Mercantilism◆ A system of government policies and institutions aimed at increasing exports and decreasing imports.
Such policies and institutions including taxes on imported goods , bans on the importation of other goods and special law and taxes designed to favor certain industries at the expense of others.
The Mercantilism’s main points of views on trade
The Mercantilists maintained that the way for a nation to become rich and powerful was to export more than it imported. The government should do all in its power to stimulate the nation’s exports and discourage and restrict imports, especially the import of luxury consumption goods
The Mercantilists preached economic nationalism , believing as they did that national interests were basically in conflict.
They considered that a nation’s gains from trade were only at the expense of other nations, trade was a Zero-Sum game
The Mercantilists deemed that the wealth of a nation is only measured by the stock of precious metals it possessed , particularly by the stock of gold and silver.
The law of Absolute Advantage
Absolute Advantage refers to a country’s ability to provide a kind of good or service using fewer inputs than anywhere else in the world. For instance