In the 18th century, as a result of Industrial Revolution, the investment began to increase and many nations produced more than what they needed. It could not be accommodated in domestic markets. The trade relation was established with Asian, African and Latin American nations. The European countries economically exploited other from tries using political power and military forces.

The nations produced more than their need and it could not be accommodated in domestic markets. This resulted in competition among the European countries. The economical exploitation of European countries using political power and military forces among the nations later resulted in colonization.

They had considered the colonies as the source of raw materials and market for industrial products. The colonial masters began to invest capital in the colonies.

The phase of flow of finance capital to colonies is termed as imperialism. A nation imposing its political, economic and cultural dominance on another is a fundamental feature of Imperialism. This was done using legal system, administrative measures, military force etc.