After 1450, Western Europe experienced significant changes in its economic system, primarily due to the following factors:
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Rise of Commercial Capitalism: The period saw the emergence of commercial capitalism, which involved the expansion of trade networks. Merchants began operating more systematically and became instrumental in accumulating capital and investing in trade expeditions, including those that reached new markets in Asia, Africa, and the Americas.
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Exploration and Colonization: The Age of Exploration led to the discovery of new lands and sea routes. Figures like Christopher Columbus and Vasco da Gama opened up trade with the New World and Asia, respectively. The influx of wealth from colonies, especially through resources like gold, silver, and spices, significantly altered the economic landscape.
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Growth of Urban Centers: The increase in trade fostered the growth of cities and urban centers, which became hubs for commerce and industry. This urbanization stimulated the development of new markets and motivated innovations in production and distribution.
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Mercantilism: Governments began to adopt mercantilist policies aimed at enhancing national wealth through trade. This included establishing colonies, monopolistic practices in trade, and accumulating precious metals. States sought to regulate the economy to maximize their power and wealth.
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Investment in Infrastructure: There was increased investment in infrastructure, such as roads and ports, to facilitate trade. This development was crucial in promoting both internal and international commerce.
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Technological Innovation: Advances in technology, such as improvements in navigation (e.g., the compass and astrolabe) and shipbuilding techniques, boosted maritime trade and exploration. Innovations in agriculture, such as crop rotation and new farming tools, also increased food production and supported population growth.
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Shift from Feudalism: The decline of feudalism and the rise of a more market-oriented economy allowed for increased mobility of labor and capital. This shift facilitated the emergence of a capitalist framework where individual entrepreneurship became more valued.
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The Rise of Banking and Financial Institutions: The expansion of trade led to advancements in banking and finance. Institutions such as bills of exchange, letters of credit, and the establishment of banks in cities like Florence and Amsterdam facilitated trade and investment.
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The Protestant Reformation and Changes in Economic Thought: The Reformation, particularly in the 16th century, encouraged individualism and personal interpretation of the Bible, which paralleled the emerging ideas about personal wealth and enterprise, contributing to the capitalist ethos.
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Slavery and the Slave Trade: The Atlantic slave trade became central to the economy of the New World, particularly in plantation economies. This system provided labor for cash crops like sugar and tobacco, which became significant exports and profits for European economies.
These changes collectively transformed the economic structure of Western Europe, laying the groundwork for modern economies and establishing patterns of trade and production that would have lasting impacts through the Industrial Revolution and beyond.
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