Question

What is mercantilism? How did it lead to development of colonies?

Answer 1

The mercantilism is an economic theory that the trade is what generates wealth, being stimulated by the accumulation of profitable balances, which should be encouraged by the government by means of protectionism. This led the leaders of the strong Western European countries to seek for territories from which they can benefit in the sense of gaining more goods for trade, and then use the people in the colonies as customers as well, thus creating lot of wealth. And so they did. France, Spain, the British Empire, Netherlands, Portugal, all managed to create colonies at places that were rich in natural resources and goods that were well paid and demanded. On top of it, they made colonies so that they can expand their market, thus they were producing in the colonies, using them as a market, and making lot of profit. In order for this to be happening, the governments used their military in order to protect their colonies, often engaging into conflicts.