The economic system in Western Europe underwent significant transformations after 1450, marking the transition from a primarily feudal agrarian economy to a more complex and diversified early modern economy. Several key changes characterized this period:
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Rise of Capitalism: The foundations of modern capitalism began to take shape. Trading networks expanded, and merchants began to accumulate capital, which fueled investment in markets and commerce. The emergence of a merchant class, which gained wealth through trade and industry, began to challenge the traditional feudal hierarchy.
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Expansion of Trade: The discovery of new trade routes and the establishment of overseas colonies led to increased international trade. The Age of Exploration, marked by voyages of figures like Columbus and Vasco da Gama, opened up new markets in the Americas, Asia, and Africa, contributing to the flow of goods and resources such as spices, sugar, and precious metals into Europe.
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Introduction of New Goods: Trade brought a variety of new products to Europe, including exotic spices, textiles, and other goods from Asia and the Americas. This not only influenced consumer habits but also stimulated demand for luxury items among the growing middle class.
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Mercantilism: This economic theory gained prominence as nations sought to accumulate wealth through a positive balance of trade and increased state intervention in the economy. Governments began to establish monopolies, control trade routes, and manage colonies to benefit from their resources.
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Technological Advancements: Innovations in navigation, shipbuilding, and manufacturing processes, such as the introduction of the printing press, contributed to economic growth. These advances facilitated exploration and the expansion of trade, as well as the distribution of new ideas and knowledge.
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Urbanization: As trade and commerce expanded, there was a significant movement of people from rural areas to cities. Urban centers grew as hubs of economic activity, where markets flourished and new professions emerged, leading to the rise of a more diverse workforce.
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Agricultural Changes: The agricultural revolution began during this period, with new farming techniques and practices emerging. Innovations such as crop rotation and the use of new tools improved productivity, which supported larger populations and freed some labor for other economic activities.
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Banking and Financial Systems: The establishment of more sophisticated banking systems and financial instruments, including bills of exchange and letters of credit, facilitated trade and investment. Institutions like the Medici Bank played a critical role in financing trade and commerce.
These changes set the stage for substantial economic shifts in Western Europe that would influence social structures, political power, and global interactions in the centuries to follow.