What is NEOMERCANTILISM? What does NEOMERCANTILISM mean? NEOMERCANTILISM meaning

What is NEOMERCANTILISM? What does NEOMERCANTILISM mean? NEOMERCANTILISM meaning - NEOMERCANTILISM pronunciation - NEOMERCANTILISM definition - NEOMERCANTILISM explanation - How to pronounce NEOMERCANTILISM? Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license. Neomercantilism is an economically nationalist trade policy regime based on classical mercantilism. It is predicated on the notion that what naturally evolves, and survives the test of time, is inherently robust and practically beneficial: what has worked, will work. It is observed that mercantile policies have been employed since at least the 1300s in England under King Edward III, and 1250s in Venice, and continued in various forms until the era of decolonization in the middle of the twentieth century. During this time they were the policy choices that were active, and likely contributed to the Dutch Golden Age and Britain's Industrial Revolution. As in classical mercantilism, neomercantilism is concerned with enriching and empowering the nation, and the state, to the maximum possible degree. This is done by acquiring and retaining as much economic activity within the nation's borders as possible. Of particular importance are ensuring economic independence in manufacturing and advanced industries, or those with military or national security applications (such as food or energy supplies). Achieving economic autarky is an element of neomercantilism. This is done through encouraging exports of technologically advanced or manufactured products, while encouraging the import of raw materials. This is designed to artificially elevate the nation's production by producing both for their own, and their trading partner's consumption. This maintains artificially high employment and economic activity, which reduces the welfare burden on government. Theoretically, it aims to provide high economic growth with a small government and low tax obligations. Neomercantilism combines the central tenets of: (1) economic protectionism with the added caveat that (2) trade deals should be actively sought out, on the condition that they asymmetrically benefit the proposing nation over the other. 1. Protectionist elements include: the protection of domestic producers by discouraging value-added imports through tariffs, structural barriers to prevent entry of foreign companies into domestic markets, manipulation of the currency value against foreign currencies to encourage exports and foreign direct investment inflows, and limitations on foreign ownership of domestic corporations. While all nations engage in these activities to some degree, neomercantilism makes them the focus of economic policy. 2. Trade deals: Trade deals are actively sought out by neomercantilist states, on the condition that they asymmetrically benefit the proposing state. Neomercantilist regimes are not interested in free or fair trade, they want what is sometimes described as "predatory" trade. Ideally, one nation will export advanced, and manufactured, products, in exchange for raw materials or exotic products that they are unable to produce. The paradigm is illustrated perfectly with reference to Britain's colonial trade: Britain exported manufactured products to the Caribbean colonies, who exchanged sugar, which Britain could not produce. This artificially increased Britain's industrial output and demand for labor, while at the same time ensuring the Caribbean remained dependent upon British imports. This paradigm is sometimes referred to as import dependency. This use of protectionism is criticized on grounds that go back to Adam Smith's The Wealth of Nations, which was aimed directly at classical mercantilist policies, and whose arguments are applied to neo-mercantilism. Namely that protectionism is effective as a means of fostering economic independence and national stability; and questioning the conclusion that it allows for sustainable development of the nation's industrial base in the most efficient manner. Instead market economics has for over two centuries argued that increasing competition within the nation which will more effectively promote capital development and efficient allocation of resources. "Free traders" argue that by closing an economy, resources will be spent duplicating products that could more effectively be bought from abroad, and that there will be less development of exports which offer a comparative advantage. Market economists also argue that protection denies a nation's own consumers the opportunity to buy at cheaper market prices when quotas or tariffs are imposed on imports.

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