Mercantilism

Summary

Economic policy emphasizing exports Seaport at sunset, a painting by Claude Lorrain, completed in 1639 at the height of mercantilism Mercantilism is a nationalist economic policy that is designed to maximize the exports and minimize the imports of an economy. In other words, it seeks to maximize the accumulation of resources within the country and use those resources for one-sided trade. The concept aims to reduce a possible current account deficit or reach a current account surplus, and it includes measures aimed at accumulating monetary reserves by a positive balance of trade, especially of finished goods. Historically, such policies may have contributed to war and motivated colonial expansion.[1] Mercantilist theory varies in sophistication from one writer to another and has evolved over time. Mercantilism promotes government regulation of a nation's economy for the purpose of augmenting and bolstering state power at the expense of rival national powers. High tariffs, especially on manufactured goods, were almost universally a feature of mercantilist policy.[2] Before it fell into decline, mercantilism was dominant in modernized parts of Europe and some areas in Africa from the 16th to the 19th centuries, a period of proto-industrialization.[3] Some commentators argue that it is still practised in the economies of industrializing countries[4] in the form of economic interventionism.[5][6][7][8][9] With the efforts of supranational organizations such as the World Trade Organization to reduce tariffs globally, non-tariff barriers to trade have assumed a greater importance in neomercantilism. Merchants in Venice Mercantilism became the dominant school of economic thought in Europe throughout the late Renaissance and the early modern period (from the 15th to the 18th centuries). Evidence of mercantilistic practices appeared in early modern Venice, Genoa, and Pisa regarding control of the Mediterranean trade in bullion. However, the empiricism of the Renaissance, whic...