Answer:
Mercantilism was an economic theory and practice that dominated European economic thought and policies during the Age of Discovery, roughly from the 16th to the 18th centuries. It advocated for state intervention in the economy to increase a nation's wealth and power, primarily through the accumulation of precious metals like gold and silver.
Key principles of mercantilism include:
Export Promotion and Import Restriction: Mercantilist policies aimed to maximize exports and minimize imports. Nations sought to achieve a trade surplus, exporting more goods than they imported, to accumulate precious metals. This was believed to increase a nation's wealth.
Colonialism and Colonization: European powers pursued colonial expansion to secure sources of raw materials and markets for their manufactured goods. Colonies were seen as essential for providing valuable resources and as captive markets for finished products.
Protectionism: Mercantilist policies often involved protectionist measures such as tariffs, subsidies, and trade barriers to protect domestic industries from foreign competition. These measures aimed to ensure that domestic production thrived and that wealth remained within the nation.
Navigation Acts and Trade Monopolies: European nations implemented laws like the Navigation Acts to control colonial trade and ensure that colonial goods were transported only on ships owned by the colonial power. This provided a captive market for the home country's merchants and shipping industries.
Mercantilist Balance of Trade: Mercantilists believed in the importance of maintaining a positive balance of trade, meaning that a nation's exports should exceed its imports. This was thought to increase the nation's stock of precious metals and thus its wealth and power.
Colonial Exploitation: Colonies were often exploited for their resources, labor, and markets to benefit the mother country. This led to practices such as forced labor, monopolistic trade arrangements, and extraction economies in colonies.
Mercantilism profoundly influenced European colonial policies during the Age of Discovery by shaping the motivations behind exploration, colonization, and trade practices. European powers competed fiercely for colonies and trade dominance, leading to the establishment of vast colonial empires across the globe. These colonies served as sources of valuable resources, markets for manufactured goods, and outlets for surplus population. The economic exploitation of colonies under mercantilist policies fueled European wealth and power, laying the groundwork for the economic systems and global trade networks that would follow.
