What is economic openness and what are its characteristics?

The term economic openness refers to when a country or group of countries eliminate or reduce the difficulties that may arise for trade or investment with other countries. In this sense, its main task is to promote free competition giving free rein to foreign competitors, attracting new talent, workforce and new investments.

In the opposite case we have protectionism, which is trying to protect the local country from competition. This is achieved by hindering foreign competitors, providing subsidies or aid to national companies, etc.

Regarding the main characteristics of economic openness, we find:

  • The reduction of barriers to international trade: duty, entry bans, regulations, quotas, price controls, etc.
  • The state must intervene if the market fails. In no case should it intervene between the competition of national and foreign products, except when the market fails.
  • It is expected that if there is economic openness in a mercado, there is also in the market of the other country reciprocally.

Regarding the positive aspects that we can highlight about economic openness, we find the following:

  • The State can benefit from being able to redirect the resources it used to protect the industry in other aspects.
  • Local businesses become more competitive.
  • The prices of products and / or services are improved (usually reduced) due to more competition.
  • There is a greater variety of products, increasing their quality.
  • Resources are used more efficiently, taking advantage of the comparative advantages of some countries and others.

Despite this, there are those who find some negative aspects that can affect the country. Among the most talked about are:

  • Insecurity in thinking that economic openness can affect the national industry in terms of the quality of the producers and goods and services they offered.
  • You can also think of the generation of unemployment.

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