CAS II ASSIGNMENT
ON
 MERCANTILISM

CREATED BY: 
SANCHALI GORAI AND SURABHI DIKSHIT
SUBJECT: INTERNATIONAL FINANCE
CONTENTS

 WHAT IS MERCANTILISM?

 PRINCIPLES OF MERCANTILISM

 MERCANTILISM AND INDIA

 AN EXAMPLE OF MERCANTILISM
WHAT IS MERCANTILISM?
International trade is the exchange of capital, goods, and services across
international borders or territories, which could involve the activities of the
government and business entities. Mercantilism is derived from one of the
earliest efforts of international trade stating an economic theory that
advocates government regulation of international trade to generate wealth
and strengthen national power.
Merchants and the government work closely to reduce the trade deficit and
create a trade surplus, by increasing the amount of exports and restricting
imports.  Since wealth is considered as power, so by accumulating wealth,
a nation can accumulate power. Thus, mercantilism stands on three premises
as follows:
 Wealth is directly proportional to power.

 Wealth is finite

 One state's gain is another state's loss

PRINCIPLES OF MERCANTILISM:

 A nation’s wealth is measured by the amount of precious metals (Bullion) it has accumulated rather than by its
productivity. Sometimes, mercantilism is also known as bullionism.
 A favorable balance of trade is required to increase the wealth of the nation. To achieve this, domestic industry should
be protected. Exports should be encouraged even at the cost of rival economies and imports should be curbed.
 Overseas colonies supply the mother country with raw materials for manufacture and trade

 Essential industries should be encouraged through subsidies and tax credits

 However, Laissez-faire liberals such as Adam Smith disregarded the idea of mercantilism because they felt that it was not
efficient.
MERCANTILISM AND INDIA:

India aspiring to be the regional power is no exception in resonating the ideas of mercantilist policies.
The lockdown had an upending impact and appropriated an export-driven strategy under the banner of Atma
Nirbhar Bharat. Banning of 59 Chinese apps after tension in the border and indirectly tightening the Foreign Direct
Investment (FDI) from China reiterate India’s renovation of mercantilist thought. The assertion of protectionist policy would
depend on the economic power the sovereign nation has in the global economy.
The implicit feature of mercantilism is the government’s connection with business entities exercising monopoly. The control
of the capital in a few hands would restrict an equitable society to develop. There is no absolute monopoly but  Reliance
group has managed to bring in investments amounting to INR 1,52,000 crores after successfully running the jio model for
past 4 years. The major four conglomerates Tata, Ambani, Birla and Adani of India managed to elevate the share prices in the
past six years. The market capitalization of the Reliance group climbed up by INR 4.86 lakh crore. 
AN EXAMPLE OF
MERCANTILISM:
China has forbidden all its
government institutions and
agencies from using computers
and software imported from
foreign nations. Similarly, the
United States and Russia are
exploring techno-nationalism to
counterbalance China’s
aggressive state-centric
capitalism.
THANK YOU!