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Q4. Explore the economic conditions/factors that helped the renewal of Imperialism?


Industrial Revolution created the capitalist system of production. The capitalist entrepreneurs used two ways to make big profits: Minimum wages to workers and increasing production levels. Low wages implied that majority of population had low purchasing power and resulted in low demand for products at home. Because of the “under-consumption” in domestic market, the capitalist nations had to find new markets and buyers to sell their products.

England was the first country where industries developed, therefore she gained almost complete control over the world markets. Even when other European countries began to use machines, they could not compete with England’s low prices. So, they tried to protect and stimulate its domestic industries by imposing heavy tariffs on imported items (Protectionist Policies). European powers could not sell their products to each other. They had to find totally new markets and customers in Asia, Africa and the two Americas.

Mercantilism was another economic policy prevailing in Europe during the 16th, 17th, and 18th centuries. This policy assumed following:

Volume of world wealth and trade was relatively static, so one country’s gain required another country/colony’s loss.

Wealth of a nation depended primarily on the possession of gold and silver.

A colonial possession should provide wealth to the country that controlled it.

Exports to foreign countries is preferable to imports or domestic trade, because exports brought more money into the country.

Governmental interference in the national economy is justified if it helps achieving the above objectives.


So nations acted accordingly. They setup “trading posts” which would later become “forts”, arm twisted local rulers to gain exclusive market for their products and so on. All this was done and justified as the objectives of mercantilism were fulfilled.


Supply of raw material: As the industries grew in Europe, they needed more and more raw material. For example, Cotton from India and Egypt and rubber from Congo and East Indies

They also needed food grains, tea, coffee, Indigo, tobacco, sugar, coal, iron, tin, gold, copper and later oil. This resulted in Imperialists forcing the colonies to cultivate only one or two crops which were needed as raw material for their own industries (e.g. indigo in India, Sugar in Cuba.)

Smuggling: sometimes, goods produced in one country were sold to another country to pay for the goods from that country. e.g. The English promoted cultivation of opium in India, then smuggled into China to pay for the goods they had bought from China.


Investment: Towards the end of 19th century, Western countries began to look upon Asia and Africa as both Asia and Africa had abundant supply of raw material and cheap labour. At the same time investment in Europe could only fetch 3 to 4% profit, because of little purchasing power of local people. Same amount invested in Asia or Africa, you could earn as high as 20% profit.

Besides, towards the end of 19th century, financial institutions such as banks expanded their influence and power, thus making flow of capital easier than earlier. The export of capital for investment in other countries began to become more important in the export of goods.


Infrastructure investment: The Western powers invested in their colonies to promote industries that could produce goods for export e.g. mining and plantation. They also invested to strengthen control over colony’s economy e.g. Railways, postal network. This necessitated political domination because the economic stakes were very high and they could not afford uprising of local people. Such things could lead to reduction in profit or even loss of whole investment.

For the same reasons, French investors in Morocco (N.Africa), appealed to their home government in France, to annex it. Thus Morocco became “French Morocco”.

The Spanish rule in Americas had resulted large-scale extermination of original inhabitants/Native-Americans as they were forced to work in gold/silver mines and were massacred, if resisted and Foreigners brought new diseases, and Native Americans had no immunity against them.

Later, the Europeans introduced plantation system in North America, West Indies and Brazil for the cultivation of sugarcane, cotton and tobacco (to supply as raw material to home industries).

These plantations needed lot of laborers.

Hence it became necessary to establish trading posts in the coastal areas of Africa to keep steady supply of African slaves. Later, Britain and other powers used “abolition of slavery” as an excuse to wage war against African chiefs and kings, but their hidden aim was to expand territorial possession. (For timber, ivory, minerals and oil).


Transport and communication: The Industrial Revolution brought drastic changes in transport and communication. Steamship could carry goods much faster than the old sailing vessels. The imperialist countries built railroads and inland waterways in the conquered areas, with the help of cheap local labor. Thus could get raw material out of the interiors and send their manufactured products, faster than ever before. Thus every area of the world was brought within easy reach of the industrialized countries.


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