2 Answers | Add Yours
In order to answer this question, what you need to remember is that the mercantilists thought that the only real source of wealth was exports. They believed that countries got rich by exporting, not by having large domestic markets.
If this is your goal, it is good to have a large population and low wages. This is because these things will lead to low costs for industries in your country. The industries will be able to produce goods cheaply and that will allow them to outcompete manufacturers in other countries (this is basically what China has done lately).
The mercantilists believe that the chief means of economic prosperity for a nation is its exports and hence a government should promote exports and discourage imports.
So, the mercantilists would favor to do business with countries with large populations because unemployment rates would naturally be very high in countries with large populations. Consequently, they will be able to exploit this situation to their advantage. They need not pay the same wages to these people that they will have to pay the laborers in their own native country. They can also deny the laborers in the foreign countries their basic human rights by making them do hazardous jobs which laborers in their own country would refuse to do.
We’ve answered 318,916 questions. We can answer yours, too.Ask a question