International Trade and Mercantilism
Definition Mercantilism was the prevailing thought, in terms of international trade theory, during the Pre-industrial Revolution period. Mercantilism is an economic theory that holds that the prosperity of a nation is dependent upon its supply of capital, and that the global volume of international trade is “unchangeable.” Economic assets or capital, are represented by bullion (gold, silver and trade value) held by the state, which is best increased through a positive balance of trade with other nations (exports minus imports). Mercantilism suggests that the ruling government should advance these goals by playing a protectionist role in the economy; by encouraging exports and discouraging imports, notably through the use of tariffs and subsides. (Docstoc.com. Mercantilism) Mercantilism allowed the development of the notion that the principal source of wealth was global trade, thus shifting European political power from feudal lords and the church to national sovereigns. Mercantilism, as a national economic policy, collapsed because nations cannot export without another nation’s willingness to import. (Satterlee, 2009)
Summary
In the article Solutions to Slow Growth: Develop Domestics Petroleum and Address Chinese Mercantilism, the Commerce Department reported the May deficit on international trade in goods and services increased to $50.2 billion, up from $43.6 billion when the economy recovery began. The trade deficit, along with the credit and housing bubbles, were the principles causes of the Great Recession. A rising trade deficit again threatens to sink the recovery and push unemployment above 10 percent.
Most fundamentally, U.S. economic growth and jobs creation has slowed, because the demand for U.S. made goods and services is expanding too slowly. Supplying what Americans and global consumers buy is not the issue, but rather U.S. and export customers do not want enough of what Americans make. America needs to play its strength in
Summary
In the article Solutions to Slow Growth: Develop Domestics Petroleum and Address Chinese Mercantilism, the Commerce Department reported the May deficit on international trade in goods and services increased to $50.2 billion, up from $43.6 billion when the economy recovery began. The trade deficit, along with the credit and housing bubbles, were the principles causes of the Great Recession. A rising trade deficit again threatens to sink the recovery and push unemployment above 10 percent.
Most fundamentally, U.S. economic growth and jobs creation has slowed, because the demand for U.S. made goods and services is expanding too slowly. Supplying what Americans and global consumers buy is not the issue, but rather U.S. and export customers do not want enough of what Americans make. America needs to play its strength in
References: Austin. (2012, 01 26). TheEconomist.com. Retrieved 07 12, 2012, from TheEconomist.com: http://www.economist.com/blogs/democracyinamerica/2012/01/barack-obama-and-trade This article is discussing how Barack Obama is a mercantilist Docstoc.com. (n.d.). Retrieved 07 12, 2012, from Docstoc.com: http://www.docstoc.com/docs/110829722/Mercantilism---Economics-Theory This article defines in detail the definition of mercantilism. Fox Business.com. (n.d.). Retrieved 07 12, 2012, from Fox Business: http://www.foxbusiness.com/markets/2011/07/12/solutions-to-slow-growth-develop-domestic-petroleum-and-address-chinese/ U.S Investopedia.com. (n.d.). Retrieved 07 12, 2012, from Investopedia.com: http://www.investopedia.com/terms/m/mercantilism.asp#axzz20RSwPVIm This encyclopedia defines and explains mercantilism. Library of Economics and Liberty.com. (n.d.). Retrieved 07 12, 2012, from Library of Economics and Liberty.com: http://www.econlib.org/library/Enc/Mercantilism.html This article defines and discusses mercantilism in an economical perspective. Satterlee, B. (2009). Cross Boarder Commerce. Roanoke, VA: Synergistics Inc. yahoo.com. (n.d.). Retrieved 07 12, 2012, from YahooAnswers: http://answers.yahoo.com/question/index?qid=20081010135410AAURa2S This question and answer discusses the pros and cons of mercantilism.