COMPETITIVE DEVALUATION IN THE CONTEXT OF TRADE PROTECTIONISM: A CRITICAL APPROACH

Abstract

In the current economic context, competitive devaluation has become a common practice both in emerging and developed economies. But, despite their relatively recent popularity, the economic advantages of competitive devaluations are only illusory, since these involve huge long-term costs even for the states that resort to such policies. The main purpose of our research is to reveal the economic and political consequences of currency devaluations and to critically assess the protectionist thesis that a country needs to maintain a balanced trade with all its commercial partners. The research also contains a brief analysis of competitive devaluation policies applied by China. The paper is primarily a theoretical research, aiming to refine existing arguments, to bring new arguments, and to discuss relevant examples and cases for the announced topic.

Keywords

• international trade
• trade policy
• protectionism
• competitive devaluations