An economic war is a strategy that involves attempting to defeat an enemy or competitor by utilizing different methods to undermine the financial and economic stability of that enemy. Economic warfare of this type may be directed toward another business or even involve activities that serve to limit the trade options of a given nation. Typically, the idea behind an economic war is to neutralize the effectiveness of the target by gradually diminishing the resources that can be used to defend or maintain the status quo of that targeted entity.
As the strategy is employed within the process of business, an economic war will involve attempting to undercut the reputation of a competitor using several different means. One approach is to pursue an aggressive pricing campaign that involves selling goods and services at unit prices below the costs incurred by the target in the manufacture of their own product lines. Another approach calls for incrementally tarnishing the reputation of the competitor so that consumers begin to turn to other providers as a way of meeting their needs. Both methods can be applied simultaneously, often with the effect of driving the competitor out of business altogether.
In terms of the world economy, it is possible to engage in an economic war that is designed to cripple the economic stability of a targeted nation. This approach often involves the use of trade restrictions as a means of negatively impacting the target’s ability to import essential goods that are not produced within that nation, while also finding ways to reduce or eliminate the demand for the nation’s exported goods. To create this type of trade war, nations that wish to cripple an opponent’s economy will often adopt a series of trade policies that eventually plunge the opponent into a recession or possibly even an economic depression. The trade restrictions remain in place until the impact of that nation is neutralized and it capitulates to the demands of the nations who orchestrated the war.
Just as with any type of war, an economic war normally has a specific goal in mind. The processes employed for the duration of the war may change, depending on the chain of events that emerge as the war progresses. For example, should other parties choose to enter the economic combat by siding with the targeted entity, those who launched the war may have to refine certain methods in order to compensate for the additional support and still achieve the desired goal. Depending on the ability of the target to withstand the attacks and possibly launch some sort of counter-initiative, an economic war can go on for years before any type of resolution is reached.