Definition of Mercantilism: The Purpose and Its Perspective
Mercantilism is an economic system that is centered on the belief that the government can make a nation more prosperous by regulating trade and using tariffs and other measures to protect the export balance of imports.
Understanding Mercantilism and Its Purpose
When the government has set trade rules and imposed tariffs to ensure that there is an appropriate balance between exports and imports, this government method is an example of mercantilism.
Definition of International Trade
International trade is trade carried out by residents of a country with residents of other countries on the basis of mutual agreement. The intended population may be between individuals, between individuals and the government of a country or the government of a country and the government of another country. In many countries, international trade is one of the main factors for increasing GDP.
Theory of International Trade Mercantilism
Mercantilism is the dominant economic practice and theory in Europe from the 16th to the 18th century which was promoted through the economic regulations of a country's government for the purpose of increasing state power at the expense of rival forces, this is a partner of the economic politics of absolutism or absolute monarchy.
The aim of mercantilism
Mercantilism is a national economic policy aimed at gathering monetary reserves through a positive trade balance, especially finished goods, which historically has often led to war and was also motivated to carry out colonial expansion.
Mercantile Views on International Trade
"That the only way for a country to be rich and strong is to do as much as possible of exports and as little as possible of imports." The export surplus then formed in the flow of gold bullion or precious metals, especially gold and silver.
In each country it cannot simultaneously produce export surpluses either because the amount of gold and silver is fixed at a certain time, so a country can only benefit at the expense of other countries. Therefore, the Mercantilists widely spread economic nationalism and believed that a conflict of national interests would arise.
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