In the early eighteenth century the western Mediterranean and Italy were dominated by Spain, where the new Bourbon dynasty, galvanised into activity by the ambition of Elizabeth Farnese, achieved a remarkable revival. From 1714, when she arrived in Spain as the second wife of Philip V, till 1746, when the death of her husband removed her from the centre of Spanish political life, Elizabeth and a series of able advisers acted with an energy and daring that gave Spain the initiative in the diplomatic negotiations affecting the Mediterranean region. Because of her family connections with Parma, Piacenza and Tuscany Elizabeth's ambitions were focused on those territories, and Italy was thus affected by the newly revived Spanish diplomacy. Portugal, on the contrary, though it gave a queen to the second effective Bourbon king of Spain, was little concerned in the Mediterranean diplomacy of the period. Portugal was satisfied to have regained her independence. Her colony of Brazil was providing her with a very large income and until 1750 she was content to enjoy independence and prosperity, taking very little part in European diplomacy and making very little contribution to European civilisation. After that date, with the advent of Pombal, Portugal suddenly outstripped Spain in reforming activity.

It was a very remarkable achievement by Elizabeth Farnese and her husband's chief ministers to gain the diplomatic initiative for Spain in the early eighteenth century, for at the end of the reign of Charles II Spain's economic resources had been in a state of almost total ruin. In 1692 the Crown had for the third time declared itself bankrupt although during the seventeenth century the weight of taxation had been increased considerably. The alcabala tax on all sales had been increased to 11 per cent in 1639 and to 14 per cent in 1663.