A colonial economy refers to the economic system established by a colonial power in its colonies. This system often focused on extracting resources and raw materials from the colonies, which were then sent back to the colonizing country for processing and profit. The colonies typically produced cash crops, such as sugar, tobacco, and cotton, which were in high demand in Europe. In a colonial economy, local populations were often exploited for labor, and traditional economic practices were disrupted. The colonial powers imposed taxes and trade restrictions, limiting the colonies' ability to develop their own industries. This created a dependency on the colonizers and shaped the economic landscape for years to come.