Mercantilism

AAA

DEFINITION of 'Mercantilism'

The main economic system used during the sixteenth to eighteenth centuries. The main goal was to increase a nation's wealth by imposing government regulation concerning all of the nation's commercial interests. It was believed that national strength could be maximized by limiting imports via tariffs and maximizing exports.

INVESTOPEDIA EXPLAINS 'Mercantilism'

This approach assumes the wealth of a nation depends primarily on the possession of precious metals such as gold and silver. This type of system cannot be maintained forever, because the global economy would become stagnant if every country wanted to export and no one wanted to import. After a period of time, many people began to revolt against the idea of mercantilism and stressed the need for free trade. The continued pressure resulted in the implementation of laissez faire economics in the nineteenth century.

VIDEO

Loading the player...
RELATED TERMS
  1. Economics

    A social science that studies how individuals, governments, firms ...
  2. Free Market

    A market economy based on supply and demand with little or no ...
  3. Gold Standard

    A monetary system in which a country's government allows its ...
  4. Import

    A good or service brought into one country from another. Along ...
  5. Laissez Faire

    An economic theory from the 18th century that is strongly opposed ...
  6. Export

    A function of international trade whereby goods produced in one ...
RELATED FAQS
  1. What are the advantages of free trade over mercantilism?

    Free trade provides advantages over mercantilism for individuals, businesses and nations. A key advantage of free trade for ... Read Full Answer >>
  2. How does mercantilism impede global economic growth?

    Mercantilism impedes global economic growth by leading producers to specialize in goods and services that do not take account ... Read Full Answer >>
  3. How did mercantilism contribute to the American Revolution?

    During the 17th and 18th centuries, mercantilism was a common economic system and philosophy. Economic and legal restrictions ... Read Full Answer >>
  4. How did corporations act under mercantilism?

    The term "mercantilism" applied to both a type of economic system and a period in the history of the political economy. Between ... Read Full Answer >>
  5. What happens when a country focuses exclusively on its competitive advantage?

    A country that focuses exclusively on its apparent competitive advantages without keeping in mind opportunity costs or market ... Read Full Answer >>
  6. What is the candle maker's petition?

    The "Candle Maker's Petition" is a satire of protectionist tariffs written the by great French economist, Frederic Bastiat. ... Read Full Answer >>
Related Articles
  1. Economics

    What's Mercantilism?

    Mercantilism was the main economic theory in the 16th to 18th century.
  2. Fundamental Analysis

    How Influential Economists Changed Our History

    Find out how these five groundbreaking thinkers laid our financial foundations.
  3. Entrepreneurship

    Adam Smith And "The Wealth Of Nations"

    Adam Smith's 1776 classic may have had the largest global impact on economic thought.
  4. Personal Finance

    What Is International Trade?

    Everyone's talking about globalization, so we explain what is it and why some oppose it.
  5. Taxes

    Tablets To 1040s: How Taxes Began

    Ever dream of a world without tax? It existed - 3,000 years ago.
  6. Economics

    The History Of Economic Thought

    Economics is a vital part of every day life. Discover the major players who shaped its development.
  7. Personal Finance

    The History Of Capitalism: From Feudalism To Wall Street

    Find out how the economic system we now use was created.
  8. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  9. Economics

    What Is The World Trade Organization?

    The WTO sets the global rules of trade. But what exactly does it do and why do so many oppose it?
  10. Economics

    What is a Resident Alien?

    A resident alien is a foreigner who is a permanent resident of the country in which he or she resides but does not have citizenship.

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!