The history of the Dutch economy has faced several ups and downs throughout the 16th and 17th centuries. It has undergone moments of prosperity and was one of the dominant world powers in the 17th century. Its heavy involvement in the Atlantic trade had a large impact on its economy and growth. There is no clear definition for the Atlantic trade, but researchers have concluded it may be referred to as: Trade with the New World, and trade with the Asia through the Atlantic, including, but not limited to, imperialism and slavery based undertakings. Among the most important of these traders were the Dutch and the British. It is noted that these two nations experienced a more rapid growth than most due to their non-absolutist political institutions. This is only one of many beneficial factors that played a role in shaping growth and economic change within the Netherlands that occurred throughout the 16th and 17th centuries.
The rise of Dutch independence
The Dutch success in trade did not come without struggle and conflict. Studies show that the Dutch had several qualities that afforded their trade system to rise above other European states' throughout the duration of Atlantic trade. Dutch merchants have always had access and opportunities providing a gateway to profitable trade. They also obtained autonomy. Before the Dutch Revolt, the Dutch were under the control of the Habsburg Empire which limited the power of Dutch merchants and their influence on trade. The Empire had control and tried to gain even more over the fiscal revenues from the Netherlands. Conflict amongst the merchants and the empire began to grow and independence and new political institutions were the result.
During the Revolt, Dutch trade was revolutionized, and the 15th century marked a considerable expansion of the Dutch economy. Several important modifications were made to both the military and commercial strategies. Before long, the Dutch had gained access to Asian and American trade centers. Leading this drive to independence were merchants. Throughout this time the Dutch experienced growth in economic industries such as agriculture, shipping, and public finance. In 1590, the beginning of divergence between the South and North of Europe began to be noticeable, as well as the explosion of Dutch commerce and the early stages of Amsterdam growing as a large financial center. The growing Atlantic trade was edging out the once profitable Baltic route. With trade growing along this route and specialization prospering, the Dutch were ultimately victorious in their pursuits against the Habsburgs.
Israel states:
From 1590, there was a dramatic improvement in the Republic's economic circumstances. Commerce and shipping expanded enormously, as did the towns. As a result, the financial power of the states rapidly grew, and it was possible to improve the army vastly, both qualitatively, and quantitatively, within a short space of time. The army increased from 20,000 men in 1588 to 32,000 by 1595, and its artillery, methods of transportation, and training were transformed. By 1629, the Dutch were able to field an army of 77,000 men, 50 percent larger than the Spanish army of Flanders″
The Dutch prospered immensely during this time. The leading benefactor of this growth was trade and the means of which they manifested it.
They did so particularly through conflict and specialization. Now we see the importance of competitive goods, the Dutch traded what was in demand and the strategy proved to be very favorable for them. They were long distance tradesmen and had some breathing space as far as trade regulations went, which also contributed to their growth. This is in comparison with the previous Habsburg restrictions. In his article, Acemuglu uses this evidence to prove that Atlantic trade led to the enrichment of merchants, which resulted in the development of political institutions. Said institutions are responsible for constraining the power of the crown.