political polarization

1. BS Political Science
8th semester
Subject: International Political Economy
Department of Political Science and
International Relations
GCWUF
Khadija Shahbaz
khadijashahbaz@gcwuf.edu.pk
and International Relations

2. Mercantilism

3. Mercantilism Definition
Mercantilism refers to an economic policy or trade system wherein a country
focuses on maintaining a favorable trade balance by maximizing exports and
minimizing imports with other countries. Its purpose is to empower a nation via
wealth and resource acquisition while improving its military and political might.
Many European nations, including Great Britain and France, were among the firsts
to adopt the practice between the 16th and 18th centuries. Under the mercantilism
policy, a mother country established colonies in other nations to import cheaper
raw materials and export finished products back to them in exchange for gold and
silver. In addition to regulating international trade, these countries impose tariffs,
reduced trade deficits, offered subsidies, formed monopolies, and created trade
surpluses to expand their precious metals reserves.

4. How Mercantilism Works?

5. History of Mercantilism
This economic system of international commerce existed from the 16th century to the
18th century. At that time, gold and silver holdings were the measures of a nation’s
wealth. It was the era of the emergence and dominance of nation-states (self-governing
countries) and the end of feudalism in Europe. The focus of mercantilism theory was to
develop the European economy based on trade.
The concept was introduced in the era of industrialization and capitalism and heavily
relied on colonialism. This economic arrangement also acted as economic
protectionism as the national government intervened in trade policy creation to protect
domestic industries from foreign competitors. The accumulated wealth helped build the
national infrastructure, especially business and military. It thus made the mother nation
self-sufficient in every aspect.

6. Features of Mercantilism
•Maximizes exports to collect precious metals such as silver and gold
•Advocates trade policies that protect domestic industries
•Imposes tariffs on imports
•Prohibits the emigration of skilled labor, capital, as well as tools
•Use the military to ensure the protection of local markets as well as supply sources
•Availability of a strong merchant fleet in order to provide additional markets with
raw materials and goods

7. What is Capitalism?
Capitalism is an economic system in which individuals
and businesses own the factors of
production. Entrepreneurship, natural resources,
capital goods and labor are the factors of production in
capitalism. In a capitalist society, the production of
goods and services depends on supply and demand in
the general market. Furthermore, private property,
competitive markets, capital accumulation, wage labor,
a price system, and voluntary exchange are some of the
main characteristics of capitalism.

8. Mercantilism vs Capitalism

9. Neomercantilism
Neomercantilism (also spelt as neo-mercantilism) is a policy regime that encourages
exports, discourages imports, controls capital movement, and centralizes currency
decisions in the hands of a central government.
Neomercantilism is considered the oldest school of thought in international political
economy (IPE).
It is rooted in mercantilism, a preindustrial doctrine, and gained ground during the
Industrial Revolution.
It is also considered the IPE counterpart of realism in the sense that both hold that
power is central in global relations.
This regime is also associated with corporatocracy particularly during the 1970s when
both were treated as components of a functional system and policy goals.
In the United States, neomercantilism was embraced in the late 20th century amidst the
move to buttress American industries from Japanese competition.

10. Key Points (Mercantilism)
•Mercantilism was the dominant economic system from the 16th century
to the 18th century.
•Mercantilism was based on the idea that a nation's wealth and power were
best served by increasing exports and reducing imports.
•It's characterized by the belief that global wealth was static and that a
nation's economic health relied heavily on its supply of capital.
•Due to the nationalistic nature of mercantilism, nations frequently used
military might to protect local markets and supply sources.
•Mercantilism was replaced by free-trade economic theory in the mid-18th
century.