Neo-Mercantalism and Its Benefits in the 21st Century

Mercantilism and Colonialism, two terms relatively gone from modern political and economic discussions about the future, but what if these old ideas can be revised to fit modern needs? The developed world generally accepts a mix of capitalist and socialist ideas, both politically and economically. However, regardless of what the developed world’s system generally is, much of the developing world has no real chance to catch up with capitalist ideas, simply leaving the poor poorer and the developed countries simply continue to trade with other developed countries. What if major developed powers began using a system that protected their domestic industries, as well as uplifting developing powers, while they still profited in the process?

The term “neo-colonialism” is usually used to describe unethical business practices or lasting exploitation of formerly colonized nations. But perhaps it’s time to reconsider what that relationship could look like when guided by mutual benefit rather than dominance. Many developing countries are rich in natural resources but lack the infrastructure, political stability, or industrial base to extract and refine them effectively. These developing countries often also have a young, but extremely poor population, unable to fully participate in global trade due to consumers simply due to widespread poverty or underdevelopment.

Wealthy countries investing in or building infrastructure in developing countries sounds good in theory for both parties, but rarely ends in a mutually beneficial agreement. China often implements similar practices in Africa today, notably in Zambia, where Chinese copper investments have grown in recent years. China also worsens the situation of so-called “colonized” countries by, rather than using native workers, injecting Chinese workers as they develop their industries. An ideal situation would involve cooperation between both countries, where native workers can take the high-paying jobs that come as a result of a newly developed industry. Rather than uplifting the developing country and gaining a new export market, China gains economic control of the country and its natural resources (though China has recently slowed this practice as of 2021).

In addition, developing these relationships with foreign nations can allow the more efficient industries of a larger nation to have a stable and secure market for their exports (see below section).

Neo-mercantilism combines ideas of modern capitalism and historical mercantilism together, resulting in a developed and protected domestic industry, and increased global exports. An important part of a neo-mercantilist economy is protective tariffs, especially in industries where a country may be behind global standard or inefficient. These tariffs, along with government subsidies can help develop these domestic industries flourish. While critics might say they will always be inefficient compared to free, global trade, they will be self-sufficient and not rely on wavering foreign relations between powers. Industries where efficiency is high, or competition is low globally, can work with the government to export a majority of goods, to trading partners endorsed by the government (see neo-colonialist section). In a world with a exponentially decreasing number of natural resources, and with renewable options taking longer and longer to implement, this new form of mercantilism is looking ever more enticing.

Diplomat, Amitai Etzioni for The. “Is China a New Colonial Power?” – The Diplomat, For The Diplomat, 21 Nov. 2020, https://thediplomat.com/2020/11/is-china-a-new-colonial-power/.

https://www.africanews.com/2018/09/03/china-promises-60-bn-aid-to-africa-as-2018-focac-summit-opens

https://www.theguardian.com/books/2021/oct/28/top-10-books-on-neocolonialism