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# Colonial Economic Adaptation

## Definition

The capacity of colonial economies to adjust to changing circumstances, including market conditions, technological developments, and competitive pressures. Greater economic freedom enhances adaptive capacity by allowing decentralized decision-making and market-driven adjustments.

## Source Chapter

Book IV, Chapter 7

## Context

Smith emphasizes adaptation as a key advantage of economic freedom, arguing that monopoly policies reduce colonial economies' ability to respond effectively to changing conditions. He contends that more flexible arrangements would promote better adaptation and sustained development.

## Economic Domain

General Theory

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