The Spanish empire once stretched around the world. It included land on every continent except Australia and gave Spain dominance in global affairs. Now, Spain is a relatively powerless country with a serious debt problem. Why did Spain lose position as dominant power in the world? The answers can be summed up in the twin issues of overspending and laziness.
Spending all South America's gold plus more
When Spanish conquistadors came to what they called the 'New World' they were looking for treasure. For the most part, they found it, carting home the wealth of the Incas and establishing mining operations throughout South America. This imported wealth gave a significant boost to Spain's native economy, but it also was the root of their imperialistic undoing.
Basically, with so many riches to be found overseas, business groups in Spain overinvested in shipping operations and mining. They neglected native Spanish industries and speculated broadly. This problem rolled all the way up the imperial food chain, to the point that even the Spanish royals were spending based on what they hoped to realize from their international investments instead of what actually came into their coffers through taxes and domestic businesses. As a result, catastrophes like piracy, bad weather, and lost ships took all the economic security out of the society, leaving it vulnerable to disasters.
The ultimate disasters came in the form of rebellious colonies. Simon Bolivar's campaigns for freedom in South America destroyed a major economic pillar of Spanish society. Without South American gold, Spain had little of its own wealth and lost status as a dominant global player.
When there's no need to be innovative, why not be idle?
Another answer to the question of why did Spain lose position as a dominant power has to do with the motivation for innovation. With wealth pouring in from the colonies, the demand for innovation in domestic business died out. Why bother, when the next ship in from the colonies would have everything you needed and more?
After decades of imported wonders, many Spaniards had lost creativity and innovation as elements of their culture. While Spanish paintins and literature were outstanding, their practical arts such as engineering suffered. They became a society of consumers and artists instead of producers. When the colonies broke free of Spanish rule starting in the late 1700s, the country couldn't adapt fast enough to maintain its status as a dominant world power.
There were other contributing causes to Spain's decline, but they served as additional burdens on top of these two crushing blows. Without sufficient capital or creativity, the empire Spain built on Christopher Columbus's shoulders couldn't be maintained. Bit by bit, Spain's position eroded and it became a minor European nation instead of a major world player in the modern era.