The feudal system in Europe was increasingly replaced by emerging capitalist economies and centralized monarchies during the late Middle Ages. This transition marked the decline of feudal obligations and manorial systems as trade began to flourish, cities grew, and a merchant class emerged. The rise of towns and urban centers, coupled with innovations in agriculture and finance, led to increased economic interdependence that diminished the power of feudal lords. Additionally, strong centralized states began asserting authority, which laid the groundwork for modern nation-states. This shift facilitated the exploration of new trade routes and ultimately the Age of Exploration.