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.


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BREAKING DOWN '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.

  1. Laissez Faire

    An economic theory from the 18th century that is strongly opposed ...
  2. Import

    A good or service brought into one country from another. Along ...
  3. Export

    A function of international trade whereby goods produced in one ...
  4. Economics

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

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

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

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