ABSTRACT
This chapter traces the impact of the European intrusion into the Pacific from the sixteenth to the nineteenth century. It considers the general nature of the intruders and their interest in the Pacific, focuses on the dominant European power in the area, Spain, and its American empire. In practice, nobody was completely clear where the Pope's dividing line was located, but the Pacific was without doubt defined as a Spanish lake. The gains to be made from trade were large given the complementarity in factor endowment between the European metropolis, well supplied with capital and labor, and the periphery, including the Pacific Rim, better endowed than Europe in land and resources. The two major institutional legs of the European economic advance were the nation-state and the market, complementary institutions that emerged simultaneously, if haltingly and unevenly, particularly during the sixteenth and seventeenth centuries.
