Imperial Decline

Portugal's empire in Asia made its monarchy the richest in Europe and made Lisbon the commercial capital of the world. This prosperity was more apparent than real, however, because the newfound wealth did not transform the social structure, nor was it used to lay the basis for further economic development. The country's industry was weakened because the profits from Asian monopolies were used to import manufactured goods. As the empire in Asia was a state-run enterprise, no middle class or commercial sector independent of the crown of any consequence emerged as it had in other parts of Europe. Moreover, the persecution of the Jews, who possessed vital technical skills, robbed the country of an important force for modernity and reinforced feudal elements. Adding to the drain on the economy was the large amount of money spent on sumptuous palaces and churches.

Because the wealth from the discoveries did not produce a middle class of competent, trained individuals to whom the affairs of state gradually fell, leadership in Portugal remained in the hands of the king and the military aristocracy. Moreover, the imperial system had intensified the already centralized system of government, which meant that the quality of national policy was closely tied to the abilities of the top leadership, especially the king himself. Unfortunately, the House of Avis did not produce a king of great merit after João II, and Portugal entered a long period of imperial decline.