Discuss the difference between mercantilism and neomercantilism?
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Answer:
Mercantilism
Was based on the idea that a country's wealth and power were served
through raising exports and accumulating precious metals like silver and gold.
It was also for the ideology that powerful nations had the opportunity to create a world economy using its strength to ensure local markets and supply sources are protected.
Was also based on the understanding that agriculture was important and should be promoted so a nation would minimize the need to import food.
Neo-mercantilism
Puts emphasis on protectionism (trade restrictions) and commercial policies as a means of increasing domestic income and employment.
It encourages exportation while discouraging importation of goods.
It is also based on controlling capital movement while centralizing currency decisions in the hands of central government.
The objective of neo-mercantilism is to increase levels of foreign reserves held by the government ensuring more efficient monetary and fiscal policy.
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