FOREIGN TRADE IN TERMS OF RECESSION

Abstract

It is easiest to make mistakes when panic-struck, while following the model of others who err is even bigger mistake. Under the conditions of recession, the first imprudent move is to close the market in order to attempt to protect local economic operators. The protectionist measures in foreign trade become popular. After a while, as the crisis deepens, the creators of economic policy become aware that market closing is not contributing to recovery. On the contrary. Big countries, with markets which have significant capacity in terms of depth and width, might afford temporary and selective closing, primarily by hindering import. Small economies have no chance whatsoever for recovery of economic recession if they attempt to close their economies. Protection of local production from unfair foreign competition is essential. However, economic development of small economies cannot be based on banning of import but rather on growth of export and overall foreign trade. A large number of instruments and measures, related to both export and import, can be applied in pursuing foreign trade policy. A combination of these measures must be established in such a way to improve constantly the overall foreign trade by strengthening competitiveness of local production, and to protect it from unfair foreign competition at the same time. Under the conditions of economic crisis and preparation for post-crisis period of recovery of global economy, this task becomes of particular importance.