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Mercantilism is a 16th century economic philosophy that believes a country's wealth comes from gold and silver holdings. It promotes exports and discourages imports to increase these holdings. Neomercantilists modernly support mercantilist policies that benefit their industries. The theory of relative factor endowments refers to the Heckscher-Ohlin theory that a country will have comparative advantage in goods using its abundant resources. It was tested after WWII, suggesting the US should export capital-intensive goods and import labor-intensive goods.
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This document provides an overview of the economic theory of mercantilism. Some key points:
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- David Ricardo later developed the principle of comparative advantage, showing that even if one nation is less efficient at producing all goods, nations can still gain from trade by specializing in the good where their productivity disadvantage is least and importing the good where it is greatest.
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Mercantilism was an economic theory that dominated Britain in the 16th-17th centuries. It held that a positive balance of trade and accumulation of gold were crucial. Thomas Mun was a key early proponent of mercantilism who argued that England should regulate trade to export more than it imports to gain gold. He defended practices of the East India Company that were importing more than exporting and sending gold to India to pay for imports. Mun's writings laid out mercantilist ideas including banning competing imports, reducing luxury imports, and cultivating wastelands to boost domestic production and reduce imports.
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dding more information (description, tags, category) makes it easier for others to find your content. The score increases as you add each item.
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- David Ricardo later developed the principle of comparative advantage, showing that even if one nation is less efficient at producing all goods, nations can still gain from trade by specializing in the good where their productivity disadvantage is least and importing the good where it is greatest.
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The document discusses theories of international trade and banking practices. It covers the following key topics:
- The history and theoretical development of international trade, including mercantilism, absolute advantage, comparative advantage, and modern theories.
- The static and dynamic gains from international trade such as increased production, welfare, and efficient use of resources.
- An overview of different types of trade agreements from multilateral WTO agreements to preferential regional agreements.
- How regional integration and trade agreements have impacted development in developing countries.
- Different payment methods and trade financing available to support international transactions.
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Chapter 6presentation
- 3. Mercantilism Neomercantilists or Protectionists: are modern supporters of mercantilist policies becausethey benefit them. Those are textile manufacturers, steel companies, sugar growers, and peanut farmers etc.
- 4. Relative Factor Endowments The theory of relative factor endowments refers the Heckscher-Ohlin theory:A country will have a comparative advantage in producing products that intensively use resources(factors of production) it has in abundance . These economists made two basic observations:
- 5. Relative Factor Endowments 1. Factor endowments are types of resources vary among countries such as land, labor, capital, and entrepreneurship that a country possesses and can exploit for manufacturing. Countries with a large endowment of resourceswill have a comparative advantage in producing products and tend to be more prosperous than those with a small endowment.
- 6. Relative Factor Endowments Goods differ according to the types of factors that are used to produce them. For example, wheat requires fertile land, oil production requires crude oil reserves, and apparel manufacturing requires unskilled labor.
- 7. Relative Factor Endowments This theorywastested in United States after WWII by economistWassily Leontief. It suggeststhat US should export capital-intensive goods and import labor-intensive goods
- 8. Group members Panhavuthly ID: 53010919063 Kakadakong ID: 53010919683 BenjamapornThitpipit ID: 53010919029 JanthanipaPhansaoID 53010919008