An analysis of the formation, development and effects of the neo-mercantilist policies

Mercantilism is a doctorine started in the end of the 15th century and replaced by neo-mercantilism at the end of the 18th century with the emerge of classical economics. It is evaluated as a counter reaction to liberalization policies. Neo-mercantilism is adopted by the countries that desire to protect themselves from the unfair competition of the industrialized countries damaging domestic production or to use their competitiveness to acquire global hegemon position. Economic instabilities rise as some of the countries follow liberalization policies while the others apply neo-mercantilist policies. These instabilities generally cause economic crisis or trade wars. Especially, policymakers frequently prefer to adopt stronger neo-mercantilist policies in the eras of economic crisis to straighten their macroeconomic imbalances. Besides, the trade war, which was started in 2018 by the USA, confirms that neo-mercantilist ideas are still alive even in the 21st century. In this study, firstly, the applications of the neo-mercantilist policies until today are examined. Our research shows that together with classic mercantilism, the policies relying on the mercantilist ideas have been continued for the last 500 years and they all serve to similar goals under different forms. Additionally the relationship between neo-mercantilist policies and several macroeconomic variables is investigated which are considered as directly connected. A GMM analyze was conducted on this purpose with the data belonging 38 countries for 2001-2019 period. According to the results of the analysis, it is concluded that the neo-mercantilist policies have a negative relationship with the imports, and a positive relationship with the manufacturing sector and reserve accumulation.