Uncertainty and economic self-sufficiency

Existing formal analysis of international trade under uncertainty has established that it is never optimal to forgo completely the opportunity of trade. This paper uses some simple trade models to derive conditions under which zero trade or complete self-sufficiency is optimal when uncertainty is present. The paper does not advocate extreme policies against international trade and specialization. Its purpose is to show that under certain circumstances involving uncertainty economic self-sufficiency in some goods may be desirable.