Mercantilism is an economic principle earlier popularised by Adam Smith as a system of economical absolutism whereby a country seeks to achieve a favourable balance of trade by contracting its imports and encouraging exports. The mercantile policy emphasises a command economy which places the total control of the nation's economy on the shoulders of the government.
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This policy was dominant in the 16th century Europe. The European governments of then, especially King Louis XIV of France and Queen Elizabeth of England(called the Elizabethan era), adopted the mercantille ideology to regulate their economies, augment state powers at the expense of rival national powers and also widened their colonial bases. Inherent in the practice was not only import trade restrictions but also expansionary monetary policies. The then British government subsidised exports, encouraged the maximisation of domestic resources and banned the export of gold and silver and even their use as a form of payment. However, this practice was not without faults which aided its collapse: it motivated colonial expansion, discouraged diplomatic relations and often led to war.
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Be it as it was, the benefits of the policy prompted its review in the 20th century by the neoclassical economists. Mercantilism was reviewed and renamed as neo-mercantilism. The new mercantilism (neo-mercantilism) focused on more rapid economic growth based on advanced technology. It promoted subsidies, government expenditure on economic projects, general regulatory powers for tariffs and quotas, and protection through the formation of supranational trading blocs.
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How neo-mercantilism can be applied to Nigeria economy.
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1. Regulatory quotas: in 1549, the office of the Queen Elizabeth issued a statement on national balance of trade which read, "we must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them". This statement was better explained by Thomas Mun, a mercantile economist. In his book, 'England's Treasure by Forraign Trade', Mun emphasised that the best way to increase the wealth of a nation is foreign trade. He was quoted to have said, "we must sell more to strangers yearly than we consume of theirs in value". To achieve this, Mun listed economic policies which could help England achieve a favourable terms of trade. These policies are discussed below and how they can be applied to the current Nigerian economic situation is explained under each policy.
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a. Imported goods that can be produced domestically should be banned: just as Mun recommended for the British government, it is imperative on the Nigerian government to totally ban goods that can be produced in Nigeria. 'Hollande' milk should be banned. That is only a small cog in the wheel of a very big machine. If domestic resources can be efficiently optimised, an appreciable relief should embrace this economic woes.
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b. Reduce luxurious imported goods by making Englishmen have a taste for English goods: so should Nigerian government reduce the importation of foreign luxuries by making Nigerians have a taste for Nigerian goods. The '#ByNigerianToGrowTheNaira' campaign may be futile if the government does not place restrictive quotas on the importation of ostentatious. It is laughable that the Nigerian government is promoting the patronage of made in Nigeria cars through Innoson while Toyota still exports its products to Nigeria without restrictions on quantities. If this persists, Innoson is only destined for a monumental collapse because of the 'inferiority' of its products compared to Toyota's. The dumping effect should also be noted here. While Toyota can practise international price discrimination by lowering the price of its products in Nigeria(foreign market), it will be difficult for Innoson to lower the price of its vehicles due to diseconomies of scale. If Nigeria wants to leap from its economic woes, strict regulatory quotas should be placed on the importation of luxuries.
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c. Reduce export duties on goods produced domestically: Yes, and also subsidise them. Subsidising domestic firms will encourage export-promotion and import-substitution. Increase in the nation's output will undoubtedly lead to increase in its Gross Domestic Product(GDP). And when domestic firms decide to export their products, relief should be granted on export duties.
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d. If no alternatives are available to its neighbours, England should charge more money for its exports: this is likened to elasticity in modern economics. When the demand for a product is non-competitive(having no close substitutes), elasticity of such product is likely to be inelastic. Inelastic demand for a product puts the firm/country at an advantage to increase price. So, Nigeria should find out which of its products(exports) obeys this rule and charge a higher price for it in the international market. Here, agricultural products come to mind. The government should work more on this intel.
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e. Cultivate wasteland for higher production: England might have wasteland but I am certain that Nigeria lands are agricultural productive lands. This akins to diversification of the economy to lift the pressure on crude oil. It is shameful to read in the pages of newspapers that Nigeria imports rice. This is not only shameful, it also exposes Nigerian government's laxity towards the growth of agriculture.
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f. Shipping could be completed solely on English vessels: during the mercantile period, shipping was the mainstay of the economy in England and France. This can be likened to Nigeria's crude oil. As Mun advised that shipping was to be completed on English vessels, so should Nigeria complete its crude oil refining on its soil. This will encourage not only production of oil at the least cost output but also increase the volume of its exports. The Nigerian government should bring its refineries back to life and complete few more if it wants to get off from the looming economic mess.
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2. Subsidies and Devaluation: "if there is no subsidy, it will affect our foreign exchange, we will end up buying a dollar at #500" (Aliko Dangote, July 4, 2015). That statement alone is enough to map out the important roles subsidy plays. I purposely brought in devaluation even though it was not part of the neo-mercantile recommendations. Devaluation is the lowering of the nation's value of currency relative to another currency standard. Devaluation causes a country's exports to become less expensive, making them competitive in the global market. However, it causes imports to be more expensive, making domestic consumers less likely to consume them. By making imports more expensive, domestic firms are protected against unhealthy competition. If you were the Nigerian government, what would you do at a time the consumption of domestic products is needed to save the economy? Devaluation, isn't it? Mind you, the naira officially exchanges for a dollar at #197 and not #400. If the government is keen on salvaging the economy through domestic consumption, then, devaluation of the naira is the way forward.
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3. Government expenditure on economic projects: I don't want to berate the Nigerian government for its incessant travelling around the world but is worthy to note that, economically, it is not too advisable for the nation. That purpose was why the foreign affairs ministry was set up. It is an open-secret that every presidential trip is at the expense of the nation's treasury. And as an after-thought, such act is dissipation of resources on non-productive projects. At a time of economic imbalance, the government should focus more on the building of human capital and physical capital. Construction of infrastructures is an incentive to investors. The French government under Louis XIV was able to install itself as European economic powerhouse because of its large investment in shipping manifests and gold accumulation. It also cemented itself as a fascist militia because of its huge investment in human capital through training and motivation.
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4. Protection through the formation of supranational trading blocs: No country can live in economic isolation. In modern economic theory, trade is not a zero-sum game of cut-throat competition. Non-adherence to this led to the fall of the earlier mercantilism practice: each country wanted to live in economic absolutism. Due to comparative or absolute advantage as the case may be, countries need to form economic diplomatic relations. What one country can produce at the least opportunity cost should be traded with what the other can also produce at the least comparative cost. Nigeria should not import toothpick when its primary school students can easily produce it. This principle also emphasises the formation of protective economic bloc such as the OPEC. Recently, there is enormous pressure on the Nigerian government to pull out of the OPEC due to some of the body's policies which do not help countries like Nigeria who are in the middle of an international economic crises. It will though, be an economical suicide for Nigeria to pull out of OPEC. Iranian government can explain better.

Chidozie Martins Ugwu(Umartins1), the author of this article, is an undergraduate of Economics in the University of Lagos.

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