There is another way. While other international cities struggled to cope with traffic-clogged streets, while they spent colossal amounts of money on public transport systems, while they demolished vernacular low-rise buildings and replaced them with cosmopolitan skyscrapers, Amsterdam forged a different path.

In the city center, 17th-century gabled houses still line the famous canals. On this misty early morning, we walk on cobbles through a city that appears almost unchanged in 400 years. Ducks float serenely on the canal. All is calm. Cyclists rattle by in increasing numbers. The rush hour has started.

There are around 800,000 bicycles in Amsterdam. (Given that the total population is 780,000, it adds up to one of this city’s many quirky statistics: Bikes outnumber people.) Around 250 miles of dedicated bike routes have been established, as well as ample parking racks, helping to make this the most bicycle-friendly city in the world.

The health benefits are obvious (the city’s obesity rate is 11 percent, compared to 27.7 percent in the United States), and there are also environmental benefits from reduced noise and air pollution. But perhaps the biggest argument in favor of Amsterdam’s enlightened approach, and the one that ought to make other world cities take notice, is economic. With nearly two-thirds of all journeys now made by bicycle, it is estimated that each year the city saves $27 million on public transport costs and the same again on vehicle infrastructure.

It is a solution typical of Amsterdam, a city built on inspired answers to difficult problems.

The first obstacle the original builders of downtown Amsterdam faced was the land itself. Much of the area was a sandy bog, seemingly unsuited as the location for a major settlement. But the prospective inhabitants remained undeterred. They drove a forest of timber piles deep into the soggy ground, providing firm foundations for their buildings.

Ironically, in order to prevent the piles from rotting, the ground must remain damp. Which brings us to Amsterdam’s biggest preoccupation, and the main reason for its historical success: the management of water.

As the local saying goes, “God created the world, the Dutch created Holland.” Around 60 percent of the country lies at or below sea level. Many districts of Amsterdam, including Schiphol Airport (which occupies the site of a 16th-century naval battle), rest on land reclaimed from the sea. The seawater is kept at bay by an ingenious system of dikes, sea walls, canals and pumping stations which, before the Industrial Revolution, were powered by the region’s famous windmills.

Having successfully repelled the water, the city planners came up with a scheme typically counterintuitive, typically Dutch. They decided to channel the water back into the city. In the 17th century they began work on the Grachtengordel (“girdle of canals”), a spider’s web of manmade waterways connected to the nearby Amstel River.

Aeriel view of Amsterdam’s canals © Dirkthomas | Dreamstime.com

The canals brought flowing fresh water to the doorsteps of most Amsterdammers and also provided them with unrivalled connections to the world beyond the horizon. Trading schooners and barges voyaged into the heart of the city. Amsterdam rapidly transformed from a nondescript North Sea outpost into the wealthiest city in the world.

It was from the canal-side docks that the Dutch East India Co. presided over a vast commercial empire that embraced huge swathes of distant Asia. The company, the world’s first multinational, also became the world’s first corporation to issue shares to the public. Amsterdam can therefore claim to be the birthplace of modern capitalism.

This morning, we stroll through downtown, surrounded by the legacy of the city’s 17th-century Golden Age. The old buildings are now given over to shops, cafés and housing, and the waterways no longer bustle with international commerce. The evidence suggests that Amsterdam’s economic significance is in the past. That mistaken impression is one of several erroneous conclusions you could leap to on first encounter with this deceptive city.

The city feels small, homogeneously Dutch and frozen in time. In fact, it is one of the fastest-growing capitals in Europe, its population among the most multicultural (a third of Amsterdammers are of non-European origin), and it is currently investing billions of dollars in new infrastructure.

The commercial focus of the city has shifted away from the canals to the gleaming new district of De Zuidas (“the south axis”), immediately south of the historic center. This 556-acre site, still in the relatively early stages of development with work expected to continue until 2035, has already altered the skyline of southern Amsterdam. It presents a rising cluster of striking new buildings including the World Trade Center and, resembling a giant robotic insect, the headquarters of ING Group.

To the north of the old center, a former harbor area is being redeveloped as North Shore. The centerpiece: a stunning refurbishment of a drab office block which, on completion in 2015, will be renamed the A’DAM Tower and feature a top-floor viewing deck providing a 360-degree panorama of the city.

To the east, a customarily radical solution is being enacted to meet the insatiable housing needs of the city’s burgeoning population. IJburg rises on eight manmade islands — two square miles in total — on the shore of IJmeer, one of the chain of lakes bordering Amsterdam. Costing more than $1 billion, when complete the new suburb will house 35,000 people, including 600 living on an innovative floating housing estate.

To thread all of these new developments together, the Amsterdam Metro will feature a new north-south line. Excavation has been difficult (not least because the tunnels have had to negotiate the subterranean wooden piles on which the city stands), but the new line is due to start operation in 2017.

For centuries, Amsterdam’s Jewish community referred to the city by the Yiddish word Mokum, meaning “place.” In recent years, it has become the city’s fond nickname. In the 21st century, Mokum is a place that continues to surprise, delight and inspire.

Things to do in Amsterdam

While the old city is compact and easily walkable, an organized tour provides a worthy means for finding your initial bearings. Amsterdam’s medieval maze of canals and narrow streets does not lend itself easily to a standard bus tour. However, the Dutch always find a solution. In this case, why not design a bus that can travel on water as well as on land? Floating Dutchman offers 45-minute tours in custom-made amphibious buses.

Locals tend to favor two wheels for getting around their city, and there are plenty of opportunities for visitors to pedal with them. MacBike, one of many bike rental companies, offers a wide range of bicycles, tricycles, electric bikes and even tandems; rent by the hour or by the day. If you’d prefer to cycle with a guide, Mike’s Bike Tours runs a gentle, 3.5-hour city tour; reservations are recommended in summer. The company provides the bikes as well as rain gear if needed (given Amsterdam’s maritime climate, there’s a good chance it will be).

Dam Square © Henry Soesanto | Dreamstime.com

The traditional center of Amsterdam is Dam Square, once the location of a 13th-century dam built to link two sides of the fledgling settlement. Eventually the dam gave way to a bustling market square. Eight centuries later, it is still the city’s focal point, so be prepared for impromptu gatherings. If soccer fans have a victory to celebrate or if political activists have a grievance to express, this is where they’ll come.

Immediately to the east of Dam Square is the Red Light District, the most obvious manifestation of the city’s famously liberal approach to sex and drugs. Its central location makes it difficult to avoid; you’ll probably accidentally pass through it en route to other attractions. If you’re curious to visit one of the city’s notorious coffee shops (where weed and “space cakes” are sold openly), this is the best area to find them; Rusland is one of the more upscale establishments. Needless to say, don’t venture into the Red Light District with your children (a lot of the sights are definitely R-rated), and also be sure to keep your valuables out of sight (it’s a major haunt for pickpockets). And don’t take photographs, or you’ll find yourself surrounded by angry bouncers.

At the other end of the spectrum, the city boasts some of the finest museums in the world. The greatest of them all, the Rijksmuseum, reopened in 2013 after a 10-year, $500 million refurbishment. The museum’s spectacular collection of 1.1 million objects is now presented in a setting to match. Among the must-see works on display: Rembrandt’s The Night Watch and Vermeer’s The Milkmaid.

Interior of the Rijksmuseum © Jaroslav Moravcik | Dreamstime.com

The Hermitage Amsterdam, an outpost of the famous museum in St. Petersburg, puts on temporary exhibitions of items loaned from Russia.

Rembrandt’s House, in the Old Jewish Quarter, recaptures the atmosphere of 17th-century Amsterdam. The artist’s furniture was sold to pay his debts when he died; therefore, the current furnishings are not original. The museum does not own any of Rembrandt’s paintings, though it does have a large collection of his etchings and drawings. By contrast, the Van Gogh Museum, housed in two dedicated modern buildings close to the Rijksmuseum, boasts the world’s most comprehensive collection of Vincent van Gogh’s work.

Anne Frank House poignantly commemorates the impact of Nazi occupation on Amsterdam’s Jewish community, encapsulated by the tragic fate of the teenage diarist Anne Frank. You can book online in advance for an assigned time slot; otherwise, prepare to stand in line for up to an hour (and sometimes longer).

CHECKING IN WITH Annemarie Satink and Ron Boyle

International Press Officer and Senior Area Manager, North America, I Amsterdam

WHAT OPPORTUNITIES DOES AMSTERDAM OFFER AMERICAN INVESTORS?
Annemarie Satink: First of all, its location. All of the big customers in Europe can be reached within a one-hour flight. The city has a talented international workforce, with more than 177 different nationalities resident here. As a result, the city is an ideal test market for new ideas and technologies. The Dutch are very receptive to innovation and traditionally have an international outlook. At least 90 percent of the population speaks two or more languages. Also, Amsterdam has a very high quality of life. For these reasons and others, more than 450 multinational companies have established their headquarters in the city.

WHAT CULTURAL DIFFERENCES SHOULD AMERICAN INVESTORS BE AWARE OF WHEN DOING BUSINESS IN AMSTERDAM?
Ron Boyle: While the atmosphere is very welcoming and relaxed in The Netherlands, it is important to make appointments. An appointment is an appointment, much like a deal is a deal. It is also good to know that while the business mentality to get things done is 24/7, shops do not stay open 24/7. They close at night. Unlike the United States, for instance.

HOW IMPORTANT IS THE BUSINESS SECTOR TO AMSTERDAM’S TOURISM INDUSTRY?
RB: Business is one of the three main reasons behind a visit to Amsterdam. The average business traveler stays more than four days.

WHAT ARE THE KEY DEVELOPMENTS TO LOOK FOR IN AMSTERDAM’S FUTURE?
AS: One very important development is Amsterdam’s business district, De Zuidas, a prime international location for living, working and recreation. It is located within the city, only minutes away from Schiphol Airport. Amsterdam’s North Shore is an exciting development which will include the 22-story A’DAM Tower that promises to be one of the city’s eye-catchers when it opens in 2015.

WHICH LOCAL ATTRACTIONS DO YOU RECOMMEND FOR VISITORS TO AMSTERDAM?
AS: First of all, one should take a canal boat tour through our famous 400-year-old canals. And you should visit at least one of our more than 50 museums (Rijksmuseum, Van Gogh Museum, Stedelijk and many more). Furthermore, it depends what time of year you are visiting. There are seasonal sights and events throughout the year.

Amsterdam: Just the Facts

Time Zone: GMT +2 (summer); GMT +1 (winter)
Phone Code: Country code: 31 City code: 20
Entry/Exit Requirements: U.S. citizens require a valid passport. No visa is needed for leisure or business trips of up to 90 days.
Currency: Euro
Official Language: Dutch
Key Industries: Tourism, information and communications technology, financial services, logistics

Amsterdam Info to Go

International flights arrive at Amsterdam Airport Schiphol, Europe’s fourth-busiest airport and one of the world’s most important intercontinental hubs. The airport is located 5.6 miles southwest of downtown. There is a direct rail link into the city, as well as easy transport by bus and taxi.

Where to Stay in Amsterdam

Amsterdam Wiechmann Hotel Turn the clock back. This is old Amsterdam as you’ve always imagined it. The rooms are housed within three mansions at the junction of two canals. Prinsengracht 328-332 $$

Crowne Plaza Amsterdam-Zuidas Located within the Zuidas business district, only a 20-minute train hop from the historic city center, the Crowne Plaza offers excellent business facilities. George Gershwinlaan 101 $$$$

NH Grand Hotel Krasnapolsky You can’t get closer to the heart of the city than this. Amsterdam’s most famous hotel has presided over Dam Square since the 19th century. Dam 9 $$$$

Restaurants in Amsterdam

Blauw Located southwest of downtown, Blauw provides the perfect introduction to rijsttafel — rice table — the unique Dutch take on Indonesian cuisine. Amstelveenseweg 158-160 $$$

Brasserie ‘De Poort’ It’s a gimmick, but a good one. Every steak is served with its own numbered certificate — a tradition that goes back 150 years and 6 million steaks. Die Port van Cleve Hotel, Nieuwezijds Voorburgwal 176-180 $$$

Vinkeles Restaurant Once a bakery, the dining room of this Michelin-starred restaurant still features the original 18th-century ovens. The menu combines classic and contemporary French cuisine. The Dylan Hotel, Keizersgracht 384 $$$$

Read more about Vincent van Gogh.