My question is concernecd with the forces at work during the period of Ottoman stagnation and to what extent it was Politics or Economics.
My understanding of the this time is that you have a series of ineffectual leaders, rise in the power of the Janissaries, a series of uprising, and trade being rerouted around Africa instead of the silk road.
I guess my question is how much was stagnation a product of outside forces like the rerouting of trade or stronger western alliances versus internal political factors?
In addition to the factors you mentioned, general Ottoman technological and social stagnation resulted in an economy that remained agrarian-based than their Western counterparts, with industrialization coming into play slower and later for the Ottomans than their European neighbors.
As a matter of fact though economic reforms were beginning to take place in the mid-1800s under Abdulmecid I (national bank, increased foreign investment, etc.), but unfortunately rampant state spending by his successor (and Abdulmecid, but to a far-lesser extent), the Ottoman government was forced to take out loans that would result in bankruptcy in the 1870s, an economic hole they would never be able to fully climb out of.
By the 20th century Oil was the Ottoman Empire's best bet at revitalizing their economy, as despite their territorial losses over the centuries they still maintained control over several major oil producing area, but unfortunately WWI came around and ended the Empire before Oil would become the major world resource it is today.
http://www.youtube.com/watch?v=T-SUlb4rwls
Here's a nice video. It claims that the problem started when the Spanish flooded the global economy with gold. European merchants would travel to the Ottoman Empire to buy raw materials like timber and metal. Local industries in the Ottoman Empire could not acquire raw materials because the European merchants outbid them with gold from the Americas.
The Empire tried to ban European merchants to protect local industry. A black market formed to trade with European merchants. The black market extended into the bureaucracy and administration, who began taking bribes. Corruption of the government caused the decline of the Empire.
A while ago I read an interesting theory - I think it was in 'Lords of the Horizons' by Jason Goodwin, but I'll try and check.
To paraphrase - Ottoman revenues were gathered according to the solar calendar i.e. every 365 days. The Janissaries and other creditors had to be payed according to the Islamic lunar calendar i.e. every 354 days.
In the short term this funding gap wasn't a problem, but the deficit increased by 11 days every year - for hundreds of years. By the 19th century the deficit and costs of servicing had grown unsustainably huge.
I hope I've explained this clearly - I'd love to hear the thoughts of any economic historians.