Question

• Do you agree or disagree that there is a place for mercantilism in national trade policy? Why or why not?
• Do you see signs of mercantilism in today's international trade and economic policy? If so, where? How has mercantilism manifested?
• Is mercantilism an appropriate policy for governments to pursue?

Answer 1

Mercantilism system does not support free trade policy. It is based on restricting the import and promoting the export. Thus country policies follows the mercantilism.

US and China trade war is an example of mercantilism. Both countries are trying to restrict the cheaper import. US is running the trade deficit with China as china already following the trade as the zero sum game. Now both countries are heading towards the mercantilism. Post pandemic period is going to be more intense mercantile guided.

Mercantilism is not good for any economy. It makes the economy low diversified and over the long run growth get retarded .

The consumer surplus decline if an economy follows the mercantilism.