Mercantilism – Definition, Characteristics, and Examples
Definition of Mercantilism
Mercantilism is an economic form that regulates international trade to increase exports to surpass imports. The focus of this concept is to reduce the trade deficit and increase the trade surplus.
The mercantilist Government strengthens the private owners to increase production. This concept believes that global wealth is static and the nation’s economic health relies on the global export of capital, rather than depending on imports. This concept increases the prosperity and power of a nation through regulative trade practices.
From the 16th to the 18th century, numerous European nations accumulated the most considerable wealth stake by maximizing their exports and restricting their imports via tax regulations.
Characteristics of Mercantilism
Following are the characteristics of mercantilism,
1. Regulate the Trading (Imports & Exports)
Governments follow the Mercantilism concept targets to regulate trading through implementing various policies and tax structures. This is to ensure a healthy trade surplus.
2. Utilize Natural Resources Optimum to Increase Production
Nations follow the Mercantilism concept increases production to improve their exports and also utilize the natural resources in a more optimum manner.
3. Believes the Global Wealth is Static
This concept believes that global wealth is static. Hence, Mercantilists believes that they the sought prosperity and power needed to secure as much wealth as possible through increasing the production exports and decreasing imports.
4. Trade Surplus is the Best
The mercantilism concept focuses on increasing exports and decreasing imports. This will result in a trade surplus and the concept believes that is the best economic aspect.
Examples of Mercantilism
Mercantilism’s concept of an economic system was available in European nations between the 16th to 18th centuries. The countries focused on increasing exports more than what they imported. Holland, France, Spain, and England were some countries involved in this.