‘Economic Miracle’ is quite a self-explanatory term. It refers to a situation when a relatively weak and economically obscure region manages to achieve staggering economic growth rates against all odds. An economic miracle is not an idealistic or abstract phenomenon. Throughout world history, there have been actual instances when certain countries have defied all expectations and emerged as leading economic powers. This happened for the first time in the Northern Netherlands provinces in the late 16th and 17th centuries. The Dutch American historian, K.W Swart, called it the first economic miracle. In other historical texts, this period is known as the Dutch Golden Age. Before exploring the features and causes of this golden age, it is important to understand the geopolitical context in which it occurred.
The Netherlands was a region which was part of the mighty Spanish Habsburg Empire. In 1568, the provinces in the Netherlands revolted against Spanish rule in the hopes of gaining political independence as well as religious freedom. While Habsburg Spain followed the Roman Catholic Church, the rebels wanted an exclusively protestant state for the people belonging to the Dutch-speaking provinces. This war of independence lasted 80 years after which the Northern Netherlands (also called United Provinces) formally gained independence. Southern Netherlands (modern-day Belgium) remained with the Habsburg Empire. The topic of this article, the Dutch Economic Miracle, refers to the extraordinary economic rise (the economic miracle) of these Northern Netherlands provinces. This rise started during the war of independence itself (in the latter half of the 16th century). Before this, the centers of the medieval European economy were provinces in Southern Netherlands like Flanders. In addition to this, Antwerp (Southern Netherlands) was the most important commercial port in Europe. Wealthy and influential merchants carried out global trade from the port city of Antwerp. Moreover, the provinces in Southern Netherlands were largely urbanized compared to the rural provinces of North Netherlands. However, the situation radically changed in the late 16th century. As a result of these changes, the Dutch Golden Age rushed in. But what were the causes of these changes?
Firstly, there was a large influx of skilled craftsmen and wealthy merchants from the Southern Netherlands. They earlier used to reside in the port city of Antwerp and other industrial cities like Flanders. A majority of them subscribed to the Protestant faith. Hence, in the 1580s, the Habsburg Empire asked all Protestants (who were unwilling to convert) to leave the empire. Due to this, a majority of merchants and craftsmen decided to migrate to Northern Netherlands. Not only did this add to the intelligentsia of the country, but it also deprived Antwerp of major traders and merchants. Because of this, Antwerp declined in status while Amsterdam became the premier port city of Europe. Protestant followers from other places in Europe came to Northern Netherlands as well which contributed to the increasing availability of cheap labor in the region. Because of this, productivity increased greatly.
Secondly, it is widely claimed that the protestant faith promotes a strenuous and extremely productive work ethic. Its focus is largely on putting in long hours as well as gaining certain basic education. One aspect of this was the availability of credit at cheap interest rates as enterprising individuals were given incentives to work hard and set up their production units. This distinctive work ethic contributed extensively to this economic miracle.
Thirdly, the availability of cheap energy resources immensely contributed to the economic miracle. Windmills, the cheapest sources of energy, were present in large numbers throughout the provinces. In addition to this, the invention of the wind-powered sawmill led to the rapid processing of wood which was used to manufacture ships.
Fourthly, it was favorably located on major trade routes which enabled it to conduct trade with Eastern Europe, Western Europe, the Baltic seas, and the Mediterranean. This is why Amsterdam became the most important port city in Europe.
Another not-so-tangible yet the effective reason is also cited by various historians. The argument is that the victory against the mighty Spanish Habsburg Empire would have certainly boosted national morale. This memory of shared success allowed various counties of the Northern Netherlands to work together and develop the region as a whole. The constant threat of a new invasion by Spain also meant that there was no civil strife within the region as it was in the best interests of all the counties to stay together. These conditions of optimism and relative stability must have contributed greatly to the Dutch economic miracle and the arrival of the Golden Age. The next paragraph outlines some of the distinctive features of this golden age.
After the 1580s, the region of Northern Netherlands started to unexpectedly morph into an economic powerhouse. It witnessed extraordinary developments in its textile industries as the demand for European cloth increased worldwide. This meant that it replaced Flanders and other regions in Southern Netherlands when it came to the production of cloth. In addition to this, the Dutch Shipping industry developed at a breathtaking rate which enabled the port of Amsterdam to become the nucleus of European and global trade. It also led to the establishment of the Dutch East India Company in 1602 which managed to establish many colonies in Asia and Africa.
Possibly the most significant achievement of Northern Netherlands was that the Dutch East India Company gained monopoly rights over trade with Japan. Through Japan, the Dutch managed to indirectly conduct trade with China as well. This was quite significant as both China and Japan were traditionally aloof civilizations who were quite suspicious of the motives of Western traders. To gain the trust of these civilizations and to urge them to open their borders for trade was no easy task. Until 1854, the Dutch East India Company was Japan’s sole window to the Western world. This fact conveys the sheer exclusivity and scale of the Dutch dominance in maritime affairs. The golden age also consisted of tectonic advancements in areas of science, culture, art, sculpture, and architecture. Astronomers like Christiaan Huygens, legal experts like Grotius, and philosophers like Bertrand Russel were some of the marquee figures of this period of cultural ascension.
This economic rise of Northern Netherlands was completely unprecedented and unexpected. It laid the foundation of modern-day Netherlands even though it is no longer the pre-eminent economic power on the continent. Just after the Dutch economic miracle ended with the arrival of the 18th century, the Dutch had to face new challenges posed by other colonialist regimes. It also got embroiled in various wars that drained its resources. However, for about 100 years, the Dutch region stood on top of the world.
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The one word that defines him is curiosity. Always looking for new things to explore and learn. Apart from this, he is an avid debator which largely stems from his habit of reading voraciously. Currently pursuing Political Science (Hons.) at Ramjas College, Manraj is a movie buff and a huge football fan.