What does economic interdependence refer to?

Economic interdependence refers to a situation in which countries rely on each other for goods and services. This concept highlights the interconnected nature of global economies, where nations depend on trade and cooperation to fulfill their needs. In an interdependent global market, countries may specialize in the production of certain goods or services, which they then trade with other countries that provide different products or services. This can lead to increased efficiency, a greater variety of goods for consumers, and potential economic growth for all involved nations.

Understanding this concept is crucial because it illustrates how globalization can shape economies, influence foreign policy, and create complex relationships between nations. It contrasts sharply with the idea of self-sufficiency, where a country produces all it needs without relying on external trade, which is not feasible in today’s interconnected world.