Mercantilism entails a collection of economic thought that dominated Europe in the duration between 1500 and 1750. Universally, the mercantilist period marked the commencement of the political economy accruing to the state building. During this era, the wealth of the European countries was evaluated around the countries’ possession of species (precious metals). The mercantilist ideology asserted that international trade is rather a zero sum game since one nation’s gain is the equivalent loss of the trading partner. The period further embraced the fact that each member country was to uphold a positive (favorable) balance of trade – exports should exceed imports (Rodrik 2). Invariably, a positive balance of commerce diversifies the country’s wealth via the acquisition of a surplus of precious metals (like gold and silver). Nevertheless, increased trading would be realized after the underlying European countries exhibited a strong merchant marine and military power. The mercantilists perceived an economic system as a collection of three main components – foreign colonies, a manufacturing sector, and a rural sector (agriculture).
Considering Turkey and its economic history, the Turkish government played a crucial role in facilitating the state’s economic development. Precisely, the government practiced bullionism wherein it regulates the outflow and inflow of precious metals. Additionally, the government-controlled the currency in the nation, including substantial control of the local economy via implementation of several strategies. Such plans included governmental granting regarding monopolies, as well as control of labor via craft guilds. The policies entailed policies to encourage importation and discourage exportation to meet the stable social order (Hamida & Salina 457). Nonetheless, the success of the Turkish economy faced several challenges since it was incapacitated by the eruption of other global trade affairs, including industrialization. The country’s economy was, however; influenced by the motivation of searching new routes mainly for transportation of silk from Iran and Europe. The Ottoman Empire relied on Anatolia as the primary route for the Iranian silk as well as European wools. This trend prevailed until its termination during the sixteenth century. The empire acquired the adequate amount of revenues from the trade’s customs duties. Nonetheless, the economy faced a developmental threat from Shah Abbas, who restricted sufficient sales of silk to the Turks. To prevent the potential scarcity of silver and gold from this trade, Abbas commenced selling silk directly to other European countries via the Indian Sea. This analogy accounted for the Turkish economy’s loss of productive status regarding silk trade.
Additionally, the Industrial Revolution imposed significant changes in the Turkish economy and its stability. Before the Revolution, the underlying production of commodities had relied on animal or human power. Nonetheless, the introduction of mechanical power resulted in an enormous increase in the aggregate productivity of the industrialized states. Turkey was unable to cope with the pace at which the global industrial revolution was advancing in Europe since it mainly relied on agriculture only (Walter 3). Specializing in the agricultural sector implies the absence of ‘learning-by-doing’ effect and hence the economy lacked sufficient incentive to guarantee investment in the physical capital since physical capital is not deployed in the agricultural sector.