Beggar-thy-neighbour policy
Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
A beggar-thy-neighbour policy is one where a country tries to gain at its trading partners' expense. Typical tools are high tariffs or competitive devaluation, which means deliberately cutting the value of its own currency to make exports cheaper. Such moves usually provoke retaliation. When everyone retaliates, world trade shrinks and every country ends up worse off.
Example
The US Smoot-Hawley Tariff Act (1930) raised tariffs and set off a round of retaliation. World trade shrank by about two-thirds between 1929 and 1934, which deepened the Great Depression.
Don't confuse with
- Retaliatory tariff: a tariff imposed in response to another country's measures. Beggar-thy-neighbour describes the first self-serving move that starts the cycle.
Related concepts
- Free trade
- Protectionism
- Trade barrier
- Infant industry argument
- Strategic trade policy
- Trade liberalisation
- Export promotion
- Trade openness
- Countertrade