French mercantilism
The term mercantilism was coined in the 18th century and is widely used in economics in the world today. It is a government system that seeks to adjust various trade concerns in a particular country. It has been observed that Europe was one of the regions in which this dogma was widely practiced. For instance, French government developed mercantile systems in all economic sectors like agriculture and industries in order to streamline and maintain economic growth in the country. The government, through the finance minister, Baptiste Colbert, introduced new rules ad measures that were meant to reduce the imports and increase the exports in the country. In addition, industrial monopoly was heavily supported and the government looked for means of controlling the production process of goods and services. In other words, every economic sector was put under the control of the government.
Long term effects of mercantilism on the economy
Although there was notable economic growth at the introduction of mercantilism, its effects were short-lived. These efforts attracted long term negative effects that are heavily felt in New France today; and they have continuously degraded the country’s economic growth rate. Therefore, one question remains in regard to mercantilism in France; what effects did mercantilism have on the economy? The first effect is that mercantilism introduced trade monopoly instead of trade autonomy. One of the major components that support a running business is competition. Competition has several enemies and the greatest of them all is monopoly which paves way for complacency in improving quality of goods and services. Today, companies have suffered a great deal since there are remnant monopolists, both individuals and companies, who have Colbert’s mentality.
The other effect is the tendency by the government to control imports and exports that were coming and leaving the country respectively. This was simply a means of insinuating that the growth and expansion of businesses in the country solely depended on the government. As a result, many companies would not do business as they would but as per the directives of the government. This led to high employee’s turn over which could have been caused by insufficient wage bills for them, and thus left many companies with no alternative but to terminate contracts of employment. Therefore, the drift between the government and private companies widened and it has been very difficult for this gap to be mended in this present time.
The last effect that was heavily felt by major economic stakeholders was a sluggish economic growth and low market capitalization. This is because companies and organizations were denied the right to trade fully with other organizations across the globe in terms of human resources, raw materials and goods and services. In other words, there were little or no chances to share ideas from other countries in terms of technology and production skills. As a result of controlling the number of goods and services being produced, companies did not have the audacity to increase their sales. This meant that most of the companies were not able to satisfy the demand and thus could largely compromise the quality and the quantity of goods and services. The modern France has some traces of these effects today. It can be submitted that companies and major organizations are afraid of international relations. This explains the reason as to why most French traders have a tendency to trade amongst themselves, with a handful of traders agreeing to partner with other organizations in other countries. This can only be blamed on mercantilism that was introduced in earlier centuries.
