Final answer:
European countries enriched themselves through a colonial system known as mercantilism, extracting resources from colonies while restricting their trade and limiting local competition. This resulted in lasting global economic inequality with some colonies later becoming powerful independent nations.
Step-by-step explanation:
The system in which European countries generated wealth and income from colonies is rooted in a historical framework of mercantilism and colonialism. Under this system, during the sixteenth through nineteenth centuries, European powers like Britain, France, and Germany established and maintained colonies primarily to extract raw materials necessary for their industrial economies. These colonies also served as markets for European manufactured goods. To ensure this economic structure was profitable, European merchants and governments exerted control over colonial trade, limiting local competition from colonized peoples and taxing them to force participation in the extraction of resources, such as mining and plantation work.
The colonial system not only provided raw materials and labor but also maintained mercantilist trade policies that favored the home country. For example, England's North American colonies were required to sell their products exclusively to England. While emerging nations worked to develop their own economies, European and American entities amassed wealth by dominating international trade and exploiting colonial resources. This has left a lasting impact on global economic inequality. Ironically, sometimes these colonies, after gaining enough economic power, formed independent nations that turned out to be stronger than their European colonizers, as was the case with the United States.