DEFINITION of 'War Economy'

The organization of a country's production capacity and distribution during a time of conflict. A war economy must make substantial adjustments to its consumer production in order to accommodate defense production. Governments must choose how to allocate their resources in a war ecomony very carefully in order to achieve military victory while meeting vital domestic consumer needs.


All of the major members of both the Axis and Allied powers had war economies during World War II. America's economic strength was a vital pillar that allowed the Allies to receive the money and equipment needed to defeat Axis.

  1. War Damage Insurance Corporation

    A government financial protection arm created during World War ...
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  3. War Bond

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  4. Trade War

    A negative side effect of protectionism that occurs when Country ...
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  6. Tariff War

    An economic battle between two countries in which Country A raises ...
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