Submitted by

SAN LUIS, Ma. Tereza G.

BSA 1st YEAR
 Mercantilism is an economic policy that is
designed to maximize the exports and
minimize the imports for an economy. It
promotes imperialism and tariffs and
subsidies on traded goods to achieve that
goal. It is an economic theory that
advocates government regulation of
international trade to generate wealth
and strengthen national power. Merchants and the government work together
to reduce the trade deficit and create a surplus.
The underlying principles of mercantilism included:
1. The belief that the amount of wealth in the world was relatively static;
2. The belief that a country's wealth could best be judged by the amount of
precious metals or bullion it possessed;
3. The need to encourage exports over imports as a means for obtaining a
favorable balance of foreign trade that would yield such metals;
4. The value of a large population as a key to self-sufficiency and state power;
and
5. The belief that the crown or state should exercise a dominant role in
assisting and directing the national and international economies to these ends.
As such, mercantilism developed logically from the changes inherent in the
decline of feudalism, the rise of strong national states, and the development of
a world market economy.
 Economic nationalism, also
called economic patriotism and
economic populism, is an
ideology that favors state
interventionism over other
market mechanisms, with
policies such as domestic
control of the economy, labor, and capital formation, even if this requires the
imposition of tariffs and other restrictions on the movement of labor, goods and
capital.
To compensate for less trade, economic nationalism advocates increased
fiscal policies to help businesses. This includes increased government spending on
infrastructure and tax cuts for businesses. Economic nationalism opposes
immigration, arguing that it takes jobs away from domestic workers.
Nationalism is the foundation of modern society and social solidarity; it is
also used by politicians to promote national unity and patriotism. The Treaty of
Westphalia in 1648 established the nation-state, membership of which became
the identity that is the basis of modern society.
Economic nationalism tends to emphasize industrialization (and often aids
industries with state support), due to beliefs that industry has positive spillover
effects on the rest of the economy, enhances the self-sufficiency and political
autonomy of the country, and is a crucial aspect in building military power.
 The linear stages of growth model are an economic
model which is heavily inspired by the Marshall Plan
which was used to revitalize Europe's economy after
World War II. It assumes that economic growth can
only be achieved by industrialization.
According to the linear stages of growth model, a
correctly designed massive injection of capital coupled
with intervention by the public sector would ultimately
Walt W. Rostow
lead to industrialization and economic development of
a developing nation.
Walt W. Rostow identified five stages through which developing countries had to
pass to reach an advanced economy status:
(1) Traditional society
(2) Preconditions for take-off
(3) Take-off
(4) Drive to maturity
(5) Age of high mass consumption.
He argued that economic development could be led by certain strong sectors;
this is in contrast to for instance Marxism which states that sectors should
develop equally.
Rostow's stages from their 1st publication were considered a gross over
simplification for those of us researchers with considerable field experience in
the so called "developing" countries and large regions.
 The structural change theory
focuses on the mechanism by
which underdeveloped
economies transform their
domestic economic structures
from a heavy emphasis on
traditional subsistence
agriculture to a more modern,
more urbanized and more industrially diverse manufacturing and service
economy.
Structural change refers to the transformation in the structure of a society.
This type of change includes changes in the structure of social institutions or
the rules by which they are run. Structural changes are thus long term and
permanent changes. For example, globalization is a structural change.
Structural change refers to dramatic shift in the way a country, industry, or
market operates, usually brought on by major economic developments. The key
to effect structural change is the dynamism that is inherent in that system. For
example, a subsistence economy may be transformed into a manufacturing
economy, or a regulated mixed economy may be liberalized.