The word autarky comes from the Greek word autarkeia – autos, means self and arkein means “to be strong and sufficient.” Therefore, any country which is economically self-sufficient is said to be an autarky. It is a closed economy. Nations which are autarky are few and far between. For example, in Nazi Germany trade within its economic blocks was maximized while international trade was minimized particularly with Great Britain, France and the Soviet Union. North Korea and Bhutan could serve as examples of autarky today although they are not strict autarky. Although many countries would like to be autarky, it is not easily achievable. There are several advantages and disadvantages of autarky.
When a nation’s economy is self sufficient, it can be stronger politically. It will not have to give into demands of other nations which would otherwise impose trade embargoes.
An autarky also provides the opportunity to exercise complete control over the supply of technology, goods, and services. For example, manufacturing of weapons within a country uses its resources will keep such technology a secret and make it independent of other countries.
One of the major disadvantages of an autarky is the fact that very few nations can accomplish it. For example, for the development of weapons, metal of a specific kind is required. If a country aiming to achieve autarky does not possess deposit of the required mineral ore, then it is forced to trade with another country with the ore. Therefore, trade with other countries allows access to goods and services that it cannot produce on its own.
Autarky often leads to privation of the citizens of the country which in turn results in the growth of black markets as citizens try to acquire goods from other countries.
Autarky can also force manufacturers or producers to produce goods and services at increased per unit costs. This is could be because of the limited supply of raw materials or economic limitations imposed by the county or both. Autarky also makes it hard for the country to develop new technology and new services due to the isolation of economy which prohibits people from exchanging ideas and products from other countries.
Countries with numerous colonies only can be successful autarky because then all its needs can be met within its own borders and that of the colonies.