Turning Points in Leadership: Shipping Technology in the Portuguese and Dutch Merchant Empires

This paper discusses the implications of organizational control on the race for economic 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.