Mercantilist Period

Definition

The Mercantilist Period refers to the era from the 16th to the 18th century when European powers pursued economic policies aimed at maximizing exports and minimizing imports to accumulate wealth, particularly in gold and silver. This period emphasized state intervention in the economy, with governments actively regulating trade, establishing colonies, and enacting tariffs to strengthen national economies.

5 Must Know Facts For Your Next Test

1. Mercantilism became dominant in Europe as nations sought to enhance their power through economic means, leading to competition for resources and markets.
2. Governments played a crucial role during the Mercantilist Period by imposing tariffs and quotas, establishing monopolies, and promoting domestic industries.
3. The rise of colonial empires was a significant feature of this period, as European nations established colonies to exploit resources and create new markets.
4. Mercantilist policies often led to conflicts and wars over trade routes and colonies, significantly impacting international relations.
5. This economic system began to decline in the late 18th century as ideas of free trade emerged, culminating in a shift towards capitalism and market economies.

Review Questions

• How did mercantilism shape the economic policies of European nations during its period?
  • Mercantilism shaped the economic policies of European nations by encouraging them to prioritize self-sufficiency and wealth accumulation through strict trade regulations. Countries sought to maximize exports while minimizing imports to maintain a favorable trade balance, which was believed to enhance national power. State intervention was key; governments implemented tariffs, established monopolies, and encouraged the establishment of colonies to secure resources and markets for their goods.
• Discuss the role of colonialism within the framework of mercantilist policies during this period.
  • Colonialism played a critical role in the framework of mercantilist policies as European powers expanded their empires to access valuable resources and establish new markets for their manufactured goods. Colonies served as both suppliers of raw materials needed in European industries and as markets for finished products. This relationship allowed colonial powers to enforce trade restrictions, ensuring that wealth flowed back to the mother country while limiting economic competition from other nations or local producers.
• Evaluate the long-term effects of mercantilism on modern economic systems and international trade practices.
  • The long-term effects of mercantilism on modern economic systems can be seen in the initial development of state-controlled economies that prioritized national interests over individual enterprise. While mercantilist practices laid the groundwork for later economic theories, they also contributed to persistent rivalries and conflicts among nations. As ideas shifted towards capitalism and free trade in the late 18th century, many principles established during the Mercantilist Period were re-evaluated, leading to more open markets and international cooperation in trade practices today.

Related terms

Colonialism: The practice of acquiring and maintaining colonies, which served as sources of raw materials and markets for manufactured goods during the Mercantilist Period.

Bullionism: An economic theory that valued national wealth based on the amount of precious metals a country possessed, driving policies that focused on accumulating gold and silver.

Trade Balance: The difference between a country's exports and imports, which mercantilist policies sought to keep favorable by encouraging more exports than imports.