Elizabeth I's reign brought about a period of political and social stability to England after a long period of disorders and upheavals, both civil and religious. With the defeat of the Spanish Armada in 1588, England became a genuine world power. Though it may be unclear how the phenomenon occurs, a sense of greatness and power within a country's leadership has a way of permeating an entire society, including the artistic culture.
Sir Philip Sidney had noted in his Defence of Poesie that there are certain qualities in the English language that will make it ideal for literary expression. Sidney basically asked why his own countrymen could not create a great national literature as the Italians, French, and Spanish were doing. In the 1500s, major poetic works had emerged, especially from Italy, the most important of which were Ariosto's Orlando Furioso and Tasso's Gerusalemme Liberata. English poets and scholars like Sidney and Edmund Spenser were emboldened to attempt the same kind of achievement. Spenser was perhaps the first English poet of this, the Renaissance period, to create an epic, The Fairie Queene, that could stand with the work of the continental European poets, and this was an inspiration to the English literary men of his time and the following generation.
Further, this period the expanding middle class meant that there was an increasing audience in London for both literature and stage spectacle. The triumph of the Tudor dynasty created a sense of gratitude among much of the population, and there was a desire to celebrate the Tudors in stage portrayals, almost as a kind of propaganda for the regime. All of these elements—a new sense of national greatness, political power, the influence of poetry and romance from continental Europe, and the general spread of learning and expansion of the urban bourgeoisie—set the stage for the Elizabethan drama, whose greatest exponent was Shakespeare, with the second rank occupied by Marlowe, Beaumont and Fletcher, Thomas Kyd, and others.