Illustrate the policy - beggar my neighbour, Macroeconomics

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Illustrate the policy - Beggar my neighbour

'Beggar my neighbour' policies are government policies which attempt to gain a competitive benefit at the expense of other countries. Three illustration are:

  • imposing tariffs and other import controls in the hope that other countries won't retaliate
  • devaluing exchange rate, again in the hope that other countries don't do the same
  • dumping, that means selling exports at prices below their average cost of production

Of course if other countries respond by retaliating, protectionist and currency wars may be triggered, that can end up harming all the countries involved.

 


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