Citizenship was a key concept in European state formation from the Middle Ages onwards. This article presents an economic interpretation of citizenship. It argues that such a contract increases the efficiency of the exchange between the state and its inhabitants. Next, the concept of citizenship is applied to the political economy of the Dutch Republic, which was an ‘intermediate’ stage in the process of state formation between the medieval commune (with a restricted form of citizenship) and the nation-state of the nineteenth century, when the concept became more inclusive, covering all inhabitants. The article briefly sketches the genesis of the Dutch Republic and identifies some of the key problems of its political economy.