Trade Theories How Trade Shaped the World - Assignment Example

The policies that government made to protect business came in many forms and in varying degrees. State could use their power to finance new business, permit or disable monopolies, impose tariffs, prohibit a wide range of contraband, control labour, and if necessary blockade competing nation. The Europeans, the Asians and the Arabs all recognized the importance of shipping as a means to promote and protect export, though none took it as such an extreme as the European powers. On export power, the mercantilist policies were based on the notion that if a nation could expand its imports of gold by exporting goods, it would thereby deprive its rival nation of gold needed to protect a nation commerce, gold simply bought more protection.

The argument persisted in Europe into 18th century until the convincing argument of Adam Smith and David Ricardo demonstrated the values of specialization and comparative economic advantage. A number of factors led to the decline and end of the great period of mercantilism. By 1860, England had dismantled its mercantilist legal structure and risen to power as the undisputed ruler of both the newly industrialized world and its seas. In the modern age, the mercantilist spirit has re-emerged in the form of numerous non-tariff barriers that the free market nation employ to protect very specific industries.

The export/import licensing, quarantines, and trading blocs are now manifesting as mercantile protectionism. In many of the closed and semi closed economies of the world e.g. Cuba and China protection of domestic producers is still very strong (Bernstein, 2012) Free trade principles were broadly appealing in an export-driven colonial economy long before publication of Adams Smiths Wealth of Nation revolutionary patriot who mobilized against British imperial trade regulation. Dismantling colonial monopoly would