Fernand Braudel characterized 1480–1620 as the “long sixteenth century” of economic and population growth in Europe (Braudel 1982–1984, vol. 2). In Portugal too, after roughly 1480/1490, the upturn in the population numbers is one of the positive signs of this long-term cycle of prosperity. Growing trends started out from a situation in which low population densities were consistent with a high land–labor ratio typical of a “frontier economy.” From what is known about the rest of the Iberian Peninsula, this phase of demographic growth went together with a rise in per capita output, recovering to, though not exceeding, the levels that had existed before the Black Death (Álvarez Nogal and Prados de la Escosura 2013). The Portuguese economy may have followed a different path. Recent estimates suggest that output per capita decreased (Palma and Reis 2016). However, while per capita agricultural production declined, the Portuguese intercontinental trade reached its peak years by comprising offshoots in America, Africa, and Asia. Dealings overseas are one of the most studied features of Portugal's economy. The effects of these trade flows on per capita gross domestic product (GDP) in European colonial powers remain an open and controversial issue (O'Brien and Prados de la Escosura 1998). Some scholarly insights point to colonial trade as the cause of living standard improvements in the mother country. Although there is no agreement about the significance of that contribution, it is certain that it grew throughout the early modern period and achieved its higher impact in the late eighteenth century. Therefore, during the first hundred-year period of the history of the empire, in which the route of the Cape of Good Hope earned a particular advantage over other imperial resources, the colonial trade had a negligible effect on the GDP, though it fostered sectors like shipbuilding and shipping.

This chapter examines the evolution of domestic production and estimates the contribution of resources provided by the empire. During the period under analysis, roughly from 1480 to 1620, Portugal became a kingdom integrated in the Habsburg monarchy (1580). The history of the empire points to the relative advantages Portugal reaped from the political union, since it created new opportunities for slave traffic paid with silver, controlled by Portuguese merchants. Silver was at the time the most important item in the Portuguese Cape Route.