The goal of mercantilism was to achieve prosperity through maximizing trade. And such trade should always result in a balance of payments surplus. In other words, trading nations should always export more than they imported.
However, this was easier said than done. Some countries would always be short of certain goods that had to be imported. For example, the growing demand in 17th-century England for tea could only be met by importing the stuff from places such as India. Inevitably, this meant that the balance of payments surplus so highly prized by supporters of mercantilism was under serious threat.
The government tried to get round this problem by slapping huge tariffs on imported goods as a way of protecting domestic industry. All too often, however, such measures had the effect of driving up the cost of certain items for both businesses and consumers alike, fueling inflation.
No comments:
Post a Comment