Our basic aim is to answer the question ‘What causes trade?’, but before we do this
we should consider the fact that, however powerful the economic arguments may be, if
a country does not believe that trade is in its interest, it can close its borders. China, the
former Soviet Union and Japan have all followed this policy, and at one time or another
most Western countries have restricted trade in some way. A policy of not trading, or limiting
trade by tariffs or quotas, is known as protectionism, or in its extreme form isolationism.
It seeks to exclude the goods produced by foreigners from local markets in order
to protect the livelihood of local producers or for political reasons. Over the last century
isolationism in major regions such as the Soviet Union and China shaped the trading
world and the opening up of these areas had a major impact on growth and development.