Mercantallist theory states that a nations power can be measured by the amount of precious metals, usually gold or silver, the nation posseses.
Between 1600 and 1800 most of the states of western Europe were heavily influenced mercentallist theories. This was essentially an effort to achieve economic unity and political control. There are many broad definitions but I belive thatmercantallism is a collection of policies, which are used by the mother country, in order to keep itself prosperous, by in a way "leeching" off of the colonies. There are numerous positive and negative effects of mercantalism. The colonies have some leeway in their legislature. They also receive protection from the mother country. This can be direct (having troops stationed in the colonies in case of attack), or through a more indirect approach. This would be intimidation.
No one wants to go attack a colony of a country who is for example the biggest naval power. People look at the colonies as a part of the whole, and not a seperate entity. Something else that mercentalism sets up, is the chance for a colony to become is own free state. This has happpened in many cases, including our own. Funds from the mother country build the colony. They fund industry and establish an economy and trade. After years, the colony becomes self sufficient, and with a bit of rebellion, can become its own free state.
This in many cases is good, because the people who left the original country in thefirst place, left because they wanted to form something of their own, and their dreams are fulfilled. We get more players in the global economic ring, which in turn creates competition and the economies flourish. The colonists gain their own identity. However, for every action, there is an equal and opposite reaction. Murphy’s law clearly states that if anything can go wrong it will. The mother country is usually strict and clamps down on colony legislature.