ABROIL,AÑASCO,ALBERCA,ALIMBOG_MERCANTILISM_BACORE6 (INTERNATIONAL BUSINESS AND TRADE)

Summary

Mercantilism, an economic policy dominant in Europe from the 16th to 18th centuries, focused on accumulating wealth through a favorable balance of trade. Nations aimed to export more than they imported, often using colonies to supply raw materials while restricting imports. Influenced by thinkers like Thomas Mun and Jean Baptiste Colbert, mercantilism sought to strengthen national economies by controlling trade and increasing gold and silver reserves. It led to industrial growth, the decline of feudalism, and the rise of capitalism, while fostering protectionism and colonial exploitation, especially seen in the British East India Company’s monopoly.

Takeaways

• 😀 Mercantilism was an economic policy that dominated Europe from the 16th to 18th centuries, focusing on accumulating wealth, especially gold and silver, through a favorable balance of trade.
• 😀 Countries practicing mercantilism aimed to maximize exports and minimize imports by controlling trade and establishing colonies.
• 😀 The rise of mercantilism was linked to the decline of feudalism and the rise of capitalism, where trade became the central economic activity.
• 😀 Key thinkers like Thomas Mun and Jean-Baptiste Colbert influenced mercantilist policies by emphasizing export-led growth and the importance of controlling industries and trade.
• 😀 Thomas Mun's 1630 work promoted the idea that countries should export more than they import to increase wealth, especially in gold and silver.
• 😀 Jean-Baptiste Colbert, finance minister of France, applied mercantilist principles by strengthening industries, imposing tariffs on imports, and expanding colonial trade to make France economically powerful.
• 😀 Mercantilism was based on the belief that wealth in the world was finite, so one country’s gain often meant another’s loss.
• 😀 A key mercantilist principle was that countries should accumulate precious metals like gold and silver to measure national wealth.
• 😀 The mercantilist system favored exports over imports, seeking to maintain wealth within the nation and limit economic leakage through imports.
• 😀 Mercantilism also emphasized the importance of a large population to provide workers and soldiers, increasing a nation's production capacity and self-sufficiency.
• 😀 The British East India Company is a prime example of mercantilism, as it was granted a monopoly on trade with India and other Asian countries, helping Britain accumulate wealth and power.

Q & A

What was the primary focus of mercantilism?

Mercantilism was focused on accumulating wealth, particularly gold and silver, by maintaining a favorable balance of trade. This meant maximizing exports and minimizing imports.

How did England apply mercantilism in its colonies?

England used mercantilist policies to control its American colonies, requiring them to export raw materials like tobacco and cotton to England while importing only English-manufactured goods. This kept wealth within the empire, benefiting England at the expense of the colonies.

What role did the decline of feudalism play in the rise of mercantilism?

The decline of feudalism, due to the growth of trade and urban centers, led to the rise of capitalism, where individuals and businesses controlled trade for profit. This shift created a need for nations to regulate economic activities, giving rise to mercantilism.

Who were two major thinkers that influenced mercantilist policies?

Thomas Mun (1630) and Jean-Baptiste Colbert (1661) were two key thinkers who influenced mercantilist policies. Mun emphasized the importance of exports to accumulate wealth, while Colbert applied mercantilist principles in France.

What is the basic principle behind the idea that 'the amount of wealth in the world is fixed' in mercantilism?

Mercantilists believed that wealth was finite, so if one country gained wealth, another country would lose it. This zero-sum perspective led to a focus on controlling trade and resources.

Why did mercantilists believe that the amount of gold and silver in a country indicated its wealth?

Mercantilists believed that gold and silver were the true forms of money. A country’s wealth was measured by the amount of these precious metals it had, as they were seen as a direct indicator of prosperity.

What is the significance of exporting more than importing in mercantilism?

Mercantilism promoted exporting more goods than importing in order to retain gold and silver within the country. This practice was aimed at ensuring the nation's wealth stayed within its borders rather than flowing out to other countries.

How did mercantilism view population growth?

Mercantilism valued a large population because it was believed that more people meant more workers, soldiers, and potential producers of goods, which made the country stronger and less reliant on others.

What was the role of the leader in a mercantilist economy?

In a mercantilist economy, the leader (such as a king or state ruler) was seen as crucial in directing the country’s economy. They were expected to create policies that promoted national wealth and protected the country's economic interests.

How did the British East India Company illustrate mercantilism in action?

The British East India Company was a prime example of mercantilism as it had a monopoly on trade between Britain and Asia. It was used by the British government to control trade and accumulate wealth and power through trade with colonies.