Mercantilism is an economic theory that emerged in Europe during the 16th to 18th centuries. It emphasizes the importance of a nation accumulating wealth, primarily through a favorable balance of trade. This means that countries should export more goods than they import, thereby increasing their reserves of precious metals like gold and silver. Governments often intervened in the economy to support domestic industries and restrict imports. Under mercantilism, colonies played a crucial role as sources of raw materials and markets for finished goods. European powers, such as Britain and France, established colonies in the Americas and elsewhere to enhance their economic strength. This system contributed to competition among nations and laid the groundwork for modern economic policies.