I have been busy lately, though not with economics. I entered into my world just two days back. My internals are going on now. I have to start preparing for my entrance exam to get into a good masters program in Jawaharlal Nehru University(JNU) or Delhi School of Economics(DSE) as their standard of questions is very good.
I have been interested in Economic history and Economic thought lately. So explains my previous post and so will my future posts!
I am currently reading 'The end of poverty' by Jeffrey Sachs, which is a good book. Those who have finished reading it, please post your views on it.
Tuesday, August 09, 2005
Monday, August 08, 2005
Mercantilism
The forerunner of Mecantilism was Thomas Mun, a 17th century British merchant-economist. He proposed the following theories.
For Britain to prosper economically, it has to run trade surpluses.
Nations become wealthy for the same reasons that families become wealthy i.e when the income is more than the expenditure.
Importation of necessities was good, while luxuries were considered as bad, unless these luxuries could be re-exported and profits could be earned. Rich metals is an example of re-exportation.
Only international trade would bring about trade surplus and not domestic trade.
The money which Britain earned should not be spent for unproductive purposes. Nor should it go to the hands of individuals, because it would lead to an increase in the aggregate demand, leading to a price rise. In order to avoid that, it should be reinvested in the economy. Thus he stressed the importance of capital investment in an economy.
These are some of the principles he talked about. I feel, as students of economics, it is highly necessary for us to know about the works of the great economists.
For Britain to prosper economically, it has to run trade surpluses.
Nations become wealthy for the same reasons that families become wealthy i.e when the income is more than the expenditure.
Importation of necessities was good, while luxuries were considered as bad, unless these luxuries could be re-exported and profits could be earned. Rich metals is an example of re-exportation.
Only international trade would bring about trade surplus and not domestic trade.
The money which Britain earned should not be spent for unproductive purposes. Nor should it go to the hands of individuals, because it would lead to an increase in the aggregate demand, leading to a price rise. In order to avoid that, it should be reinvested in the economy. Thus he stressed the importance of capital investment in an economy.
These are some of the principles he talked about. I feel, as students of economics, it is highly necessary for us to know about the works of the great economists.
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