Analysis of the Factors for Success and Subsequent Decline of Portugal, Spain and the Netherlands on the World Trade Arena in 1500-1650

Topics: Spain, Europe, Portugal Pages: 7 (2606 words) Published: May 15, 2013
Analysis of the factors for success and subsequent decline of Portugal, Spain and the Netherlands on the world trade arena in 1500-1650

1. Introduction
The period of 1500-1650 had a crucial impact on the world trade, thus influencing the global economic and political balance. Though the volumes of intra-continental trade in the first half of 16th century were much higher than those of spice and slave movement between the continents, it is obvious that the emergence of the global trade was an event of exceptional importance in the global economic history. Despite it was a desire to trade and profit that motivated the first voyages, it is apparent that conquests and plunder played a crucial role in this process. The roles of different factors to success in the cases of Portugal, Spain and the Dutch Republic and the reasons for fading of their initial successes will be discussed in this essay. 2. Research question

The three main questions this essay sets to answer are: Why was it the three abovementioned countries, and not the others, that were the first to encounter into the trans-ocean trade? What were the prerequisites that determined the timing of these events? And what was the interconnection between the global conquests and trade expansion, i.e. was it the trade that helped the abovementioned countries raise their own economies and finance the conquests of the faraway lands, or was it the war and plundering that allowed to fund the costly voyages to other continents? 3. Data analysis

In order to understand the factors that defined the time and the participants of the trade globalization, it is necessary to understand the balance of power that emerged at the edge of 16th century. Considering that in 15th century Venice and Genoa were enjoying the role of leaders in European imports from the East, with Venice accounting for over 50% of all European spices imports (Findlay, Rourke, 2007, p.140) and gathering enough capital to borrow it to the Western European states, it would have been natural to assume that it would be Venice and Genoa, or at least the strengthening France, who would engage into the expensive intercontinental voyages. Practically, the events unfolded in the opposite way. Being irritated in the end of the 15th century with the growing role of Italian city-states and the Muslims who were blocking Western Europe’s access to Asia and Africa, so much desired because of their spices and gold respectively, Spain and Portugal had no other choice than to develop their own trade routes – through the Atlantic. In support of this explanation Portugal, that was oppressed in terms of trade not only by the Italian city-states, but also by Spain blocking its access to the Mediterranean, had the biggest incentive to reach out to the unknown lands in order to bypass the Mediterranean and Central Asia and get a direct access to India, China and the Spice islands. Portugal’s and Spain’s initiative in moving southwards was also backed by the two facts: firstly, those countries that had an access to the Atlantic and at the same time lacked strong monarchy regimes could grant large profits and political power to the forces that were not in the royal circle. This new power that this group gained helped it pursue the state to respect the property rights, which led to further investments, growth of opportunities and increased volumes of trade that finally turned into the First Great Divergence (Acemoglu et al. 2005). Secondly, covering the increasing costs on warfare and exploration became possible due to a reduction in the quantity of independent political units on the European continent (Findlay, Rourke, 2007, p.144). On the other hand, even this tendency in many cases failed to supply enough money to the states, making plunder, exploitation of slavery and trading monopolies seem like an appealing way to cover the rising costs. 3.1. Portugal

Being oppressed by Spain, Portugal on the verge of 16th century had virtually no...
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