A beggar-my-neighbour policy is a policy meant to improve one country’s economy by shifting demand, unemployment, or adjustment costs onto other countries.
How it works
The classic idea is to raise domestic output not by increasing world demand, but by redirecting existing demand away from foreign producers and toward domestic ones.
Common mechanisms include:
- tariffs and import restrictions,
- export subsidies,
- competitive devaluation,
- policies that deliberately suppress imports.
These tools may help one country temporarily, but if trading partners retaliate, the global result can be lower trade and weaker output for everyone.
Historical and policy logic
The term is closely associated with the 1930s, when many countries responded to crisis with protectionist measures. The lesson from that period is that policies that look sensible from one country’s narrow perspective can become collectively destructive when many countries imitate them.
Why economists care
This concept is central to open-economy macroeconomics because it highlights strategic interaction. The payoff from one country’s policy depends on how others respond, which is why international rules and coordination matter.