Question

Compare and contrast mercantilism past and modern day

Answer 1

Mercantilism was an economic system of trade that spanned from the 16th century to the 18th century. Mercantilism is based on the principle that the world's wealth was static, and consequently, many European nations attempted to accumulate the largest possible share of that wealth by maximizing their exports and by limiting their imports via tariffs.

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In the modern world, mercantilism is sometimes associated with policies, such as:

• Undervaluation of currency. e.g. government buying foreign currency assets to keep the exchange rate undervalued and make exports more competitive. A criticism often levelled at China.
• Government subsidy of an industry for unfair advantage. Again China has been accused of offering state-supported subsidies for industry, leading to oversupply of industries such as steel – meaning other countries struggle to compete.
• A surge of protectionist sentiment, e.g. US tariffs on Chinese imports, and US policies to ‘Buy American.’
• Copyright theft