Mercantilism is back!

Who says times have changed? It isn’t just about finance crisis or food crisis, but even growth theories. Most of the now developed countries grew on the basis of Mercantilism or export driven strategies. These were then discarded for fancier ideas like Washington Consensus. Now, the whole things seems to be coming back.

Growth Commission is set up to look at the overall growth experience in the world. It is headed by Michael Spence and on looking at their website have put up lot of papers/case-studies on their website.

I read this Growth Commission paperby Michael Spence and Mohamed El-Erian where the authors say exports are really important for a country’s growth. The authors put up a good picture on what drives growth in an economy and exports is one of them.

All successful high-growth economies have had policies that were designed to help start and accelerate the process of export diversification and structural transformation. These included the following (with the mix varying):

• Tax and other incentives to attract foreign direct investment.
• Special export zones with supporting infrastructure, tax provisions, and import tariff relief.
• Management of the exchange rate to maintain competitiveness in the export sectors

These comments by Spence are being discussed widely. For instance at the WSJ Blog, Simon Johnson (see this one as well) (IMF Chief Economist). Once this reported is submitted in May, I am sure more would follow.

So, has anything changed?

2 Responses to “Mercantilism is back!”

  1. Tax » Mercantilism is back! Says:

    […] Mostly Economics wrote an interesting post today on Mercantilism is back!Here’s a quick excerpt• Special export zones with supporting infrastructure, tax provisions, and import tariff relief….• Tax and other incentives to attract foreign direct investment…. […]

  2. Economist » Blog Archive » Mercantilism is back! Says:

    […] Enterprise Resilience Management Blog wrote an interesting post today on Mercantilism is back!Here’s a quick excerptThese comments by Spence are being discussed widely. For instance at the WSJ Blog, Simon Johnson (see this one as well) (IMF Chief Economist). […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: