Spain and Portugal consolidate and expand their colonies in the Americas. The Spanish economic developments in their territories focus on silver mining, especially in the towns of Potosí (Peru) and Zacatecas (Mexico). In Brazil, the Portuguese expanded slower than the Spanish, but they soon discovered the fertility of the Brazilian coast for sugarcane. The senhores de engenho (mill lords) were central to sugarcane production since they possessed the means to turn sugarcane into useable sugar. Brazil was never as rich as Spanish America and never as developed.

The way in which the Spanish and Portuguese were able to rule over lands far larger than Spain and Portugal combined is through hegemony, which is a social order wherein the relatively wealthy few form the highest class and dominate the others ideologically by making their dominance appear natural and inevitable. One of the clearest examples of the use of hegemony was through religion. The kings of Spain and Portugal ruled by divine right; therefore, any opposition to them was an opposition to God. There was also a strict social hierarchy outside of the monarchs, with priests forming the second tier. Education was another aspect of hegemony, as to obtain an education required elements beyond the reach of the lower classes.