Mercantilist Policies

Definition

Mercantilist policies were economic theories and practices that emphasized the importance of accumulating wealth, primarily gold and silver, through a favorable balance of trade. These policies shaped colonial expansion, with European powers seeking to control resources and trade routes to enhance national power and wealth, influencing European colonization efforts, the structure of transatlantic trade, and international relations.

5 Must Know Facts For Your Next Test

1. Mercantilism was prevalent from the 16th to the 18th centuries, guiding European nations in their economic policies and colonial ambitions.
2. Under mercantilist policies, colonies were seen as sources of raw materials for the mother country, leading to exploitation of natural resources in colonized regions.
3. Countries adopted protective tariffs and restrictions on colonial trade with other nations to maintain their economic dominance and secure their markets.
4. The competition for colonies fueled conflicts between European powers, as nations sought to expand their empires and gain access to valuable resources.
5. Mercantilist policies contributed to the development of trade monopolies, as countries aimed to control entire supply chains from production to distribution.

Review Questions

• How did mercantilist policies influence European colonization during the 16th to 18th centuries?
  • Mercantilist policies heavily influenced European colonization by encouraging nations to establish colonies that could provide raw materials for their economies. Countries like England, France, and Spain sought new territories not just for land but primarily for resources that would bolster their wealth through trade. This led to a race among European powers to claim and exploit territories across the Americas, Africa, and Asia.
• In what ways did mercantilism contribute to the structure of transatlantic trade during its height?
  • Mercantilism shaped transatlantic trade by prioritizing the export of goods from colonies to Europe while restricting imports. This resulted in a triangular trade system where raw materials were sent from the colonies to Europe, manufactured goods were shipped back to the colonies, and enslaved people were transported from Africa. The need for a favorable balance of trade drove these economic activities, significantly impacting both European economies and the lives of those involved in these trades.
• Evaluate the long-term impacts of mercantilist policies on modern economic systems and international relations.
  • The long-term impacts of mercantilist policies can be seen in modern economic systems that emphasize trade balance and protectionism. These historical practices laid the groundwork for contemporary debates about free trade versus protectionist measures. Moreover, mercantilism has influenced international relations by fostering competition among nations over resources and markets, which can lead to conflicts similar to those experienced during colonial expansion. Understanding these roots helps contextualize current global economic dynamics.

Related terms

Colonialism:

The practice of acquiring and maintaining colonies to exploit resources and establish control over foreign territories.

Balance of Trade: The difference in value between a country's imports and exports, with mercantilist policies promoting exports over imports to achieve a surplus.

Navigation Acts:

A series of laws enacted by England to regulate colonial trade and ensure that commerce benefited the mother country.