The economic policy of the state affects both external and internal spheres of its activity. One of its main types is the policy of mercantilism.
Background
Since the 15th century, European states have been stepping up their efforts in terms of international relations, developing international economic relations, and the first large organizations are emerging, like the East India Trading Company. All this prompted economists of that era to create a system of rules and doctrines expressed in the policy of mercantilism, the main idea of which was the active participation of the state in the economic activity of the country and its inhabitants with the aim of accumulating money, gold and silver.
The concept of mercantilism is closely connected with the concept of protectionism, the political doctrine according to which economic relations with other countries are limited, the outflow of capital and the consumption of foreign goods are prohibited.
The principles of the policy of mercantilism
In such countries of Europe as England, France, Germany and Austria, in the XV-XVI centuries. the policy of mercantilism was reduced to the accumulation of funds in the country by any means. These goals were served by restrictions on the import of foreign goods, bans on the export of gold and silver from the country, a ban on the purchase of foreign products from income derived from the sale of goods abroad, etc. Over time, these facilities were modified and changed, and from the end of the 16th century to the middle of the 19th century, the policy of mercantilism gradually moved away from the strict restrictions on the export of precious metals.
Late mercantilism
By the end of the 19th century, mercantilism was already accepted as the main economic doctrine by all the strongest European powers. Artificial interference of the authorities in economic life led not only to positive economic consequences (increase in the trade balance, growth of GDP, improvement of the welfare of the population), but also to the development of technological support for production, increased birth rates, reduced social tension and improved quality of life. According to economic historians such as Immanuel Wallerstein and Charles Wilson, a technical revolution in England in the 19th century would not have occurred without the practical application of the principles of mercantilism.
Implementing a policy of mercantilism will be difficult if the country lacks natural resources. This means the absence of developed production, and therefore the accumulation of capital becomes problematic.
