Mercantilism

Written By latifah gurape on Monday, December 24, 2012 | 8:23 AM

Mercantilism is an economic theory which states that only the well-being of a country is determined by the amount of assets or capital held by the country concerned, and that the magnitude of the global trade volume is extremely important. Economic assets or capital of the state can be described by the number of real capital (precious minerals, especially gold and other commodities) are owned by the state and the amount of capital can be enlarged by increasing exports and prevent (as far as possible) so that the import trade balance with other countries will always be positive .

Mercantilism teaches that the government of a country must achieve this goal by protecting its economy, by encouraging exports (with lots of incentives) and reduced import (usually by the application of the tariff). Economic policies that work with such a mechanism is called the system of mercantilism.

The doctrine of mercantilism dominant once taught in all schools Europe in the early modern period (from the 16th century until the 18th, the era in which the state of consciousness has begun to emerge). This event is triggered, for the first time, the intervention of the state in regulating the economy that ultimately this age anyway nascent capitalist system.

The need for a market that is taught by the theory of mercantilism ultimately led to many wars among the countries of Europe and eventually started the era of European imperialism. The economic system of mercantilism began to disappear at the end of the 18th century, along with the emergence of new economic theory proposed by Adam Smith in The Wealth of Nations, when the new economic system adopted by the UK, which is actually the time was the largest industry in the world.
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