First I agree with
Athelstane. Venice performed too well historically, against all odds: manpower limitations, blocked sea routes, high tariffs for her merchants in the Ottoman Empire, the hostility of other Italian states and the Pope, competition by bigger powers like France, England, Netherlands.
Also, I agree with
wannis: Venice declined more due to the shift of the trade routes than the wars with the Ottomans. But, furthermore, the Venetian products lost their place in the North European markets since the industries of Netherlands and England produced huge amounts of products of smaller quality, but in far smaller prices and dominated the markets of both Europe and the Ottoman Empire. Also, as Norwich notes in his
work , despite all the problems of Venetian trade performance in comparison with the Northern Europe, despite the losses of Venetian trade due to the rise of Trieste, in the 18th c. the Venetian economy was at its hights. Only that this financial wellfare was not translated in terms of political power, while the bulk of the national income was going to the hands of very-very few, who spent it all in consumer and luxury goods, so little remained for investments of the state.
Let me explain the situation based on my homeland, Corfu, which was roughly a micrograph of Venice:
The 18th c. was a good time for the island. The last war ended in 1718, having been no too devastating for Corfu. So, there were about 80 years of peace. But, although this, the peasantry's situation worsened, and so did aristocracy's as well. The aristocrats drained more and more of the peasantry, spending it all to luxuries, falling thus in debts towards local and foreign money-lenders. Some reorganization of the political and economical system by a couple of Provisioners failed due to the lack of support by both the local regime (Corfu was not a direct possesion of Venice, so there were two administrational bodies, one Venetian and one local) and the metropolitan one. The whole state fell in decay, which affected the morale of the citizens and subjects, who accepted the French rule (1797) with no reaction at all, just like Venice herself. That's why when Venice fell to the Frech, a group of aristocrat and high-middle youngsters launched a campaign against the Venetian emblems in the town of Corfu and celebrated the forthcoming Revolutionary French rule: despite that would be against their class' interests, they preffered that instead of the "Venetian" decay...