FALLSEM2015-16_CP0925_29-Jul-2015_RM01_Theory-of-Mercantilism - Theory of Mercantilism The theory of mercantilism attributed and measures the wealth of

FALLSEM2015-16_CP0925_29-Jul-2015_RM01_Theory-of-Mercantilism

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Theory of Mercantilism The theory of mercantilism attributed and measures the wealth of a nation by the size of its accumulated treasures. Accumulated wealth is traditionally measured in terms of gold, as earlier gold and silver were considered the currency of international trade. Nations should accumulate financial wealth in the form of gold by encouraging exports and discouraging imports. The theory of mercantilism aims at creating trade surplus, which in turn contributes to the accumulation of a nation’s wealth. The colonial powers primarily engaged in international trade for the benefit of their respective mother countries, which treated their colonies as exploitable resources. The first ship of the East India Company arrived at the port of Surat in 1609 to carry out trade with India and take advantage of its rich resources of spices, cotton, finest muslin cloths, etc. Other European nations- such as Germany, France, Portugal, Spain, Italy – and the East Asian nation of Japan also actively set up colonies to exploit the natural and human resources.
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