Question

How did Adam Smith believe the economic system known as mercantilism limited potential economic growth? for apex

Answer 1

It limited the choices that producers and consumers could make when choosing trade partners.

Answer 2

Adam Smith criticized what he called the "mercantile system" because it restricted trade and thus restricted economic growth.  The mercantile system believed the wealth of the world was a fixed amount, measured primarily in gold and silver accumulated.  The system promoted a nation selling its products abroad but not needing to buy from others, or imposing heavy tariffs if importing anything.  Commerce was heavily controlled by the government through charters granted to specific trading companies.

Smith countered by advocating a free market -- the opportunity for all nations to increase their wealth by exchanging goods freely with one another according to what would become known as capitalist principles.