Explain the factors that favored the growth of the Dutch trading empire and what obstacles it faced.

Answer 1

The Dutch trading empire's prosperity was made possible because of the high level of productivity in the Dutch economy and its advantageous geographical and political position in the international trade markets of the time. Let's break these two factors down:

Productivity: Energy was cheaply available through the proliferation of windmills. The wind-powered sawmill made shipbuilding faster and cheaper, fueling the growth of the country's merchant fleet. The country's canals enabled relatively cheap transport of goods throughout the country. Religious tensions following the Eighty Years' War in Europe drove many skilled workers to Amsterdam and other parts of the country, enabling the city to become an economic powerhouse. The country established modern financial systems where investors could buy stock in a company, allowing the pooling of resources needed to undertake long voyages over international trade routes.

Trade advantages: The country's location made it a natural middleman in the trade between the Baltic sea and the Iberian peninsula. Dutch merchants carried goods such as fish and grain from Baltic ports to France, Spain, and Portugal and products like wine and cloth from those countries to the Baltic. Dutch ports were also a place for goods from the colonies, such as spices, to enter Europe. The Dutch were also able to establish trading posts throughout the world, including many parts of Indonesia and Southeast Asia that allowed to control the valuable spice trade.