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ECS3705 Assignment 2 (Detailed Answers) Semester 2 2024
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“Kenya keen on fourth industrial revolution” Read the following article and then answer the questions that follow. The government has identified specific goals and targets to steer growth as the country strives to catch up with the fourth industrial revolution. The fourth industrial revol...

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  • September 22, 2024
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ECS3705

Assignment 2

Semester 2

2024

, Question 1


Identify and explain five mercantilist principles that are implied in the article.
Mercantilism is an economic theory that emphasizes the role of the state in managing
the economy, particularly through regulation and promoting exports while limiting
imports. The following are five mercantilist principles implied in the article:
1. State Intervention in the Economy: The Kenyan government's efforts to establish
an integrated steel mill illustrate the mercantilist belief in state intervention to
promote industrial growth. By actively pursuing policies that support the development
of specific industries, the government aims to strengthen the economy and increase
the country’s position in the global market.
2. Emphasis on Manufacturing Capability: The focus on developing the iron and
steel industry is a critical aspect of mercantilism, which holds that a nation’s wealth is
best achieved through a strong manufacturing sector. By investing in the iron and
steel industry, Kenya aims to build infrastructure capable of producing essential
goods domestically, fostering self-reliance, and increasing overall industrial
productivity.
3. Export Promotion: The government's initiative aligns with the mercantilist principle
of promoting exports over imports. By developing an integrated steel mill, Kenya
seeks to produce finished products that can be sold in international markets,
enhancing the country's export capacity. This approach not only increases national
revenue but also contributes to economic growth.
4. Reduction of Import Dependencies: A key tenet of mercantilism is to minimize
reliance on foreign imports. The establishment of an integrated steel mill is aimed at
reducing Kenya's dependence on imported steel and iron products. This principle
reflects a strategic move to enhance national sovereignty and maintain control over
essential industrial inputs.
5. Trade Surplus as a National Goal: The overarching goal of mercantilism is to
create a trade surplus, where the value of exports exceeds imports. By developing
its iron and steel industry, the Kenyan government aims to bolster its exports,
thereby achieving increasing trade surpluses. This trade balance is essential for
accumulating national wealth and ensuring economic resilience against external
shocks.
References:
• Smith, A. (1776). The Wealth of Nations.
• Reinert, E. S. (2007). How Rich Countries Got Rich... and Why Poor Countries Stay
Poor.

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