Mercantilism was the dominant economic system in Europe between 1500-1700. It aimed to maximize exports and minimize imports in order to accumulate gold and silver. Governments would intervene in economies through subsidies, tariffs, and monopolies to promote exports of domestically produced goods and discourage imports. Colonies existed to provide raw materials to the mother country in exchange for manufactured goods.
Feudalism was a political system characterized by power dispersed between kings and nobles in medieval Europe. It evolved to maintain stable farming populations and raise armies against external threats. Key elements included lords who owned land, vassals granted possession of land, and fiefs or plots of land. Feudal societies also had overwhelmingly agrarian economies and a strong church. Over time, as lords could no longer provide new lands or enforce hereditary land rights, feudalism became less viable and Europe transitioned to a more money-based mixed economy.
This document provides an introduction to a presentation on mercantilism. It lists the group members presenting - Kaniz Fatima, Fariha Ahmad, and Tarich Khalasi - and their student IDs. It then provides an overview of the basic concepts of mercantilism, including that it believes a nation's wealth depends on precious metals and favors exporting more than importing to accumulate gold and silver. It also notes Adam Smith first coined the term "mercantile system" and that mercantilist policies involved tariffs, subsidies, and limiting wages.
In this presentation, we will discuss about International Economics and will focus on various aspects that influence import and export trading, MNCs operational structure etc. We will also discuss about International trade and financial scenario.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html
This document provides an introduction to international economics. It discusses that international economics deals with economic interactions between independent nations, and analyzes issues like the gains from trade, patterns of trade, trade policies, balance of payments, exchange rates, and international policy coordination. It notes that international trade focuses on real transactions of goods while international monetary analysis examines financial transactions and exchange rates. The overall topic will cover international trade theory and policy as well as exchange rates and international macroeconomic policy.
Mercantilism was the dominant school of thought in Western European economics from the 16th to late 18th centuries. It focused on accumulating gold and silver and viewed international trade as a zero-sum game where one country's gain resulted in another's loss. Key aspects included prohibiting certain imports, subsidizing exports, accumulating precious metals, and establishing colonial monopolies where colonies could only trade with their parent nation. While criticized by later economists like Adam Smith and David Ricardo, some modern policies like currency manipulation and subsidies are seen as forms of neo-mercantilism.
Meeting 1 - Introduction to international economics (International Economics)Albina Gaisina
This document provides an introduction and overview of the scope of international economics. It discusses key concepts like globalization, patterns of trade, and different economic institutions. It also summarizes different theories of international trade, including absolute advantage, comparative advantage, and theories exploring the effects of technology and scale economies on trade patterns. Modern analyses use econometrics to identify various trade factors. The document also briefly mentions terms of trade, infant industries, and debates around trade policies.
This document summarizes the key topics in international trade policy, including arguments for and against free trade. It discusses how free trade maximizes welfare but can have distributional effects. Arguments for free trade include efficiency gains and economies of scale. Arguments against include terms-of-trade gains from tariffs and addressing domestic market failures. Trade policy is also influenced by income distribution and political pressures. International trade agreements aim to liberalize trade through negotiation while balancing these various interests.
This document discusses different political and economic systems including liberal political economy, regulated capitalism, mercantilism, Marxism, communism, and socialist democracies. It provides definitions and explanations of key concepts such as how political systems interact with economic systems in the study of political economy, and different views on trade, private ownership, and the role of government in economic planning.
Feudalism was a political system characterized by power dispersed between kings and nobles in medieval Europe. It evolved to maintain stable farming populations and raise armies against external threats. Key elements included lords who owned land, vassals granted possession of land, and fiefs or plots of land. Feudal societies also had overwhelmingly agrarian economies and a strong church. Over time, as lords could no longer provide new lands or enforce hereditary land rights, feudalism became less viable and Europe transitioned to a more money-based mixed economy.
This document provides an introduction to a presentation on mercantilism. It lists the group members presenting - Kaniz Fatima, Fariha Ahmad, and Tarich Khalasi - and their student IDs. It then provides an overview of the basic concepts of mercantilism, including that it believes a nation's wealth depends on precious metals and favors exporting more than importing to accumulate gold and silver. It also notes Adam Smith first coined the term "mercantile system" and that mercantilist policies involved tariffs, subsidies, and limiting wages.
In this presentation, we will discuss about International Economics and will focus on various aspects that influence import and export trading, MNCs operational structure etc. We will also discuss about International trade and financial scenario.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html
This document provides an introduction to international economics. It discusses that international economics deals with economic interactions between independent nations, and analyzes issues like the gains from trade, patterns of trade, trade policies, balance of payments, exchange rates, and international policy coordination. It notes that international trade focuses on real transactions of goods while international monetary analysis examines financial transactions and exchange rates. The overall topic will cover international trade theory and policy as well as exchange rates and international macroeconomic policy.
Mercantilism was the dominant school of thought in Western European economics from the 16th to late 18th centuries. It focused on accumulating gold and silver and viewed international trade as a zero-sum game where one country's gain resulted in another's loss. Key aspects included prohibiting certain imports, subsidizing exports, accumulating precious metals, and establishing colonial monopolies where colonies could only trade with their parent nation. While criticized by later economists like Adam Smith and David Ricardo, some modern policies like currency manipulation and subsidies are seen as forms of neo-mercantilism.
Meeting 1 - Introduction to international economics (International Economics)Albina Gaisina
This document provides an introduction and overview of the scope of international economics. It discusses key concepts like globalization, patterns of trade, and different economic institutions. It also summarizes different theories of international trade, including absolute advantage, comparative advantage, and theories exploring the effects of technology and scale economies on trade patterns. Modern analyses use econometrics to identify various trade factors. The document also briefly mentions terms of trade, infant industries, and debates around trade policies.
This document summarizes the key topics in international trade policy, including arguments for and against free trade. It discusses how free trade maximizes welfare but can have distributional effects. Arguments for free trade include efficiency gains and economies of scale. Arguments against include terms-of-trade gains from tariffs and addressing domestic market failures. Trade policy is also influenced by income distribution and political pressures. International trade agreements aim to liberalize trade through negotiation while balancing these various interests.
This document discusses different political and economic systems including liberal political economy, regulated capitalism, mercantilism, Marxism, communism, and socialist democracies. It provides definitions and explanations of key concepts such as how political systems interact with economic systems in the study of political economy, and different views on trade, private ownership, and the role of government in economic planning.
International trade is the exchange of capital, goods, and services across international borders or territories.
international trade has existed throughout history (for example Uttarapatha, Silk Road, Amber Road, salt roads), its economic, social, and political importance has been on the rise in recent centuries.
To understand the pattern in international trade, Different trade theories are postulated. Some famous trade theories are:
Mercantilism
Absolute Advantage Theory
Comparative Advantage Theory
Hecksher-Ohlin Factor endowment theory
Product Life Cycle Theory
New Trade Theory
Porter’s Diamond Theory for competitive advantage
Restrictions on imports – tariff barriers, quotas or non-tariff barriers.
Accumulation of foreign currency reserves and gold and silver reserves. (known also as bullionism)
Granting of state monopolies to particular firms especially those associated with trade and shipping.
Subsidies of export industries to give competitive advantage in global markets.
Government investment in research and development to maximize efficiency and capacity of domestic industry.
Allowing copyright / intellectual theft from foreign companies.
Limiting wages and consumption of the working classes to enable greater profits to stay with the merchant class.
Control of colonies, e.g. making colonies buy from Empire country and taking control of colonies wealth.
England Navigation Act of 1651 prohibited foreign vessels engaging in coastal trade.
All colonial exports to Europe had to pass through English first and be re-exported to Europe.
Under British Empire, India restricted in buying from domestic industries and were forced to import salt from the UK. Protests against this salt tax, led to ‘Salt tax’ revolt led by Gandhi.
In seventeenth Century France, the state promoted a controlled economy, with strict regulations about the economy and labour markets
In the modern world, mercantilism is sometimes associated with policies, such as.
Undervaluation of currency e.g. government buying foreign currency assets to keep the exchange rate undervalued and make exports more competitive.
Government subsidy of industry for unfair advantage. China has been accused of offering too much subsidised investment for industry, leading to over supply of industries such as steel – meaning other countries struggle to compete.
Surge of protectionist sentiment, e.g. tariffs on imports.
Copyright theft
This document provides an overview of the economic theory of mercantilism. Some key points:
- Mercantilism held that a nation's strength depended on its wealth, which was measured by gold and silver reserves. It aimed to increase these reserves through trade surpluses.
- Mercantilism developed between the 16th-18th centuries in Western Europe as the nation state rose and feudalism declined. It was influenced by changes in technology, the Black Death pandemic, and influxes of New World gold and silver.
- Major tenets included using economic policy as a way to increase state power, promoting domestic production and exports over imports, and obtaining trade surpluses to bring gold
The document discusses key aspects of government budgets and the economy. It defines a budget as the annual financial statement of estimated government receipts and expenditures for a fiscal year, which runs from April 1 to March 31. The objectives of a government budget include reallocating resources, reducing income and wealth inequalities, maintaining economic stability, managing public enterprises, promoting economic growth, and reducing regional disparities. The budget has revenue and capital components, with revenue budget covering recurring receipts like taxes and expenditures like salaries, and the capital budget covering non-recurring receipts like borrowings and expenditures to acquire assets. Deficits can occur when expenditures exceed receipts, including revenue deficit, fiscal deficit, and primary deficit. The budget is an
International trade involves the exchange of goods and services between countries. It has increased globally to include services like transportation, banking, and communication. International trade occurs when countries specialize in producing goods they have a comparative advantage in and trade for goods they have a comparative disadvantage in. Reasons for international trade include uneven distribution of natural resources between countries, differences in economic growth rates, and allowing for division of labor and specialization. The main benefits of international trade are optimal use of resources, availability of all types of goods, and economic growth and development.
This document provides an overview of protectionism and its effects on international trade. It defines protectionism as government policies that restrict free trade to protect local industries from foreign competition, through measures like tariffs, quotas, and subsidies. It then discusses different types of protectionist policies and their impacts. While protectionism aims to protect domestic jobs in the short-term, it ultimately makes countries less competitive and can strain foreign relations. The document also notes arguments for and against protectionism, and that while protection may help infant industries, it discourages innovation and leads to lower quality, more expensive domestic goods over time.
The document discusses New Institutional Economics (NIE) and its relevance for the International Food Policy Research Institute (IFPRI). NIE examines how institutions, both formal and informal, shape economic performance and outcomes. It analyzes how transaction costs influence organizational forms and contracts between parties. NIE is useful for IFPRI's work in developing countries, where market failures and imperfect institutions are common. The document provides examples of how NIE insights could further IFPRI's research on issues like contract farming and international food standards.
The document criticizes several aspects of IMF loans and policies, arguing that they often do more harm than good. It claims that the IMF takes a "one size fits all" approach without considering individual country contexts. IMF loan conditions also reduce political independence by dictating national policies. Additionally, the IMF is criticized for engaging in too much intervention and not allowing free market forces to operate naturally. There is also a lack of transparency and local involvement in imposing IMF policies.
Welcome to my presentation on dependency theoryOjhor Shrabon
1. Andre Gunder Frank's dependency theory argues that underdeveloped countries are kept in a state of underdevelopment due to their economic dependence on developed "metropolis" countries, which extract economic surplus from satellite underdeveloped countries through trade.
2. The theory posits that underdeveloped countries experience the most development when their ties to the metropolis are weakest, such as during wars or economic crises, or due to geographic isolation.
3. Regions with the closest past ties to metropolis countries, through the export of primary commodities, are now the most underdeveloped, while regions that were able to industrialize saw a decline in dependence on the metropolis.
This document discusses the relationship between political and economic factors. It defines political economy as the grafting of politics and economics, and notes they are mutually dependent. It explores how governments can use political power to influence economic resources at domestic and international levels. It also outlines three major ideologies in political economy: liberalism, nationalism, and Marxism. The document examines different structures that comprise the global political economy, such as production, security, financial, and knowledge structures. It analyzes how political events like the OPEC oil crisis influenced economics. Multinational corporations and regional economic organizations are also discussed in relation to world political economy.
The balance of payments (BOP) records a country's transactions with other countries. It has two main categories: the current account which covers trade in goods, services, and income, and the capital and financial account which covers capital transfers and financial flows. The overall BOP position is the change in a country's net international reserves resulting from transactions. It is calculated as the current account balance plus the capital and financial account balance minus net unclassified items. The document provides the Philippines' BOP data for 2009 and 2010, showing growth rates for each component.
Regional integration refers to the process where states enter agreements to enhance cooperation through regional institutions and rules. The key objectives of regional integration include strengthening trade, private sector development, economic growth, good governance, and reducing social exclusion. Regional trade agreements (RTAs) like the European Union (EU) and North American Free Trade Agreement (NAFTA) aim to reduce tariffs and trade barriers between member nations. Other RTAs discussed include the Association of Southeast Asian Nations (ASEAN), South Asian Association for Regional Cooperation (SAARC), and the South Asian Free Trade Area (SAFTA) which seeks to establish a free trade area across South Asia.
Unit -2 : lecture-2 (absolute advantage theory)Dr.B.B. Tiwari
- The absolute advantage theory of international trade originated from Adam Smith's work, which argued that countries should specialize in producing goods they are relatively more efficient at and trade for goods from other countries.
- According to the theory, countries have an absolute advantage in producing goods for which they have lower opportunity costs compared to other countries. They should export goods they have an absolute advantage in and import goods other countries have an absolute advantage in.
- Through specialization and trade based on absolute advantages, global production is increased and all trading partners can gain. The theory assumes two countries, two goods, and mobility of labor but not between countries. It also does not consider transportation costs or variations in country size.
This document provides notes on international trade concepts. It begins with reasons why nations trade, such as lower prices, greater choice, and differences in resources. It then discusses absolute and comparative advantage using an example of an industrialized country trading with a developing country. Key terms like imports, exports, tariffs, and protectionism are defined. Arguments for and against protectionism are outlined. The document concludes with an overview of the history and functions of the World Trade Organization.
The document discusses several theories of international trade. It begins by explaining mercantilism, which held that countries should maintain a trade surplus. It then explains Adam Smith's theory of absolute advantage, which argues that countries should specialize in what they can produce most efficiently. David Ricardo further developed this with his theory of comparative advantage, which showed that even if one country is more efficient in all products, both can still benefit from trade by focusing on their comparative advantages. The theories aim to achieve efficient allocation of global resources and maximize production at lowest cost through international specialization and trade.
The document discusses different types of economic systems, including pure market economies, pure command economies, traditional economies, and mixed economies. It describes the key characteristics of each type of economy, such as how economic decisions are made regarding what to produce, how to produce it, and who receives the goods and services. The document also briefly covers different political philosophies like capitalism, socialism, and communism that influence economic systems.
The document discusses the concept of balance of trade. It defines balance of trade as the difference between a country's imports and exports over a period of time. A positive balance of trade occurs when exports are greater than imports, while a negative balance happens when imports are greater than exports. The document also examines the importance of balance of trade, types of trade, factors that can affect a country's balance of trade, and provides examples of Pakistan's balance of trade over time.
This document summarizes Ronald Coase's theorem on the allocation of resources between parties when transaction costs are zero. It discusses that Coase believed private negotiations between parties could lead to an efficient allocation of resources to address externalities, rather than relying on government intervention. It provides an example of how a factory and fishermen could negotiate an efficient solution to pollution without government regulation if transaction costs were zero. The document also outlines the assumptions of the theorem and provides analysis of an example case related to Coase's work.
This document provides an overview of mercantilism and bullionism. Mercantilism aimed to increase a nation's wealth, as measured by its stock of precious metals, by maintaining a positive balance of trade through exports exceeding imports. Nations pursued economic nationalism and self-sufficiency through policies like tariffs and subsidies. Colonies helped provide raw materials and captive markets to maintain a favorable trade balance. Bullionism held that a nation's economic health depended on its supply of gold and silver, acquired through international trade.
Mercantilism and piracy and relation between themUsamaAhmad69
This Presentation explains what is Mercantilism and piracy, its history and relation between them. It also explains British Colonies and trade between them.
International trade is the exchange of capital, goods, and services across international borders or territories.
international trade has existed throughout history (for example Uttarapatha, Silk Road, Amber Road, salt roads), its economic, social, and political importance has been on the rise in recent centuries.
To understand the pattern in international trade, Different trade theories are postulated. Some famous trade theories are:
Mercantilism
Absolute Advantage Theory
Comparative Advantage Theory
Hecksher-Ohlin Factor endowment theory
Product Life Cycle Theory
New Trade Theory
Porter’s Diamond Theory for competitive advantage
Restrictions on imports – tariff barriers, quotas or non-tariff barriers.
Accumulation of foreign currency reserves and gold and silver reserves. (known also as bullionism)
Granting of state monopolies to particular firms especially those associated with trade and shipping.
Subsidies of export industries to give competitive advantage in global markets.
Government investment in research and development to maximize efficiency and capacity of domestic industry.
Allowing copyright / intellectual theft from foreign companies.
Limiting wages and consumption of the working classes to enable greater profits to stay with the merchant class.
Control of colonies, e.g. making colonies buy from Empire country and taking control of colonies wealth.
England Navigation Act of 1651 prohibited foreign vessels engaging in coastal trade.
All colonial exports to Europe had to pass through English first and be re-exported to Europe.
Under British Empire, India restricted in buying from domestic industries and were forced to import salt from the UK. Protests against this salt tax, led to ‘Salt tax’ revolt led by Gandhi.
In seventeenth Century France, the state promoted a controlled economy, with strict regulations about the economy and labour markets
In the modern world, mercantilism is sometimes associated with policies, such as.
Undervaluation of currency e.g. government buying foreign currency assets to keep the exchange rate undervalued and make exports more competitive.
Government subsidy of industry for unfair advantage. China has been accused of offering too much subsidised investment for industry, leading to over supply of industries such as steel – meaning other countries struggle to compete.
Surge of protectionist sentiment, e.g. tariffs on imports.
Copyright theft
This document provides an overview of the economic theory of mercantilism. Some key points:
- Mercantilism held that a nation's strength depended on its wealth, which was measured by gold and silver reserves. It aimed to increase these reserves through trade surpluses.
- Mercantilism developed between the 16th-18th centuries in Western Europe as the nation state rose and feudalism declined. It was influenced by changes in technology, the Black Death pandemic, and influxes of New World gold and silver.
- Major tenets included using economic policy as a way to increase state power, promoting domestic production and exports over imports, and obtaining trade surpluses to bring gold
The document discusses key aspects of government budgets and the economy. It defines a budget as the annual financial statement of estimated government receipts and expenditures for a fiscal year, which runs from April 1 to March 31. The objectives of a government budget include reallocating resources, reducing income and wealth inequalities, maintaining economic stability, managing public enterprises, promoting economic growth, and reducing regional disparities. The budget has revenue and capital components, with revenue budget covering recurring receipts like taxes and expenditures like salaries, and the capital budget covering non-recurring receipts like borrowings and expenditures to acquire assets. Deficits can occur when expenditures exceed receipts, including revenue deficit, fiscal deficit, and primary deficit. The budget is an
International trade involves the exchange of goods and services between countries. It has increased globally to include services like transportation, banking, and communication. International trade occurs when countries specialize in producing goods they have a comparative advantage in and trade for goods they have a comparative disadvantage in. Reasons for international trade include uneven distribution of natural resources between countries, differences in economic growth rates, and allowing for division of labor and specialization. The main benefits of international trade are optimal use of resources, availability of all types of goods, and economic growth and development.
This document provides an overview of protectionism and its effects on international trade. It defines protectionism as government policies that restrict free trade to protect local industries from foreign competition, through measures like tariffs, quotas, and subsidies. It then discusses different types of protectionist policies and their impacts. While protectionism aims to protect domestic jobs in the short-term, it ultimately makes countries less competitive and can strain foreign relations. The document also notes arguments for and against protectionism, and that while protection may help infant industries, it discourages innovation and leads to lower quality, more expensive domestic goods over time.
The document discusses New Institutional Economics (NIE) and its relevance for the International Food Policy Research Institute (IFPRI). NIE examines how institutions, both formal and informal, shape economic performance and outcomes. It analyzes how transaction costs influence organizational forms and contracts between parties. NIE is useful for IFPRI's work in developing countries, where market failures and imperfect institutions are common. The document provides examples of how NIE insights could further IFPRI's research on issues like contract farming and international food standards.
The document criticizes several aspects of IMF loans and policies, arguing that they often do more harm than good. It claims that the IMF takes a "one size fits all" approach without considering individual country contexts. IMF loan conditions also reduce political independence by dictating national policies. Additionally, the IMF is criticized for engaging in too much intervention and not allowing free market forces to operate naturally. There is also a lack of transparency and local involvement in imposing IMF policies.
Welcome to my presentation on dependency theoryOjhor Shrabon
1. Andre Gunder Frank's dependency theory argues that underdeveloped countries are kept in a state of underdevelopment due to their economic dependence on developed "metropolis" countries, which extract economic surplus from satellite underdeveloped countries through trade.
2. The theory posits that underdeveloped countries experience the most development when their ties to the metropolis are weakest, such as during wars or economic crises, or due to geographic isolation.
3. Regions with the closest past ties to metropolis countries, through the export of primary commodities, are now the most underdeveloped, while regions that were able to industrialize saw a decline in dependence on the metropolis.
This document discusses the relationship between political and economic factors. It defines political economy as the grafting of politics and economics, and notes they are mutually dependent. It explores how governments can use political power to influence economic resources at domestic and international levels. It also outlines three major ideologies in political economy: liberalism, nationalism, and Marxism. The document examines different structures that comprise the global political economy, such as production, security, financial, and knowledge structures. It analyzes how political events like the OPEC oil crisis influenced economics. Multinational corporations and regional economic organizations are also discussed in relation to world political economy.
The balance of payments (BOP) records a country's transactions with other countries. It has two main categories: the current account which covers trade in goods, services, and income, and the capital and financial account which covers capital transfers and financial flows. The overall BOP position is the change in a country's net international reserves resulting from transactions. It is calculated as the current account balance plus the capital and financial account balance minus net unclassified items. The document provides the Philippines' BOP data for 2009 and 2010, showing growth rates for each component.
Regional integration refers to the process where states enter agreements to enhance cooperation through regional institutions and rules. The key objectives of regional integration include strengthening trade, private sector development, economic growth, good governance, and reducing social exclusion. Regional trade agreements (RTAs) like the European Union (EU) and North American Free Trade Agreement (NAFTA) aim to reduce tariffs and trade barriers between member nations. Other RTAs discussed include the Association of Southeast Asian Nations (ASEAN), South Asian Association for Regional Cooperation (SAARC), and the South Asian Free Trade Area (SAFTA) which seeks to establish a free trade area across South Asia.
Unit -2 : lecture-2 (absolute advantage theory)Dr.B.B. Tiwari
- The absolute advantage theory of international trade originated from Adam Smith's work, which argued that countries should specialize in producing goods they are relatively more efficient at and trade for goods from other countries.
- According to the theory, countries have an absolute advantage in producing goods for which they have lower opportunity costs compared to other countries. They should export goods they have an absolute advantage in and import goods other countries have an absolute advantage in.
- Through specialization and trade based on absolute advantages, global production is increased and all trading partners can gain. The theory assumes two countries, two goods, and mobility of labor but not between countries. It also does not consider transportation costs or variations in country size.
This document provides notes on international trade concepts. It begins with reasons why nations trade, such as lower prices, greater choice, and differences in resources. It then discusses absolute and comparative advantage using an example of an industrialized country trading with a developing country. Key terms like imports, exports, tariffs, and protectionism are defined. Arguments for and against protectionism are outlined. The document concludes with an overview of the history and functions of the World Trade Organization.
The document discusses several theories of international trade. It begins by explaining mercantilism, which held that countries should maintain a trade surplus. It then explains Adam Smith's theory of absolute advantage, which argues that countries should specialize in what they can produce most efficiently. David Ricardo further developed this with his theory of comparative advantage, which showed that even if one country is more efficient in all products, both can still benefit from trade by focusing on their comparative advantages. The theories aim to achieve efficient allocation of global resources and maximize production at lowest cost through international specialization and trade.
The document discusses different types of economic systems, including pure market economies, pure command economies, traditional economies, and mixed economies. It describes the key characteristics of each type of economy, such as how economic decisions are made regarding what to produce, how to produce it, and who receives the goods and services. The document also briefly covers different political philosophies like capitalism, socialism, and communism that influence economic systems.
The document discusses the concept of balance of trade. It defines balance of trade as the difference between a country's imports and exports over a period of time. A positive balance of trade occurs when exports are greater than imports, while a negative balance happens when imports are greater than exports. The document also examines the importance of balance of trade, types of trade, factors that can affect a country's balance of trade, and provides examples of Pakistan's balance of trade over time.
This document summarizes Ronald Coase's theorem on the allocation of resources between parties when transaction costs are zero. It discusses that Coase believed private negotiations between parties could lead to an efficient allocation of resources to address externalities, rather than relying on government intervention. It provides an example of how a factory and fishermen could negotiate an efficient solution to pollution without government regulation if transaction costs were zero. The document also outlines the assumptions of the theorem and provides analysis of an example case related to Coase's work.
This document provides an overview of mercantilism and bullionism. Mercantilism aimed to increase a nation's wealth, as measured by its stock of precious metals, by maintaining a positive balance of trade through exports exceeding imports. Nations pursued economic nationalism and self-sufficiency through policies like tariffs and subsidies. Colonies helped provide raw materials and captive markets to maintain a favorable trade balance. Bullionism held that a nation's economic health depended on its supply of gold and silver, acquired through international trade.
Mercantilism and piracy and relation between themUsamaAhmad69
This Presentation explains what is Mercantilism and piracy, its history and relation between them. It also explains British Colonies and trade between them.
Mercantilism is an economic theory that believes countries need large amounts of gold and silver to be wealthy. It benefits large businesses and governments who receive protectionism. Mercantilist ideas were promoted by rulers to increase national power through acquiring gold, which allowed for larger armies and colonies. While mercantilism declined historically, neo-mercantilist policies still exist today with countries restricting imports to stimulate domestic production and employment.
Mercantilism arose in the 16th-18th centuries as the nation state grew in power and feudal institutions declined. Changes in technology and the Black Death reduced populations and increased commercial agriculture. Mercantilism held that a nation's wealth came from holding gold/silver, and it aimed to maximize exports and minimize imports. This led nations to establish colonies for resources and captive markets. The triangular slave trade expanded under these policies. While initially successful, mercantilism ultimately could not sustain long-term trade surpluses and was criticized by physiocrats and Adam Smith.
This presentation summarizes the economic theory of mercantilism. It introduces the topic and presenters, then defines mercantilism as an early theory of international trade that believed a nation's wealth depended on accumulating gold and silver and having a positive trade balance. It discusses key mercantilist policies like tariffs and export subsidies. It provides an example of China using modern mercantilist policies and summarizes Adam Smith's criticisms of how mercantilism viewed trade as zero-sum and emphasized money over other forms of wealth. The presentation concludes by noting how mercantilist policies were gradually replaced by free trade in Britain and France in the 18th-19th centuries.
Mercantilism was an economic philosophy and policy practiced by European nations between the 16th and 18th centuries that promoted governmental regulation of a nation's economy for the purpose of increasing state power at the expense of rival nations. Under mercantilism, nations sought to accumulate gold and silver and achieve a positive trade balance by exporting more than they imported. They established colonies to produce raw materials and serve as captive markets, and enacted policies like the Navigation Acts to mandate that trade occur between a nation and its colonies in specified ways, such as requiring certain goods be shipped only to the mother country on domestic ships. The goal was for the government to amass wealth and bullion to enhance the nation's economic and military strength relative
Chapter Two_Mercantilism: In International Trade Theory.pptxCarla Kristina Cruz
This document discusses mercantilism as an international trade theory. It defines mercantilism as recommending that a country aims to maintain a trade surplus and sees trade as a zero-sum game. It advocates for government intervention to achieve a trade surplus. The key aspects of mercantilism involve restricting imports while accumulating gold and promoting exports through subsidies and monopolies. Examples are given of how mercantilist policies were used by countries like England, France, and under the British Empire in India. Criticisms of mercantilism include that it promotes inefficiency and that it justified imperial policies. Modern and neo-mercantilist policies are also discussed.
This document provides an overview of international trade regimes throughout history and current theories of international trade.
1. It outlines the major historical trade regimes including mercantilism from the 1400s-1700s, the liberal trade regime of 1810s-1930s, and the General Agreement on Tariffs and Trade (GATT) from 1947-1994. It also discusses related financial and currency regimes over this time period.
2. The major theories of international trade are summarized, including mercantilism, absolute advantage, comparative advantage, Hecksher-Ohlin theory of factor proportions, and Singer-Prebisch theory on uneven gains from trade.
3. Current dynamics in international trade are discussed
Adam Smith introduced the concept of absolute advantage in international trade, where a country should specialize in and export goods it can produce with fewer resources than trading partners. David Ricardo later developed the theory of comparative advantage, showing that even if one country has an absolute advantage in all goods, both countries can still benefit from trade by specializing according to their comparative costs of production. Classical economists like Smith and Ricardo viewed labor as the sole source of value and advocated for free trade based on the principle that specialization according to comparative advantage maximizes global output and welfare.
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.
Mercantilism was an economic system where countries aimed to export more than they imported in order to accumulate wealth. Under this system, colonies provided raw materials to their "mother country" since importing goods was discouraged. Great Britain passed laws like the Navigation Acts to enforce mercantilism and benefit themselves. However, they needed more labor from colonies to produce goods like wood and cotton. This led to the growth of the transatlantic slave trade, as slaves provided a source of free labor that could meet the increasing demands of mercantilism.
This document provides an overview of the Mercantilism and Physiocracy schools of economic thought. It discusses the key figures and ideas of each school. Mercantilism prevailed between 1500-1750 and emphasized accumulating wealth through exports. Key thinkers included Mun, Petty, and Colbert. Physiocracy emerged in France in the 1700s and believed that only agriculture is productive. Key figures were Quesnay, Turgot, and Condorcet. Physiocracy reacted against mercantilism and believed in natural laws governing the economy. Both schools contributed early ideas but were later criticized and modified by classical economists.
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Mercantilism was the dominant economic theory in Europe between the 15th-18th centuries that advocated for governments to control foreign trade to increase national wealth. Governments favored exporting over importing and accumulating gold. This led nations to establish colonies to access raw materials and captive markets. Mercantilism caused frequent wars as nations competed for resources and trade advantages. It aimed to have positive trade balances and believed wealth was finite, so one nation could only grow richer by making others poorer through international trade.
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3) The effects of European nationalism within Europe, including new alliances and rivalry, and globally through increased colonialism in Africa and Asia.
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2. Mercantilism held that nations benefit from accumulating gold and silver, and advocated for government regulation of international trade to generate wealth. Absolute advantage theory proposed that nations specialize in goods they can produce at lower absolute costs.
3. Comparative cost theory built on this by arguing that nations can both benefit from trade even if one has an absolute advantage in all goods, by
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Ponzi schemes, a notorious form of financial fraud, have plagued America’s investment landscape for decades. Named after Charles Ponzi, who orchestrated one of the most infamous schemes in the early 20th century, these fraudulent operations promise high returns with little or no risk, only to collapse and leave investors with significant losses. This article explores the nature of Ponzi schemes, notable cases in American history, their impact on victims, and measures to prevent falling prey to such scams.
Understanding Ponzi Schemes
A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from legitimate profit earned. The scheme relies on a constant influx of new investments to continue paying the promised returns. Eventually, when the flow of new money slows down or stops, the scheme collapses, leaving the majority of investors with substantial financial losses.
Historical Context: Charles Ponzi and His Legacy
Charles Ponzi is the namesake of this deceptive practice. In the 1920s, Ponzi promised investors in Boston a 50% return within 45 days or 100% return in 90 days through arbitrage of international reply coupons. Initially, he paid returns as promised, not from profits, but from the investments of new participants. When his scheme unraveled, it resulted in losses exceeding $20 million (equivalent to about $270 million today).
Notable American Ponzi Schemes
1. Bernie Madoff: Perhaps the most notorious Ponzi scheme in recent history, Bernie Madoff’s fraud involved $65 billion. Madoff, a well-respected figure in the financial industry, promised steady, high returns through a secretive investment strategy. His scheme lasted for decades before collapsing in 2008, devastating thousands of investors, including individuals, charities, and institutional clients.
2. Allen Stanford: Through his company, Stanford Financial Group, Allen Stanford orchestrated a $7 billion Ponzi scheme, luring investors with fraudulent certificates of deposit issued by his offshore bank. Stanford promised high returns and lavish lifestyle benefits to his investors, which ultimately led to a 110-year prison sentence for the financier in 2012.
3. Tom Petters: In a scheme that lasted more than a decade, Tom Petters ran a $3.65 billion Ponzi scheme, using his company, Petters Group Worldwide. He claimed to buy and sell consumer electronics, but in reality, he used new investments to pay off old debts and fund his extravagant lifestyle. Petters was convicted in 2009 and sentenced to 50 years in prison.
4. Eric Dalius and Saivian: Eric Dalius, a prominent figure behind Saivian, a cashback program promising high returns, is under scrutiny for allegedly orchestrating a Ponzi scheme. Saivian enticed investors with promises of up to 20% cash back on everyday purchases. However, investigations suggest that the returns were paid using new investments rather than legitimate profits. The collapse of Saivian l
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Contributors included:
Jo Blanden, Professor in Economics, University of Surrey
Clive Bolton, CEO, Life Insurance M&G Plc
Jim Boyd, CEO, Equity Release Council
Molly Broome, Economist, Resolution Foundation
Nida Broughton, Co-Director of Economic Policy, Behavioural Insights Team
Jonathan Cribb, Associate Director and Head of Retirement, Savings, and Ageing, Institute for Fiscal Studies
Joanna Elson CBE, Chief Executive Officer, Independent Age
Tom Evans, Managing Director of Retirement, Canada Life
Steve Groves, Chair, Key Retirement Group
Tish Hanifan, Founder and Joint Chair of the Society of Later life Advisers
Sue Lewis, ILC Trustee
Siobhan Lough, Senior Consultant, Hymans Robertson
Mick McAteer, Co-Director, The Financial Inclusion Centre
Stuart McDonald MBE, Head of Longevity and Democratic Insights, LCP
Anusha Mittal, Managing Director, Individual Life and Pensions, M&G Life
Shelley Morris, Senior Project Manager, Living Pension, Living Wage Foundation
Sarah O'Grady, Journalist
Will Sherlock, Head of External Relations, M&G Plc
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
David Sinclair, Chief Executive, ILC
Jordi Skilbeck, Senior Policy Advisor, Pensions and Lifetime Savings Association
Rt Hon Sir Stephen Timms, former Chair, Work & Pensions Committee
Nigel Waterson, ILC Trustee
Jackie Wells, Strategy and Policy Consultant, ILC Strategic Advisory Board
Monthly Market Risk Update: June 2024 [SlideShare]Commonwealth
Markets rallied in May, with all three major U.S. equity indices up for the month, said Sam Millette, director of fixed income, in his latest Market Risk Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
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6. Mercantilism = Command economy
Economics – study of
production, distribution and
consumption of goods and
services
1) What to produce?
2) How to produce?
3) For whom to produce?
Market
economy
Command
economy
MERCANTILISM LIBERALISM
The government
decides about
questions
Individuals
make decisions
7. Mercantilism - Definition
Mercantilism is an economic policy whereby a nation
aims to maximize exports and minimize the imports.
Wealth is measured by precious metals – gold and
17. 7) Government incentives -types
SUBSIDIE
S
MONOPOL
Y
TARRIFS
Cash –
payments in
order
someone to
encourage to
produce
certain things
Exclusive
rights given
to someone to
produce
something!
No one in the
country can!
Protective
tariffs that
stop foreign
competition!
Tax on
imports!
19. 9) Reliance on Colonies
Colonies – Backbone of a self-sufficient economy
20. 9) Reliance on Colonies
Colonies The mother
country
Raw materials
Finished goods
21. 10) Corruption – negative side
Corruption – the fruit of economic regulation
22. A) Mercantilism in FRANCE
Jean Baptiste
Colbert (1619-1683)
Finance minister to Louis
XIV
COLBERTISM
Member of Bourgeoisie,
wealthy merchant’s son
Wanted to create system
that would support Louis
XIV reign
Power of state depends on
gold
More export than import
Development of FR
industries
Importance of colonies
23. B) Mercantilism in GREAT BRITAIN
Thomas Mun
(1571-1641)
“England's Treasure by Foreign
Trade”:
“We must sell more to strangers
yearly than we consume of theirs
in value”
Imported goods that can be produced
domestically should be banned.
Reduce luxurious imported goods by
making Englishmen have a taste for
English goods.
Reduce export duties on goods
produced domestically for foreign
markets.
If no alternatives are available to its
neighbors, England should charge more
money for its exports.
Cultivate wasteland for higher
production and to reduce the amount of
imports needed from abroad.
24. Types of Mercantilism
I PHASE – Early Mercantilism
Bullionism ( Bullion = gold, silver, other precious metals)
BAN of imports of goods
II PHASE – Late Mercantilism
Imports is allowed, but not to exceed Exports
Favorable balance of trade
25. Little quiz:
1. Mercantilism, as an economic system, is:
a) Mixed economy
b) Free market economy
c) Command economy
2. During Mercantilism, the wealth of nation is measured by:
a) Number of colonies
b) Factors of production
c) Gold and Silver
3. “Hands on” approach means:
a) Government puts its hands on economy
b) Government stays out of economy
c) Economy puts its hands on the government
4. Mercantilism in France is knows as:
a) Cubanism
b) Colbertism
c) Cubism
26. Little quiz:
5. Subsidies are:
a) Protective tariffs for businesses
b) Exclusive rights to businesses
c) Cash payments to businesses
6. Gold, silver, precious metals in Mercantilism are known
as:
a) Factors of production
b) Bullion
c) Exclusive property rights
7. Goods that colonies trade with the mother country
were:
a) Only services
b) Finished goods
c) Fur, cocoa, sugar, raw materials
Mercantilism is an Economic system of trade in European countries, in the long period of 1500-1700. This system replaced the Feudal economic system in the Western Europe. It was dominant in England and France.
Mercantilism is a dominant school of economic thought in Europe through the Renaissance and the early modern period (15th-18th century).
The mercantilist period is characterized by:
- Establishment of powerful absolute monarchies in Europe,
Disintegration of the Feudal social system,
Development of trade and manufacturing
Technical new discoveries - gunpowder, compass…
New sea routes and discovery of new countries
Trade bourgeoisie helps monarchs to strengthen power and fight local feudal lords
Strengthening the state and building a modern, centralized and powerful state
Time of Renaissance and Humanism and breaking of Dogmatic views (emphasizing man/humans and worldly values, not spiritual ones)
Famous authors and painters from this period: Michelangelo (1475-1576), Leonardo da Vinci (1452-1519), Titian (1477-1576), Raphael (1483-1530), Bellini (1410-1516)
Originating in 16th-century Europe, mercantilism began with the emergence of the nation-state. The dominant economic theory was that the global supply of wealth was finite, and it was in the nation’s best interest to accumulate as much as possible. During that time, wealth was measured by a country’s quantity of silver and gold. To accumulate more wealth, European countries, such as Britain and France, would focus on maximizing their exports and minimizing imports, which resulted in a favorable balance of trade.
For countries with a negative trade balance with a mercantilist country, the difference would be paid back in silver or gold. To maintain a favorable trade balance, the early mercantilist countries would enact imperialist policies by setting up colonies in smaller nations.
The aim was to extract raw material to send back to the home country, where it would be refined into manufactured goods. The goods would then be resold to the colonies, allowing early mercantilist nations to accumulate wealth through a positive trade balance.
As an economic theory, mercantilism relies on government intervention to regulate international trade and protect domestic industries. Mercantilist policies involve the protection of domestic corporations through regulations and the promotion of trade surpluses. In the context of international trade, a favorable trade balance is achieved through government regulations, such as tariffs and restrictions on imports.
On the domestic side, mercantilist policies support domestic industries by establishing monopolies and allocating capital to encourage growth. Such policies are a form of economic protectionism meant to encourage self-sufficiency and are in direct opposition to the free-market economics of trade and globalization.
Mercantilism is a form of protectionism that was practiced throughout the Age of Discovery (16th – 18th Centuries). It became popular among the seafaring nations of Europe as it discovered the other nations of the world. Notable examples include Spain, Britain, France, and Portugal.
Economics is the study of production, distribution and consumption of goods and services. To economize mean to do them on the most efficient way. There are different ideas of how a nation can produce, distribute and consume goods and services.
The 3 economic questions that each nation has to answer are:
What should it produce?
How should it produce?
For whom should it produce?
Mercantilism is a type of command economy. It is not a market economy. The government, central authority, monarchy answers these questions.
Mercantilism is a system of political and economic policy evolving with the modern national state and seeking to secure a nation’s political and economic supremacy in its rivalry with other states. According to this system, money was regarded as the state of wealth, and the goal of the state was the accumulation of precious metals by exporting the largest possible quantity of its products and importing as little as possible, thus establishing a favorable balance of trade.
Mercantilism – origin from Latin word – meaning “merchant”, “trade” and “trading”.
Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, colonialism, tariffs and subsidies on traded goods to achieve that goal. The policy 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 frequently led to war and motivated colonial expansion. Mercantilist theory varies in sophistication from one writer to another and has evolved over time.
Mercantilism is an economic theory developed in the 16th to 18th centuries that says that a government should control the economy and that a nation should increase its wealth by selling more than it buys from other nations.
Mercantilism is an economic theory that emphasizes self-sufficiency through a favorable balance of trade. Mercantilist policies focus on the accumulation of wealth and resources while maintaining a positive trade balance with other countries. By maximizing exports and minimizing imports, mercantilism is also viewed as a form of economic protectionism. Originating in 16th-century Europe, mercantilism is now viewed as a mostly outdated economic theory, replaced by the supply and demand forces of the market economy. Present-day mercantilism commonly refers to economic policies that restrict the importation of foreign goods.
Mercantilism is an economic policy whereby a nation aims to maximize exports and minimize the imports. Originally adopted by European nations between 1500 and 1800, mercantilist nations implemented policies such as tariffs and subsidies in order to boost exports and make international imports more expensive.
Mercantilism originates from the term ‘mercantile’, which refers to merchants and trade. By extension, mercantilism is the philosophy and belief that trade with other nations should be regulated through what is now known as ‘protectionism’.
National wealth is measured in precious metals – gold and silver. The strength of the country depends on how much gold and silver it has. However, the wealth is FINITE! There is a limited amount of gold and silver.
The fundamental aim of the mercantilists was to make the country strong. The strength of the country was found in the wealth of the country, especially that portion of wealth which consisted of precious metals like gold and silver. Mercantilism firmly believed that gold was the basis of wealth and power. Hence the mercantilist slogan was ‘more gold, more wealth and more power’. All the economic activities in the country were centered around wealth. According to Gray, “Everybody thought that his country was engaged in a race with other countries and in that race it must not be the looser”.
Accumulation of gold - Gold was associated with wealth and power. It not only allowed nations to pay for soldiers and expand the empire but also for its symbolism of wealth. Nations saw gold as protection against invasion and a lack of gold would inevitably lead to the nation’s demise. Gold mines were in short supply in colonist nations such as Great Britain, France, and Spain, so they relied on their colonist nations to provide its supply. By procuring raw materials from the colonies, it would convert them to final goods and sell them back for a profit in gold.
Zero-sum game is an economic rivalry. If one pumpkin pie of 8 pieces has to be divided between 2 persons, each has to get 4 pieces. However, if one wants more of the pie, the other has to get less.
At the heart of mercantilism was the belief that wealth was static. As gold was rare, it was seen that there is only a limited supply. So importing more from one nation than it exported meant it was losing wealth. In other words, one nation could only benefit at another’s expense.
The Mercantilist theory of foreign trade is known as the balance of trade theory. The aim of this theory was to get large amount of precious metals. Foreign trade was considered to be the only Source for getting gold and silver. They believed that all those nations which did not possess their own gold and silver mines could become rich after getting gold and silver from foreign countries through trade.
Sir Thomas Mun the greatest representative of Mercantilist declared that, “foreign trade ought to be encouraged, for, upon it hinges the great revenue of the King, the honor of the kingdom, the noble profession of the merchant, the supply of our poor, the improvement of our lands and means of our treasure”.
The mercantilists insisted that the value of export should always be greater than imports. In short, they advocated a favorable balance of trade. Hence they encouraged exports and discouraged imports. “Export more, import less and collect the balance in the form of gold and silver”, was the essence of this theory. Accordingly every exporter was considered to be a close friend of the state and every importer as an enemy.
Mercantilists believed that by exporting more than they imported, it would be able to acquire a net accumulation of wealth from other nations. However, by contrast, if the nation brought more goods from abroad, it was essentially sending gold, wealth, and power abroad.
Favorable Balance of trade is when exports exceed imports. The state should send out more goods than take in. That is the way how a state can collect gold and silver-only by selling goods abroad, one can get money (gold) inside. With import of goods, you have to pay out more silver and gold, and you are losing wealth. The main objective is to get more gold and silver, meaning you should export more than you import.
Self Sufficiency is very important in the context of Mercantilism. If a country exports more than imports then it is not dependent on other countries. It will produce what it needs and will not import lots of goods from abroad, so will save gold and silver. As a society, it tries to create a Mercantile store.
Self Sufficiency is very important in the context of Mercantilism. If a country exports more than imports then it is not dependent on other countries. It will produce what it needs and will not import lots of goods from abroad, so will save gold and silver. As a society, it tries to create a Mercantile store.
Mercantile store is a place where you can find everything, from flour, plates, meat, calendar, chocolates to books, tables, furniture.
Mercantilists have a goal: to promote domestic manufacturing, domestic production. If you want to be self-sufficient you need to be able to produce as many products as you can and not to be dependent on other countries. You don’t need to import.
The mercantilists wanted to utilize all the natural resources to the maximum extent so as to produce more, export more and import less. They also attached importance to agriculture in order to solve the food problem. Colonies were developed to supply the required raw materials. Further, the colonies were not allowed to export directly to foreign countries. All the commodities should be exported to the mother country only.
The mercantilists considered commerce and industry as the most important branches of the national economy. They wanted to increase the national productive efficiency by means of regulation of industry and commerce. They believed, that commerce and trade were the most productive occupation and agriculture was the least productive.
Further, as they believed that manufacturing industries were more closely connected with commerce, they must receive all attention from the government. However, it should not be misunderstood that the mercantilists regarded agriculture as insignificant. They thought that agriculture did not contribute directly to the strength of the country.
Economic regulation: If you like to promote domestic manufacture, you have to regulate some things. In an open economy, if some other country produces some products better and cheaper, no matter how patriotic you are, you will be inclined to import and consume them. That is why in Mercantilism there is a need of protectionism, an economic regulation to protect your domestic production.
Protectionism: is when government passes laws to discourage trade. Mercantilist policies discouraged imports, which were seen as threating domestic industries. No Foreign Competition! This way you are encouraging exports and limiting imports. Imports threatens domestic industry. By importing cheaper, people will buy it instead of buying what is offered within a country.
By Laws (protective measures), you want to protect domestic producers from foreign, but also from domestic competition. Domestic competition in key industries was deemed to be destructive to the “team spirit” of mercantilism. In a lot of cases, mercantilists will regulate who can produce something within the country, keeping in mind that this is a command economy. It is not only about regulating foreign trade, but also regulating who is producing, how much it can produce in the country.
Mercantilists believed that commercial regulations were essential for maximizing social welfare. Commercial laws were passed to restrict the import of food materials. But no regulation was applied to the import of raw materials because they were required for the industrial development of the country. The state supported the export industries and shipping which would secure a favorable balance of trade.
The mercantilists regarded the state as the supreme power for controlling the activities of the people. State was the master and its citizens, the servants. The mercantilists believed that state intervention was necessary to solve the problems of the society. They believed that for securing success in wars a strong nation was required.
Nearly, all the mercantilist writers believed that since the total economic resources of the world were limited, the economic policy must be framed in such a manner as to increase the power of the state. As a result they suggested the policy of protection.
The state policies were shaped according to this idea. Special acts were passed to encourage exports and the development of industries. Protection was given to the industries because their main objective was to maintain a favorable balance of trade.
Government incentives (“Hands-on” Approach): In order to promote domestic manufacturing and to control who is producing, how much they are producing, the government will offer incentives in order to create the mercantilist economy. This is so-called “Hands-on” approach, meaning that the Government is putting its hands on economy and is controlling it.
Government incentives types – through them Government controls the production of what is desired. Mercantilists doesn’t support competition, not from outside, neither from inside.
Preferred industries at the time of Mercantilism are:
Luxury goods – French still are known for their luxury products, such as fur, wine, cheese.
Shipping – You need to build ships to export
Armaments – Weapon is better to be build in the country than to import it
French colonies:
Canada - furs
Louisiana - raw materials
St. Dominique – sugar
Colonies is a “must” because one country can not produce everything and with colonies you can expand your production ability.
British empire – Navigation Acts: colonies can not trade to anyone else, but Britain.
That is how self-sufficiency can be maintained.
This is a system of internal trade that replaces a system of external trade. Colonies were expected to trade exclusively with the mother country. Protective tariffs discouraged trade with other nations and their colonies.
Negative side: Corruption
Those closest to the decision-making authorities enjoy privileges that are not available to others. This is an economic non-efficiency and that is why Mercantilism is not much in favor today.
France
Colbertism
French finance minister and mercantilist Jean-Baptiste Colbert served for over 20 years.
Mercantilism arose in France in the early 16th century soon after the monarchy had become the dominant force in French politics. In 1539, an important decree banned the import of woolen goods from Spain and some parts of Flanders. The next year, a number of restrictions were imposed on the export of bullion.
Over the rest of the 16th century, further protectionist measures were introduced. The height of French mercantilism is closely associated with Jean-Baptiste Colbert, finance minister for 22 years in the 17th century, to the extent that French mercantilism is sometimes called Colbertism. Under Colbert, the French government became deeply involved in the economy in order to increase exports. Protectionist policies were enacted that limited imports and favored exports. Industries were organized into guilds and monopolies, and production was regulated by the state through a series of more than one thousand directives outlining how different products should be produced.[28]
To encourage industry, foreign artisans and craftsmen were imported. Colbert also worked to decrease internal barriers to trade, reducing internal tariffs and building an extensive network of roads and canals. Colbert's policies were quite successful, and France's industrial output and the economy grew considerably during this period, as France became the dominant European power. He was less successful in turning France into a major trading power, and Britain and the Dutch Republic remained supreme in this field.
Colbertism was named after Jean-Baptist Colbert, First Minister of State in France between 1661 and 1683. It refers to the number of mercantilist policies implemented during his time in office. He introduced tariffs, encouraged public works programs, and set up the France merchant navy – in the bid to expand exports abroad.
Colbert's central principle was that the wealth and the economy of France should serve the state. Drawing on the ideas of mercantilism, he believed state intervention was needed to secure the largest part of limited resources. To accumulate gold, a country always had to sell more goods abroad than it bought. Colbert sought to build a French economy that sold abroad and bought domestically.
British Navigation Act 1651
In 1651, the British government, led by Oliver Cromwell, introduced a legislation that made it illegal for any foreign ship to carry goods from or to any of its colonies. All trade was to be conducted by a British ship, with a British owner, master, and majority crew.
East India Company
In 1600, the British government created the ‘East India Company’ which was a state-sponsored monopoly looking to take advantage of the Asian markets – particularly the East Indian spice trade. Whilst privately owned, it was granted monopoly powers in the market until the British government revoked these in 1813.
Since the company’s inception and its eventual decline, it paid the government in exchange for sole rights to trade with India. This not only brought gold back to Britain, but also helped establish a strong and permanent trade route between Britain and her colonies.