Case Study

Read Case Study “Mercantilism: Older that Smith – and Alive Today” on page 35 of the textbook. Where is mercantilism found today? 

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(2012). International economics. (Vol. 1, p. 47). The McGraw-Hills Companies.

In-text citation

(International economics, 2012)

lnternational E s, i 5th
Edition 47

Chapier J \\’irr ELr t rir”h

benefits fcr clomestic 0ducei’ ir’lterests
(in irotli

was the PirilosoPhY tha,t.n.11::

L-uropean thinking allout internationa!
trade rn

in-“i*-tt, ,*ntoii*’ br:{r:re Ariam 5mith
p’ub-

il-.,i i’; wedlth of tlatit:ns irr 1776′ lrlcrcantilists
,l**l it.it-tnational irade a5 a sour(e of major
o-“-litt tc a naliorr’ Merctrants enqacef.

in

i*o-, especially tho:* selilrrg exports’ were
Onod* f,*na* tire n:lme nercantilism’

But m*r-

I”ntiriu,t also maintairrec that government
regu-

lation af trade !’v’*s ne(eisary tcl
provide the

i.rn-tt t;;ti”-ii r:enefirs’ Trade nierchants
wculd

s*lve ‘rheir cwil intere$ts aniJ r]ot
ihe natiorral

intere!r. in ihe abse nc* of goverirnrent
guidance’

“‘”i”.*”rr..i
b*lief oi rnertantilisnr was .that

nationat u,’eli-being, or wealth was based
on

;-;;;;,;’ nalJing’ ii soid and silver (specie
or

n.liii-t’i’ eiverr this ‘iiew ot netionai wealth’
;;o;,;; *;t- vie’r”-erj as goorJ anc imqorllj.*lt*o’
tui i”*”0 nraterials rtot produced at homej^were

,i*r, n. b;d’ li a tountrv seils.(exFlortsl,,ntoi*
to

{nrpinrr l)ir’/crs than llir-‘ foreigners seli tc the
‘ u’ L Y r

; inr$orts)’ then lhe for eigtt-c0untry {li-re counirY’l
uir-[ro.’to pay fr:r the exeess at their

purchases

iro ,n’pping’goid anll cilver to the
cauntry’ The

o’.’,r”i-r-tf”ii ancJ siiver increases
ihe country’s

,”n;eil-being, atccrdirir; lo the m€rcarrtilist belief’

;;;;”;t; ai* undesir;rhle betause they recluce
the

country’s ability to ‘ti{umLliate
these precir:us

rrletal-c’ 1;llpolts were also feareci
because they

,.r,inn”‘.l”, it- :rvailart:ie to the r:ountry
in time o{

;r;1. i,,
l*ciciitlon, golc errd silver accruing to tlt{“-

,,ntio,.rui ru!erl cor’t!cl be especiall;’
vair’rahle in

;;ip;;t; to maintain a large rr:iiitary for
the coun-

try. Baseel on mereantillsi tninfing’
governments

(1) irrrpcseri arr alr*! af taxes and pi”ohibitions

;;;;”;; ta lirnil irnports anri {2) subsidi;zed
ar’d

t,nccur.r qeci expoi’l5

Because cf iis peculiar emphasis or’:
gold

unJ ruu*r’ n:ercantiiisri viewecJ trade
as a zero’

sr-.irTl aeiiviiy*one cOuntry’s gains
come at r’he

expeilse of -some other crfuniri*s’
since a surpius

in irrlerrr*tional trade fr:r one ccuntry
inu-qt Lre a

,l*ticii for so;r:e other(s)’ The focus
iln t)rorrlcting

*”p-tqt”C limitinq imnorts aiso provided
rnajcr

ex.Porting and imPort-

.Adanr 5rnith *rr
nainted out that t
n’1ore exports and
priorities u Siside dorn’i

that ref ute merranlii

National wetl-h’ein
co!1sume Proeluits
leisure and a ciea

the future’ lmPor”t

incr:me tr: kluY P
are not desirable

positive -sum

ln addition’ even
ancl silver can be

tion exPands the

ompeti nq I nfl Lr51-ries)’
econ0misrs a{ter him
mercdntiiist5′ PLtsi’ {oi

r imParts turns social
, l’}ere are th* key Points
t thinkinil:

is bare’J cn the abitity ta

and otlier “qoods” such as

e!’rv-ilofirnent) now arrd in

arc Parl of tne exPantlirrg

nalianal ProdLrctlon and

dire ct: TheY Provide tht
uttt to {onsume’ !;xPorts
fheir own; i”{ttheI; exports

f-c,lefeating if ihi: acqut:t”
rnestit. t”nr:rre! SuPPlY 31ql

.rv. it ricw riaq a tirarp {or tts

:jmercaniilists believe ihat-

se they ci’eate jci:s in the

bad berauEe iheY take
jshs

qive thern to foreigners’ i”le o”

e to dePict trade as a zero’
ri0 riliogttttit-rll tllal tl d(lr’ ‘”.rl
ntr ies (including nrurtua\ g’tttts

o:p*rity ris*s iirrou13hor’lt tl’:e

ininr.ing, though misguided’

ions cf lnternational trade
in

r’)atioilal LonSurnP that
a rlaticrl see ks, nt:t

an evil ta i:e suP

lhe imPortafi(e
exports is onlV

are useful becau theY PaY
f rrt imPurts’

* Trade f reeiY trar teri be tween coLrtitr
ie: gett-

eraliY leads to gat s for
ali countries*trade is a

ty.

goal o i acquir ing gr:ld

argument f irst exP

before Smith diri ht

leads t0 clome:tic in lation of Prorluct Prices*-an
ded bY David llume even

Although the P
wriiing.
nositic.ns of the mercantilists

irave been rafuteci’ rd countrie:
nr: lorrger focus

r:n piiing ‘-lP gold
ci silver, tnercantiiist thirrkinq

is ver’,; milch alive t

orr etnPloYment’
exports are good

cot,ntry. lrfiPorts ar

front tlre ccuntry ail

rnercantilists contt

surn artivi iY.
“1’here

bring gajns to all
in emPl0yneni as

world). Metcantiiis
still Pervades disc

c()untries all over t world