CONTRIBUTION OF MERCHANTALISM TO THE RISE OF CAPITALISM
IN EUROPE
1. Merchantalism led to the accumulation of capital among Europeans. This led to
investment and re-investment in economic sectors like banks, industry, transport and
communication hence the capital obtained in merchantalism Led to the rise of industrial
capitalism.
2. Merchantalism led to the development of financial institutions and insurance companies.
These institutions facilitated the development of capitalism especially industrial
capitalism because they provided loans, credit and services to the Europeans merchants to
continue involved in overseas trade, hence development of capitalism.
3. Merchantalism led to the development of towns, cities, and sea port towns notably
Manchester, Leads, Liverpool, Lisbon, Paris, etc. because in these towns there was
development of trade and manufacturing center which developed to industrial cities
which attracted many of European population to live in those towns and a lot of town
requirement were available in those towns. Example water, electricity, good houses.etc.
4. Merchantalism led to advancement and development of science and technology. Example
the sea going science and technology like ship building, compass bearing, compass
direction, etc. This was because during merchantalism, ships of different size were
designed specifically for carrying slaves from Africa to America and used for carrying
raw materials from America to Europe and later commodities were taken from Europe to
other parts of the world especially Africa where market was available.
5. Merchantalism led to availability of cheap labour in European plantation, mine, and
industries. African slaves were taken in a large quantity during this period to America to
offer their labor power in plantations established in Canada, USA, etc. but others offered
their labor power in European mines established in Peru, Colombia all these led to the
development and growth of industries in Europe.
6. Merchantalism led to availability of raw materials which were needed to develop
European countries because these raw materials which were produced in the new world
like cotton, sugar cane, tobacco, sisal etc. was transported to Europe to be manufactured
as commodities and later these commodities were sold in other parts of the world
especially in Africa for European development.
7. Merchantalism led to availability of markets both internal and external market for
absorbing European industrial goods. During merchantalism European goods were sold
in Europe and Africa where markets were available for economic interests of European