Mercantilism was the principle that

Mercantilism was the principle that there is a fixed amount of wealth to be had in the world, and that nations would establish colonies in order to  economically benefit the mother country.

"Mercantilism" is a term we get from Scottish philosopher Adam Smith (1723-1790).  Smith criticized what he called the "mercantile system" because it restricted trade and thus restricted economic growth.  The mercantile system believed the wealth of the world was a fixed amount, measured primarily in gold and silver accumulated.  The system promoted a nation selling its products abroad but not needing to buy from others, or imposing heavy tariffs if importing anything.  Colonies were crated to provide raw materials and resources to the mother country and a market for the mother country's products.  Commerce was heavily controlled by the government through charters granted to specific trading companies.

Adam Smith countered by advocating a free market -- the opportunity for all nations to increase their wealth by exchanging goods freely with one another according to what would become known as capitalist principles.

Mercantilism is the principle in which the nations try to increase the export and decrease the import.

Further Explanation:

Main Aim of Mercantilism:

Mercantilism word derived from the merchants. Mercantilism is an international trade theory, in which the nation aims to increase exports and decrease the import. The main aim of mercantilism to get the surplus balance of payment. This theory developed in the 16th and 18th centuries when the merchants try to get more amount of gold in the reserves of the nation. In this period the goods exchanged between the two countries can be done by exchange the gold for the value of the goods which is to exchange. Before this period, the exchange among the countries done by the barter system. At this time all merchants put all their investments in producing goods and avoid doing imports from the other country. The government put various restrictions on importing goods.

More about Mercantilism:

•International Trade: This means when the two countries sold their goods from one country to another country. The goods include finished goods, raw materials, and all goods which have some value in the form of money.

•Balance of Payment: It is the records of all unilateral and bilateral transactions which has been done with the world in a particular year. When the Balance of Payment shows a surplus, it indicates that the export is more than the import. When the Balance of Payment shows deficit, it indicates that the import is more than export.

•Import: When any individual, company, and institutions of a home country purchase goods from the other country, it is known as an import.  

•Export: When any individual, company, and institutions of a home country sell goods to another country, it is known as export.

Therefore, Mercantilism was the principle in which the nations tries to increase the export and decrease the import.  

Learn more:

1.Learn more about the trade flows

       link

2.Learn more about the import

       link

3.Learn more about the trade theory

       link

Answer details:

Grade: Senior School

Subject: International Business

Chapter: International Trade Theory

Keywords: import, export, the balance of payment, home country, foreign country, merchants, international trade, and government put restrictions, goods, unilateral and bilateral transactions .

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