International Business and Trade

Module 3

Mercantilism

Mercantilism is a nationalist economic policy that is designed to maximize the exports and
minimize the imports for an economy. In other words, it seeks to maximize the accumulation of
resources within the country and use those resources for one-sided trade.

What is mercantilism in simple terms?

Mercantilism is an economic practice by which governments used their economies to augment

state power at the expense of other countries. Governments sought to ensure that exports
exceeded imports and to accumulate wealth in the form of bullion (mostly gold and silver).Oct
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History of Mercantilism
First seen in Europe during the 1500s, mercantilism was based on the idea that a nation's
wealth and power were best served by increasing exports and limiting imports.
Mercantilism replaced the feudal economic system in Western Europe. At the time, England
was the epicenter of the British Empire but had relatively few natural resources.
To grow its wealth, England introduced fiscal policies that discouraged colonists from buying
foreign products and created incentives to buy only British goods. For example, the Sugar Act
of 1764 raised duties on foreign refined sugar and molasses imported by the colonies. This
increased taxation was meant to give British sugar growers in the West Indies a monopoly on
the colonial market.