Author: Bezugly A.
economist, head of the company Refcom.info
Abstract: The article describes the essence of mercantelism as the main scientific and managerial approach to economics and finance, especially the approach to finance in the theory of mercantelism.
Keywords: mercantilism, protectionism, finance of mercantilism, development of mercantilism
For citation: Bezugly A. (2021). Financial concepts in mercantilism // The Real Science, URL: https://s-nawuka.nethouse.me/articles/mercantelism
Mercantilism is the doctrine of the XV-XVII centuries in Europe, within the framework of which it is assumed that the state should support the national producer, the state's intervention in the economy, in the form of protectionism:
1) high import trade duties;
2) the establishment of non-tariff barriers to the import of goods;
3) subsidizing national producers.
During this period, a number of European states adopted laws that limited the import of foreign goods into the country, contributing to the development of domestic production.
At the early stage of mercantilism (XV-XVI centuries), the import of goods into the country (imports) was limited, including through high duties, which made goods not so competitive compared to those sold in this country. Also, at this stage, the export of gold and silver was strictly limited (until a complete ban). The idea is that high duties themselves restrict imports, make it possible to develop production in the country, the receipt of money from taxes on businesses developing in the country, or the receipt of money from high duties. That is, here is the idea of "monetary balance", when money is saved in the economy, it does not go abroad.
At a later stage, restrictions on the export of gold and silver are gradually reduced, the idea of a positive trade balance (excess of exports over imports) appears instead of the idea of a "monetary balance", which the state should strive for. The idea here is that a positive trade balance gives a flow of money to the country, and this develops its economy.
In the 17th-19th centuries, the so-called state mercantilism develops, when states, already in their official policies, are aimed not only at ensuring a positive trade balance, but also at stimulating this domestic producer, creating conditions for it that are optimal for business development (including, through tax incentives, subsidies, loans).
References
- Conti Th.V. (2018). Mercantilism: a materialist approach // Scandinavian Economic History Review, No 66:2, pp. 186-200
- Herlitz L. (1964). The concept of mercantilism // Scandinavian Economic History Review, No 12:2, pp. 101-120
- Rekhi S. (2019). Mercantilism: Concept, Factors and Characteristics // Economics Discission, URL: https://www.economicsdiscussion.net/mercantilism/mercantilism-concept-factors-and-characteristics/20980