Asked Jan 29, 2020

 Is merchantilism system practiced today and why? Which one of the GDP or GNP figures would be higher for Canada and why?


Expert Answer

Step 1

Mercantilism which is also known as commercialism is a system in which a nation or a country attempts to accumulate wealth through trade with other countries. In such a system country or a nation exports more than it imports and increases the stores of gold and precious metal. It was the prevalent economic system in the western world from the 16th to the 18th century.

Step 2

It was dominant in Europe modernized from 16th to 18th century, a period of proto-industrialisation, before falling into decline it is argued by some commentators that it is still practised in the economies of industrializing countries in the form of economic intervention. Mercantilism was destroyed by democracy and free trade in the late 1700s. American and French revolutions formalised large countries which were ruled by democracy and capitalism was endorsed. But the Soviet Union and China continued to practise a form of mercantilism. This is because most of their business was sate-owned and they sold their state-owned companies to private owners, thus giving rise to Neomercantilism. Non-tariff trade barriers to trade have greater importance in Neomercantilism.

Step 3

The great recession leads to a tendency towards mercantilism in capitalist nations. In 2016, Donald Trump was chosen for the presidency. Policies of Trump follow the principles of Neo-mercantilism. Trump favours expansionary fiscal policy, argues for bilateral trade agreement...

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