IDSC Presentation

An Overview on Open Economy &

Closed Economy
Submitted To: Submitted By:
Dr. Sonali Mishra Jagrata Banerjee
(BBA – BFSI, Section A
En. No. 2019BBBF035)
 Open Economy
• An open economy is one of the types of economy, where which is “OPEN” to the
whole world, in terms of trade, political relations and other businesses.
• Therefore, we can say that an open economy is actually an economy, which is
globalized.
• The Gross Domestic Product (GDP) and Gross National Product (GNP) of such
economies always differ, as it also trades with other outside economies of the
world.
• Usually, in these economies, the GNP is always higher than GDP as the former
includes production within the domestic territory and also incomes from the
outside territories, which is not with the case of GDP.
 Closed Economy
• As opposed to an open economy, a Closed economy is one which does not
allow any other economies of the world to trade with them.
• In other words, a closed economy is actually self-sufficient enough to be
satisfied with the production within the domestic territory and obviously, it
neither allows exports from and nor imports to the country.
• In such kind of economies, the GDP and GNP is always equal.
• This is because, it doesn’t allow imports and exports, which is the main factor
that differs Gross National Product from Gross Domestic Product.
 Conclusion
• All the economies of the world are currently Open Economies.
• There might hardly be any economy which is closed and doesn’t trade with rest of the world.
• Thus, an open economy is always beneficial not only for the own economy, but also for other
economies as well.

Thank You