What does 'Beggar-Thy-Neighbor' mean

Beggar thy neighbor is a term for policies that a country enacts to address its economic woes that, in turn, actually worsens the economic problems of other countries. The term comes from the policy's impact, as it makes a beggar out of neighboring countries. 

BREAKING DOWN 'Beggar-Thy-Neighbor'

Beggar thy neighbor often refers to international trade policy that benefits the country that enacted it, while harming its neighbors or trade partners.

Beggar thy neighbor policies came about, originally, as a policy solution to domestic depression and high unemployment rates. The basic idea is to  to increase the demand for a nation's exports, while reducing reliance on imports.

This means driving consumption of domestic goods up, as opposed to consumption of imports. This is usually achieved with some kind of trade barrier—tariffs or quotas—, or competitive devaluation, in order to lower the price of exports and drive employment and the price of imports up.

Beggar-Thy-Neighbor: A Brief History

The term is widely credited to the philosopher and economist Adam Smith, who used the term in The Wealth of Nationsin a critique of mercantilism and protectionist trade policies. Smith saw mercantilism, and its zero-sum understanding of the market, encouraging nations to beggar each other in order to increase economic gain, as misguided; instead, he believed that free trade would lead to long-term economic growth that was not zero-sum, but would actually increase the wealth of—you guessed it—all nations.

Still though, many country's have deployed mercantilist and protectionist economic policies through the years. A number of countries did so during the Great Depression, Japan did after WWII, and China did after the Cold War. With the rise of globalization in the 90s, beggar-thy-neighbor fell by the wayside—for the most part. Recently, though, protectionist policies have been making a comeback, at least in visibility, with the rise of Trumpnomics and Trump's 'America First' rhetoric. 



  1. Terms of Trade - TOT

    Terms of trade (TOT) are the ratio between a country's export ...
  2. Import

    An import is a good or service brought into one country from ...
  3. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s ...
  4. Development Economics

    Development economics is a branch of economic study that focuses ...
  5. Economic Conditions

    Economic conditions are the state of the economy in a country ...
  6. Balance Of Trade - BOT

    The balance of trade is the difference between a country's import ...
Related Articles
  1. Insights

    Are Negative Interest Rates Good or Bad?

    The jury is still out on the effectiveness of negative interest rates, and whether they help or hurt the national and global economy.
  2. Tech

    How Does Neighborly Work and Make Money?

    Neighborly democratizes finance, enabling investments in municipal bonds that impact local communities.
  3. Insights

    Adam Smith and "The Wealth Of Nations"

    Adam Smith's 1776 classic "Wealth of Nations" may have had the largest global impact on economic thought.
  4. Trading

    6 Factors That Influence Exchange Rates

    An in depth look at out how a currency's relative value reflects a country's economic health and impacts your investment returns.
  5. Insights

    The Balance Of Trade

    The balance of trade is the difference between a country’s imports and exports. A trade deficit occurs when a country buys or imports more goods from other countries than it sells or exports. ...
  6. Investing

    How Fed Rate Hikes Cause Contagion Risk Around the World

    Learn about the economic problem facing emerging markets, including China. Discover why these economies must transition and reform to avoid economic crisis.
  7. Investing

    How Globalization Affects Developed Countries

    The increase in communications technology has companies competing in a global market.
  8. Insights

    Could Third World Debt Relief Pay Off?

    Debt is as much a political tool as an economic one. Discover if wholesale debt forgiveness is the answer for developing countries.
  9. Insights

    IMF Says Trade Barriers Will Hamper Global Growth

    Rising support for protectionist policies in countries around the world will hamper global economic growth, IMF officials say
  1. What is comparative advantage?

    Comparative advantage is an economic law that demonstrates the ways in which protectionism (mercantilism, at the time it ... Read Answer >>
  2. What impact does economics have on government policy?

    Learn about the impact of economic conditions on government policy and understand how governments engineer economic conditions ... Read Answer >>
  3. What's the difference between monetary policy and fiscal policy?

    Discover the distinctions between these two tools designed to influence national economies. Read Answer >>
  4. How successful is fiscal policy in guiding the national economy?

    See why it is difficult to evaluate the impact of fiscal policy on the national economy and how fiscal tools have failed ... Read Answer >>
  5. Under what circumstances will a government change its monetary policy?

    Learn about the kind of variables, including political and theoretical factors, that can bring about change in a government's ... Read Answer >>
Hot Definitions
  1. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  2. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  3. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  4. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  5. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  6. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
Trading Center