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8 January, 20:47

Mercantilism stress the importance of colonies as sources of raw materials and markets for manufactured goods made in the mother country

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  1. 9 January, 00:11
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    This statement is TRUE.

    Mercantilism was a predominant economic approach during the 16th-18th centuries, that was used to define the international trade policies of a country, Its main objective was to maximize the value of the country's exports.

    The wealth a nation was determined by the size of its reserves of precious metals. In order to enlarge those reserves (or at least to not decrease them) the country needed to achieve trade surpluses (or at least never deficits).

    Colonial powers purchased cheap raw materials from their colonies and brought them to the the mother country where they elaborated manufactured goods. After the production process (the whole value-added process), the final product had a larger value than the one corresponding to the sum of the individual values of its components. Afterwards, the colonies sold the final products back in the colonies and in the international markets, achieving important trade surpluses.
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