Final answer:
Mercantilism is an economic policy focused on wealth accumulation and positive trade balance for nations by controlling trade, imposing tariffs, and leveraging colonies. It shaped global trade from the 16th to 18th centuries and helped pave the way for the Industrial Revolution, despite its critiques.
Step-by-step explanation:
Mercantilism is an economic policy and set of ideas that were predominant in the 16th through 18th centuries, shaping the economic practices of European nations. It focused on achieving a positive balance of trade and economic power by accumulating precious metals, primarily gold and silver, and by fostering a nation's exports over its imports. To support mercantilist aims, governments imposed high tariffs, granted monopolies, and often required that their colonies trade exclusively with them. This control of trade was intended to prevent wealth from leaving the country and to promote domestic employment and production. The mercantilist approach facilitated the emergence of the Industrial Revolution by funding technological advancements and encouraging manufacturing, although the system faced criticism for leading to inflation and consumer harm.
Colonial possessions played a pivotal role in mercantilism as they were expected to supply raw materials and purchase manufactured goods from the home country, thus contributing to the nation's wealth and influencing global commerce and colonization. Critics of mercantilism, such as Adam Smith, argued instead in favor of free trade, stating that wealth was not finite and advocated for economic regulation through natural competition rather than government intervention.