Mercantilism Is An Outdated Concept

by Fran Smith on April 3, 2013

in International, Trade

There’s an excellent Letter to the Editor in the Financial Times today (“Trade is now about participation, not competition”), which points out that the mercantilist approach to trade “exports good, imports bad” is an antiquated view given the globalized supply chain for products and services.

The letter states:

Conventionally, nations tend to believe that export is a virtue and import a vice.  This mercantilism has lost its relevancy these days since an increasing number of companies, not states, must import various components to export their final products in the global value chains.  After all, it is not that nations compete against each other in a game of trade, but that private companies participate in a collective project of trade.

Lots of important points in that one paragraph including  the importance of imports  for inputs in manufacturing and the fact that it is companies that engage in trade, not countries.

CEI has long pointed out the dangers of promoting trade by promoting mercantilism here, here, and here, for example.

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