Closed Economy

AAA

DEFINITION of 'Closed Economy'

An economy in which no activity is conducted with outside economies. A closed economy is self-sufficient, meaning that no imports are brought in and no exports are sent out. The goal is to provide consumers with everything that they need from within the economy's borders.

A closed economy is the opposite of an open economy, in which a country will conduct trade with outside regions.

INVESTOPEDIA EXPLAINS 'Closed Economy'

Closed economies are more likely to be less developed if they lack internal sources of some raw materials, such as oil, gas and coal.

Due to the prevalence of international trade, truly closed economies are rare. Even governments that seek to limit the political or cultural influences of the outside world are likely to trade with other economies on some scale.

RELATED TERMS
  1. Macroeconomics

    The field of economics that studies the behavior of the aggregate ...
  2. Trade

    A basic economic concept that involves multiple parties participating ...
  3. Emerging Market Economy

    A nation's economy that is progressing toward becoming advanced, ...
  4. Free Market

    A market economy based on supply and demand with little or no ...
  5. Market Economy

    An economic system in which economic decisions and the pricing ...
  6. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
Related Articles
  1. What Is International Trade?
    Personal Finance

    What Is International Trade?

  2. Globalization: Progress Or Profiteering?
    Economics

    Globalization: Progress Or Profiteering?

  3. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

  4. Ebola's Economic Impacts on Liberia, ...
    Economics

    Ebola's Economic Impacts on Liberia, ...

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center