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Colonialism is the establishment of a colony in one territory by a political power from another territory, and the subsequent maintenance, expansion, and exploitation of that colony. The term is also used to describe a set of unequal relationships between the colonial power and the colony and often between the colonists and the indigenous peoples.The European colonial period was the era from the 16th century to the mid-20th century when several European powers established colonies in Asia, Africa, and the Americas. At first the countries followed a policy of mercantilism, designed to strengthen the home economy at the expense of rivals, so the colonies were usually allowed to trade only with the mother country. By the mid-19th century, however, the powerful British Empire gave up mercantilism and trade restrictions and introduced the principle of free trade, with few restrictions or tariffs.