We explain what the colonial economy is and what its characteristics are. Also, what the colonial economy was like in Latin America and Africa.
What is the colonial economy?
The colonial economy It is a type of organization of production and exploitation of resources that is governed by an unequal relationship between two nations or States. It is the economic organization that characterizes colonialism and implies the exploitation of colonized territories in favor of the colonial metropolis.
Broadly speaking, a colonial economy is characterized by organizing extractive activities for raw materials, implementing a commercial monopoly that privileges the metropolis, and laying the unequal structural foundations of the colonized territories. Another fundamental characteristic is that colonial economies can only be maintained through coercion and the use of force.
Among the main examples of this type of economy are the American colonies of the Spanish Empire and the French and English colonies in Africa and Asia. In the case of the American colonies, the colonial economy was structured around mining, commercial control, and monoculture agriculture.
Characteristics of the colonial economy
The fundamental feature of the colonial economy is that the metropolis benefits from the resources of the colonized territories. Additionally, among its main features are:
- Extractive productive activities. In general, the economy of the colonies develops towards the exploitation of natural resources and their transportation to the metropolis, where they contribute to industrial development and are transformed into manufactured products with greater added value. In this way, the colonies remain in a pre-industrial state, essentially dedicated to mining, agriculture and livestock.
- Trade monopoly. In many cases, colonies are forced to trade exclusively with the metropolis under its terms and conditions. This favors the enrichment of the metropolis and limits the productive capacities of the colonized territories.
- Trade balance favorable to the metropolis. The colonial economy is organized to enrich the metropolis: the application of rates, levies, taxes and other methods of economic control are imposed from the colonial center.
Colonial economy in Latin America
In the case of the Latin American continent, Spanish colonization began at the end of the 15th century and persisted until the 19th century. To exploit American wealth, the Spanish empire created the so-called “colonial pact” in which an economic system controlled from Spain was established.
The colonial pact implied an unequal exchange: the colony had to provide the metropolis with sufficient resources to pay for the “investment” in its administration, establishment and development, along with a surplus or profit. In return, the metropolis had to administer the system fairly and appropriately, so that the relationship was mutually beneficial.
The bases of the pact maintained the structural inequality that linked both territories. The Latin American colonial economy prioritized the extraction of precious minerals (especially gold and silver) and its export to Spain. In addition, he implemented a commercial monopoly that regulated the importation of goods into the American colonies.
This organization responded to the economic thinking of mercantilism, which maintained that the wealth of a kingdom was measured by the accumulation of precious metals. The more gold, silver, and material wealth a kingdom had, the greater its international power and influence.
On the other hand, the Latin American colonial economy It was characterized by the exploitation of indigenous labor and the introduction of slave labor coming from Africa. The indigenous labor force was mainly used for mineral extraction and the African slave labor force was mainly engaged in agricultural production (organized in large monoculture plantations) and domestic service.
Colonial economy in Africa
In Africa, colonization occurred within the framework of European imperialism whose peak was at the end of the 19th century and the beginning of the 20th century. At that time, it occupied the entire continent (except for Abyssinia and Liberia). The major European colonial empires that established dominions in Africa were France, the United Kingdom, Belgium, Portugal, Italy, and Germany.
In this case, as in the rest of the colonial economies, the relationship between metropolis and colony was unequal. Some colonizers established more open trade regimes, such as the English, and others implemented greater restrictions, such as the French. However, in both cases the conditions enriched the metropolises and limited the economic development of the colonized territories.
The main characteristics of the colonial economy in Africa were the implementation of agricultural plantation of export monocultures, the use of cheap or forced native labor and the extraction of natural resources, especially gems and precious metals.
As the goal of the metropolises was for their colonies to be profitable, investments in development and infrastructure were very limited and focused on financing projects aimed at facilitating trade and transportation for resource extraction.
References
- The Editors of Encyclopaedia Britannica. (2023). Western colonialism summary. Encyclopedia Britannica. https://www.britannica.com/
- Campos, E., Galliano, A, and others. (2015). Imperialist expansion. History. The expansion of capitalism and the formation of national states in Latin America. Estrada.
- Rizzi, A and Raiter, B. (2008). The Spanish colonization of America: the economic system. A story to think about. Modern and Contemporary. Kapelusz Norma.
