This chapter reviews a specific era in the complicated interactions of capitalism and colonialism. It outlines the controversy over the relationship between the uneven industrialization of Europe and the motivation of "new imperialism". Colonialism contributed importantly to deepening the international division of labor between Western exporters of manufactures and "Third World" exporters of primary products. The chapter then focuses on the famous question of the importance of colonies in the origin of industrialization, and sketches the economic balance sheets of empire: the gains and losses from the possession of colonies for the imperial powers. Next, it explores the impact of the imperialism of capitalist countries on capitalism in the colonies themselves: on the spread of capitalist institutions; the proliferation of capitalists; and the achievement of "capitalist" forms of economic development. Finally, the chapter examines how far colonial rule promoted or retarded the development of capitalism in the colonies and evaluates economic development in the colonies including industrial growth.