According to the World Bank and the International Monetary Fund, the
Netherlands was the 18th largest economy of the world in 2012. This for a country
that has about 17 million inhabitants.). GDP per capita is roughly $43,404 which
makes it one of richest nations in the world per capita). Between 1996 and 2000
annual economic growth averaged over 4%, well above the European average. Growth
slowed considerably in 2001-05 as part of the global economic slowdown. 2006
and 2007 however showed economic growth of 3.4% and 3.9%. The Dutch economy was
hit considerably by the ongoing global financial crisis and the ensuing
European debt crisis.. The Netherlands have a prosperous and
open economy, which depends heavily on foreign trade. The economy is noted for
stable industrial relations, fairly low unemployment and inflation, a very big
sizable current account surplus and an important role as a European
transportation hub, with Rotterdam as far out the biggest port in Europe and
Amsterdam as one of the biggest airports in Europe. Industrial activity is
predominantly in food processing, chemicals, petroleum refining, hightech,
financial services, creative sector and electrical machinery. A highly
mechanised agricultural sector employs no more than 2% of the labour force but
provides large surpluses for the food-processing industry and for
exports. The Netherlands, along with 11 of its EU partners, began circulating
the euro currency on 1 January 2002. The stern financial policy has been
abandoned in 2009 on account of the current credit crises. The relatively
large banking sector was partly nationalised and bailed out through
government interventions. The unemployment rate dropped to 5.0% in the
summer of 2011, but increased with a sharp rate since then to 7.3% in May
2013 and 6.8% in 2015. The state budget deficit is about 2.2% in 2015 well below
the norm of 3.0% in the EU. Historically, the Dutch introduced and
invented the stock market by the merchandise trading through Dutch East
India Company. The Netherlands is a founding member of the European Union,
the OECD and the World Trade Organization.
History After gaining its independence from the
empire of Philip II of Spain in 1581, the Netherlands experienced almost a
century of explosive economic growth. A technological revolution in shipbuilding
and trade knowledge and capital, due to Protestant traders of Flanders who fled
to the Netherlands, helped the young Republic become the dominant trade power
by the mid-17th century. In 1670 the Dutch merchant marine totalled 568,000
tons of shipping—about half the European total. Pillars of this position were the
dominance of the Amsterdam Entrepot in European trade, and that of the Dutch
East India Company and West India Companies in intercontinental trade.
Unique was that the V.O.C was the first multinational within one of the first
stock markets in the world. Beside trade, an early "industrial revolution",
land reclamation from the sea, and agricultural revolution, helped the
Dutch economy achieve the highest standard of living in Europe by the
middle of the 17th century. Affluence facilitated what is known as the Dutch
Golden Age. This economic boom abruptly came to an end by a combination of
political-military upheavals and adverse economic developments around 1670. Still
the Netherlands kept a high level of prosperity, due to trade and
agriculture. Towards the 1800s, the Netherlands did
not industrialize as rapidly as some other counties in Europe. One
explanation for this is that the Netherlands were struggling to come to
terms with having lost their dominant economical and political position in the
world. Griffiths argues that government policies made possible a unified Dutch
national economy in the 19th century. They included the abolition of internal
tariffs and guilds; a unified coinage system; modern methods of tax
collection; standardized weights and measures; and the building of many
roads, canals, and railroads. As in the rest of Europe, the 19th
century saw the gradual transformation of the Netherlands into a modern
middle-class industrial society. The number of people employed in agriculture
decreased while the country made a heroic effort to revive its stake in the
highly competitive industrial and trade business. The Netherlands lagged behind
Belgium until the late 19th century in industrialization, then caught up by
about 1920. Major industries included textiles and the great Philips
industrial conglomerate. Rotterdam became a major shipping and
manufacturing center. Poverty slowly declined and begging largely disappeared
along with steadily improving working conditions for the population.
Government While the private sector is the
cornerstone of the Dutch economy, governments at different levels have a
large part to play. Public spending, excluding social security transfer
payments, was at 28% of GDP in 2011. Total tax revenue was 38.7% of GDP in
2010, which was below the EU average. In addition to its own spending, the
government plays a significant role through the permit requirements and
regulations pertaining to almost every aspect of economic activity. The
government combines a rigorous and stable microeconomic policy with
wide-ranging structural and regulatory reforms. The government has gradually
reduced its role in the economy since the 1980s. Privatisation and
deregulation is still continuing. With regards to social and economic policy,
the government cooperates with its so called social partners. The three
parties come together in the Social-Economic Council, the main
platform for social dialogue. = Controversial issues =
Labour market and social welfare The Dutch labour market has relatively
strict regulations for employers on firing employees, although the House of
Representatives has agreed to loosen these regulations. Due to the costs of
employees and costs of firing them, a big part of the working force is an
independent one person company. They are independent and get paid by delivery
without higher social costs. Another big part of the workforce is hired as
temporary workforce. State unemployment benefits in the form of a 70% benefit of
the employee's last-earned salary for up to three years are available for fired
employees, provided that they have worked for a certain minimum time
period, usually 26 weeks. Age of retirement
Every Dutch citizen gets the AOW, a state pension, from age 67. Married
couples or those who live together receive 50% of minimum wage per person.
Households receive minimum 70% of their working wage. The biggest part earns a
extra pension due to the pension funds, witch is obliged in a lot of economic
sectors. In total the amount of pension funds are above 1400 billiards in 2015
for less than 17 million people. About 70% of their last income while working
is average. During the economic crisis and inflation low rate, the extra
pensions funds have temporally problems to guaranty inflation compensations.
This leads to higher yearly cost per working person to keep the system
intact. The Dutch pension system has regarded as one off the best in the
world. Home mortgage interest deduction
The Netherlands was one of the few countries in the world where the
interest paid on mortgages is fully deductible from income tax. Since 2013
big changes were made. The conditions of a high percent lever of mortgages has
been reduced and also tax benefits. The result was a housing crisis, with an
increase of prices almost 25% percent. The last year is backing up fast with a
recovery of 10% to even 0% in the most popular cities.
The Service sector accounts for more than half of the national income,
primarily in transportation, distribution and logistics, financial
areas, software development and the creative industry. The breadth of
service providers in financial services and a Protestant work ethic have
contributed to the Netherlands achieving a DAW Index score of 5 in 2012.
Industrial activity is dominated by the machinery, electronics/high tech
industry, metalworking, oil refining, chemical, and food-processing
industries. Construction amounts to about 6% of GDP. Agriculture and
fishing, although visible and traditional Dutch activities, account
for just 2%. The Netherlands continues to be one of
the leading European nations for attracting foreign direct investment and
is one of the five largest investors in the United States. The economy
experienced a slowdown in 2005, but in 2006 recovered to the fastest pace in
six years on the back of increased exports and strong investment. The pace
of job growth reached 10-year highs in 2007. The Netherlands is the fifth-most
competitive economy in the world, according to the World Economic Forum's
Global Competitiveness Report. = Energy =
While its oil reserves in the North Sea are of little importance, in [insert
year] the Netherlands was the second largest natural gas producer in Europe
and the ninth in the world, accounting for more than 30% of EU total annual gas
production and about 2.7% of the annual world total. Proven natural gas reserves
of the Netherlands are estimated to be about 50-60 trillion cubic feet, or
about 0.9% of the world total. In 2014- 2015 the government decided to reduce
the production of gas significantly due to problems of sinking ground,
differential settlement levels and tremors causing damages to properties.
This will cost about 0.2% on economic growth in 2015 and the year after.
Nuclear energy Researchers in the Netherlands began
studying nuclear energy in the 1930s and began construction of research reactor
Dodewaard in 1955. Researchers’ goal was to introduce nuclear power technology by
1962 and replace fossil fuels. In 1968, a test nuclear reactor was attached to
the power grid. This unit was shut down in 1997. In the 1970s, the Dutch chose a
policy that required reprocessing all spent nuclear fuel. In 1984, the
government decided to create a long-term storage facility for all intermediate
and low-level radioactive waste and research strategies for ultimate
disposal. In September 2003, the Central Organization for Radioactive Waste
created an interim storage facility for high-level waste. The Netherlands' only
commercial nuclear reactor is Borssele, which became operational in 1973 and as
of 2011 produces about 4% of the country’s electricity. The older
Dodewaard nuclear power plant was a test reactor that later got attached to the
national grid but was closed in 1997. A 2MW research reactor is located in
Delft, as part of the physics department of Delft University of Technology. This
reactor is not meant for energy provision, but used as neutron- and
positron-source for research. In 1994, the States General of the
Netherlands voted to phase out nuclear power after a discussion of nuclear
waste management. In 1997, the power station at Dodewaard was shut down and
the government decided it was planning to end Borssele's operating license in
2003. This has since been postponed to 2034, if it complied with the highest
safety standards. The owners, Essent and Delta, will invest 500 million euro in
sustainable energy, together with the government—money which the government
claims otherwise should have been paid to the plants' owners as compensation.
After the 2010 election, the new government was open to expanding nuclear
power. Both of the companies that share ownership of Borssele are proposing to
build new reactors. In January 2012, Delta announced it postpones any
decision to start building a second nuclear power plant.
= Tourism = In 2011 the Netherlands was visited by
11.3 million foreign tourists. In 2012, the Dutch tourism industry contributed
5.4% in total to the country's GDP and 9.6% in total to its employment. With
its global ranking of 147th and 83rd place for total contribution to
respectively GDP and employment, tourism is a relatively small sector of the
Dutch economy. North Holland was by far the most popular province for foreign
tourists in 2011. Out of all 11.3 million tourists, 6 million visited
North Holland. South Holland took the second place with 1.4 million. Germans,
Britons and Belgians made up the majority of foreign tourists,
respectively 3, 1.5 and 1.4 million. There are seven World Heritage Sites in
the Netherlands. The Netherlands are well known for their art and rich
historical heritage. Largest companies
The Netherlands is home to several large multinationals. Royal Dutch Shell is the
largest private company of the Netherlands by revenue and the second
largest in the world after Exxon Mobil. Other well-known multinationals are
Heineken, Ahold, Philips, TomTom, Unilever, Randstad and ING, all of which
have their headquarters in Amsterdam except Unilever which is located in
Rotterdam. Thousands of companies of non-Dutch origin have their headquarters
in the Netherlands, like EADS, LyondellBasell and IKEA, because of
attractive Corporate tax levels. Multinationals that pay tax in the
Netherlands may obtain special rates from the Dutch Tax and Customs
Administration. These lucrative arrangements are bound by a vow of
secrecy, thus the effective tax rate in specific cases is unknown. However, some
companies pay less than 1% corporate tax. This has led to the Netherlands
being called a tax haven, both by critics within the Netherlands and by
foreign governments and politicians from France, the United Kingdom and the
United States among others. The Netherlands' biggest companies as of
2011 are as following: See also
Bureau for Economic Policy Analysis De Nederlandsche Bank
Dutch disease Brainport
Port of Rotterdam List of companies of the Netherlands
Ministry of Finance Polder Model
Social-Economic Council Taxation in the Netherlands
VNO-NCW BrabantStad
Randstad Sources
CBS - Statistics agency of the Netherlands
CPB - Netherlands Bureau for Economic Policy Analysis
DNB - Dutch central bank Eurostat - EU statistics agency
CIA World Factbook Infographic about the relationship of
energy to the economy in the Netherlands. Dutch government, 2012
External links World Bank Summary Trade Statistics
Netherlands Useful information about the financial
institutions in the Netherlands Tariffs applied by the Netherlands as
provided by ITC's Market Access Map, an online database of customs tariffs and
market requirements Further reading
van Riel, Arthur. "Review: Rethinking the Economic History of the Dutch
Republic: The Rise and Decline of Economic Modernity Before the Advent of
Industrialized Growth," The Journal of Economic History, Vol. 56, No. 1, pp.
223–229 in JSTOR de Vries, Johan. "Benelux, 1920-1970,"
in C. M. Cipolla, ed. The Fontana Economic History of Europe: Contemporary
Economics Part One pp 1–71 Vlekke, Bernard H. M. Evolution of the
Dutch Nation 382 pp. online edition Wintle, Michael P. An Economic and
Social History of the Netherlands, 1800–1920: Demographic, Economic, and
Social Transition online edition van Zanden, J. L. The Economic History
of The Netherlands 1914–1995: A Small Open Economy in the 'Long' Twentieth
Century excerpt and text search References