TLDNR: Colonies weren't necessary for development, in some cases they actually reduced incentives for development. Local cultural and political factors are more important to "Why did Germany develop fast and Spain didn't" kind of question.

Discussion:

There's a mistaken assumption embedded in the question that colonialism was necessary for development. Italy and Germany had few colonies; Spain and Portugal had many-- overseas colonies brought wealth, but did not bring "development", which is something different.

Indeed, overseas wealth arguably enabled Spain to avoid economic development; the expulsion of the Muslims and Jews, the suppression of the Alumbrados; a whole series of actions to maintain the primacy of an essentially feudal Catholic order and to limit the impact of trade and industry and the secular on the political primacy of the Crown and Church; all these costly measures were presumably facilitated by the ships filled with American silver and gold. No need to look to trade to create wealth, with its attendant challenges to a premodern social order, when you capture gold and silver mines of Potosi. But with the traditional banking networks gone -- expelled-- Spain post 1492 had essentially only the development that it could "command". So even as Spain is conquering central and South America, Spanish attitudes toward trade and industry cause the gun and steel industry to leave; that's why there's a big Belgian arms industry today.

What drove economic development in nations like Britain, Germany and Italy? Not the Church, and not the Crown. Free thinkers, technological experimentation, and the development of nucleus of skills, markets, and capitals which were mutually reinforcing. Britain's overseas colonies didn't make the steam engine more likely, for example-- that's an endogenous innovation. Prussia's Frederick the Great was brilliant and admired and sought technological development; of the German states, Prussia remained the least developed. Similarly Peter the Great of Russia went so far as to import foreign communities, hoping to modernize Russia-- not without any success, but Russia never became the Netherlands he'd visited in his youth.

In Europe, scholars as early as Max Weber identified religion as a potentiating/retarding feature of development. Protestant values around work and consumption fueled savings and investment, producing a feedback loop-- savings funding new ventures, profits on new ventures going into savings (as opposed to consumption) and so continuing the cycle. You might be reading here and say "aha, but Italy is and was very Catholic" -- note that Italy's development has a North South gradient; development takes place in the much more secular North, but is substantially retarded in the more traditional South.

So in Italy you can find Northern textile production that is highly efficient, and southern agricultural production which is very traditional. One observation is that "where labor is cheap, innovation is less important"; slave states don't tend to invest capital in labor saving devices; across many civilizations you can see an optimal strategy "just buy more people".

Finally, there's the problem of feudalism; feudal structures sometimes were congruent with markets and development (notably in Japan of the Meiji Restoration); but sometimes they fought it. Whether a nation was capable of rapid economic development thus has an historically particular aspect of just how the previously powerful saw the rise of artisanal classes, the bourgeoisie, money and banking. In Il Gattopardo, an historical novel of political and social change in 19th century Italy, the author de Lampedusa has the great line "For things to remain the same, everything must change"; some feudal elites got this point, some fought it to the end.

Finally, I don't want to suggest that colonialism was completely disconnected from development; overseas colonies could provide profits fueled by cheap labor which could, _if_ invested productively, accelerate a market economy; Britain's relationship with East Indian sugar would be an example. See the work of W. Arthur Lewis for more on this complex subject.

Sources:

The Mobilization of Philip II's Revenue in Peru, 1590-1596

- a look at the role of American silver and gold in financing Spain's wars. What you can see is that Philip's view of the Imperial economy and mission was something like "the Americas provide the silver and Spain provides the Armies to fight for the Catholic faith"-- none of this really spoke to economic development, indeed it hindered the changes that had to happen for a market economy to rise.

The Competitive Advantage of Nations - Michael Porter's book identifies how nations develop particular self reinforcing networks of expertise and efficiency; these are some of the dynamics that drive development

The Protestant Ethic and the Spirit of Capitalism - Max Weber's classic work, more than a century old, but given that Weber died a hundred years ago in the great flu epidemic, it's worth mentioning this great book. It's both important in its own right, and as a foundation for modern economic history.

UNEVEN REGIONAL DEVELOPMENT IN ITALY: EXPLAINING DIFFERENCES IN PRODUCTIVITY LEVELS

- as the title suggests, a look that the very different levels of development in Italy.

Economic Development and Feudalism - a look at the [in]efficiency of traditional manorial agricultural practices.

W. Arthur Lewis and the Birth of Development Economics -- pretty much all Lewis' works are relevant to this discussion. Lewis was a Nobel laureate development economist who made the study of labor and development his specialty. He's particularly acute on the subtleties of of how cheap labor can provide excess capital which is then reinvested into a developing capitalism.

The Pursuit of Power: TECHNOLOGY, ARMED FORCE, AND SOCIETY SINCE A.D. 1000

- a classic work by the University of Chicago historian William H. McNeill; for the purposes of this discussion see in particular his discussion of the Spanish gunmakers. Philip II tried very hard to create a Spanish armaments industry, but his policies drove these early technologists Northy, notably to Liège; ironically Spain ended up buy much of their military necessities from entrepreneurs who had been in Spain, but had to leave in order to efficiently develop their business.