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103- Explain Economic theory of Mercantilism | History of Economic Thoughts | Theory of Mercantilism - YouTube
Channel: Easy Learning Economics
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hello friends welcome to easy learning
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economics i'm dr caval
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today we shall talk about mercantilism
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in this lecture we shall cover that what
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is definition of mercantilism
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what are the characteristics and
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features of mercantilism
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and what factors do contributes towards
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mercantilism and what are the reasons or
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the causes of failure of mercantilism
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finally
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we shall summarize each and everything
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and we shall use the keywords here that
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will be helpful to define mercantilism
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so all these things we shall cover in
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this lecture what is mercantilism
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mercantilism
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was an economic system of trade that was
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dominant during 16 to 18th century most
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of the european economists
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who wrote between 1500 and 1750
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are today generally known as
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mercantilist
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they didn't know
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their contributions towards economic
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ideology
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but the word mercantilism was coined by
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the marcus d abu in 1763
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and was popularized by adam sims in 1700
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76 in his book wealth of nation thomas
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mann who was born in 1571
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and passed away
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in 1641 so thomas mann was the major
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creator of mercantile system
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and others notable mercantilist include
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the english writers william patty
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john locke her justice child and french
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minister
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jean baptist colbert and jacob's neck
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mercantilism involved the government
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regulations vandalism is an economic
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practice whereby the government
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use their economies to boost state power
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at the expense of an other economies
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generalist varov believed
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that power of the country could be
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judged by the possession of the scarce
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resources like gold and silver that
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could help to build strong military and
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purchase essential goods the government
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ensures trade surplus
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and strongly desires to accumulate
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wealth in the form of gold and silver
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what were the features of mercantilism
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high tariff especially on the import of
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manufactured goods mercantilist
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forbidding colonies to trade with other
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nations and among each other there was
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bain on the export of gold and silver
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even for payments
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there were limited wages
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restricting domestic consumption through
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non-tariff barriers like quotas license
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extrasa were universal features of
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mercantilist policies
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mercantilist gave importance to trade in
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terms of export especially protectionism
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was also developed as heavy tariff was
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imposed on imposed the mercantilist said
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the value of product of society was
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created at the time of sale
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and sailor exchanged his product for
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more money mercantilist theory was a
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zero-sum theory means the gain in the
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trade by one was at the loss of an other
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economy
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the objective of mercantilist was to
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build the state
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and state would further strengthen an
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economy and weaken foreign adversaries
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they had strong desire for more exports
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and less imports how did mechanicalism
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work mother country accumulated wealth
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in the form of gold silver and precious
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metal and grew in power mother country
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did import raw material at low prices
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from other nations and colonies and
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export finished product at high prices
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and collected gold and silver there was
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a ban on the trade among colonies
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kingdoms
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wanted to get a big share of gdp
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by accumulating wealth as possible by
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exporting the largest possible quantity
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of products
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and importing as little as possible and
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ensure the balance of trade surplus and
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favorable terms of trade to increase
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their peace
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they believed to bring a decrease in the
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rival peace does mercantilism still work
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or not
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still
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some of the countries are following this
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theory and are known as new mercantilist
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because they modify the classical
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mercantilist ideas
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like taiwan india and u.s are practicing
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protectionism policy to nurture the
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domestic industries they provide
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subsidies on export industries
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to increase exports and levy high tariff
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to restrict import they discourage the
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usery
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overcharging interest on money lending
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what are the contributing factors
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towards mercantilism
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different factors contributes towards
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mercantilism
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it means the economic factor like
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shifting of an economy from agriculture
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to manufacturing sector production of
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money and replacement of the border
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system
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and increased importance of money and
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start of banking system
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expansion of industrial base in
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development of infrastructure
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caused and shaped the mercantilism what
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are the political factors that
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contributes towards mercantilism decline
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of feudalism and replacement of
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feudalism into nationalism
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and dictatorship and monocracy
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and by the use of army to make powerful
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monarch and sovereignty use of
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navigation laws for earning gold and
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silver we discuss these the political
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and economic factors here we are
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discussing the scientific factor which
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contributed towards mercantilism
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that invention and innovation through an
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advanced technology and printing place
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helped in rising change maritime
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discoveries
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include the discovery of america and new
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sea route to india by the use of mariner
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compass
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opened up the new gates of trade led in
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expansion of trade at the global level
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so the cultural factors
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religious factors
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lack of state organization
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need for self-governing nation
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industrial base in europe
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government support to monopolist
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rise of commercial capital
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are responsible factors for rising
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mercantilism why did mercantilism failed
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and what the critics has been made on
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mercantilism the failure of government
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and market to provide everything that
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colonists needed the smuggling means
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illegal trade of colonies with other
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nations held the mercantilism lake of
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freedom the colonies were not allowed to
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trade with other nations and there were
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exploitation of colonies by mother
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country middle east failed to understand
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the theory of absolute and comparative
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advantage of trade and created
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monopolies
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and reduced overall trade and
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specialization the theory of absolute
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advantage which was given by the adam
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sims that the trade is
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performed on the basis of absolute
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advantage it means the efficiency of
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economy to produce something by using
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few resources then rival theory of
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comparative advantage it means the most
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of the trade is done on the basis of the
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comparative advantage
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that
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the
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efficiency of an economy to produce
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something at lower opportunity cost the
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restriction upon colonies
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not to make finnish product
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but colonies were bound to provide raw
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material and additional law
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on colonies to collect duties failed
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this mercantilism in front 1750 to 1780
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physiocracy ordered the lesser sphere
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economy introduced necessary corner
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there was no involvement of the
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government in economy adam since in his
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book wealth of nation
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introduced the concept of
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naturalism
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invisible hand and theory of absolute
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advantage adam synth criticized over the
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mercantilist theory of mercantilism or
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commercialism
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that it is not rational to measure the
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power and strength of an economy on the
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basis of accumulation
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of precious metals like gold and silver
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and long-term positive balance of trade
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would lead an economy towards
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circumstances of inflation modern
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economists
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rejected this idea of accumulation of
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gold and silver to rise zero-sum theory
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and propounded the positive some theory
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that trade can make everyone better off
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we are here summarizing overall lecture
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it means the mercantilism was trading
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system
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in 16 to 18th century
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the aim and objective was to promote the
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national wealth and power by government
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regulation
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the country power was measured by
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accumulation of gold silver and precious
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metal it possessed
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importance was given to trade surplus
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and trade surplus results an increase in
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the net inflow of gold
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and led to greater national wealth
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mercantilist encouraged exports and
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discouraged imports trade was zero-sum
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game means gain in trade by one country
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is at loss of another economy
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mercantilist avoid economic dependency
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mercantilism was earliest theory of
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economics between 1500 to 1750 and this
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is theory of trade or theory of
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protectionism and provides subsidy to
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export promoting companies there was
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high tariff on import
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there is a ban on the mobility of factor
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of production and the mercantilist
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failed to provide support from other
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economy to make better of our economy
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and worse of another economy
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like british colonial empire here we are
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using the keywords to define
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mercantilism so the trading system
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objective measurement of power trade
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surplus
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and zero sum game
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high tariff better off worse off the
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export import boolean like precious
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metal gold and silver monopoly
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self-sufficient
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regulation colonialism productionism
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corruption and market inefficiency these
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words can be helpful to define
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mercantilism i hope you have better
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knowledge about mercantilism and you
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have enjoyed this lecture thanks for
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watching
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see you soon in the next lecture
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