Turning Points in Leadership: Shipping Technology in the Portuguese and Dutch Merchant Empires Claudia Rei Vanderbilt University
[email protected] December 10, 2013 Abstract This paper discusses the implications of organizational control on the race for eco- nomic leadership in merchant empires. Poor organizations have reduced incentives to invest, which in turn stifle technological improvements making leaders lag behind new entrants. Portugal’s large ships carried more merchandize and were more fitting of the monarch’s grandiose preferences, but they also were more prone to disaster in stormy waters. The merchant controlled Dutch East India Company however, invested in smaller but more seaworthy vessels conducting more voyages at a much lower loss rate. The surviving historical evidence shows Portugal relying on large ships well into the seventeenth century suggesting her technological edge was gone by the time the Dutch enforced their presence in the Indian Ocean. I thank Bob Margo and Andy Newman for early stage discussions and Jeremy Atack, Bill Collins, Mauricio Drelichman and Richard Unger for detailed suggestions on earlier drafts. I also thank Ben Eden, Boyan Jovanovic, Giacomo Ponzetto, Peter Rousseau, Ken Snowden, Jan de Vries, participants at the annual meetings of the Economic History Association in Boston, the annual meetings of the Southern Economic Association in Washington DC, and the Frontier Research in Economic and Social History meeting in Saint Pierre d’Entremont for helpful comments. 1 1 Introduction Economic progress has often been associated with technological advancement. The age of merchant empires was perhaps the period of history in which this relationship became most visible as decisive developments in shipping technology dictated the success or failure of long-distance trade (Maddison 1982, Brezis et al 1993, Israel 1989, Acemoglu et al 2005).