The Netherlands has been a trading nation for centuries due to its open economy and outlook. The Dutch are seasoned travellers. They are proficient in languages and skilled in negotiating trade agreements and implementing projects against the odds. Source: Statistics Netherlands (2003) Source: IMD (2003)
As an open economy, the Netherlands is susceptible to international developments, notably in recent years the global recession - which has been exacerbated by falling share prices, the attacks of 11 September 2001, the war in Iraq and the outbreak of Sars.
Nevertheless, the Netherlands was the world's eighth largest exporter of goods and services in 2003. Its workforce numbered 7.5 million, three-quarters of whom worked in the service sector. Per capita gross domestic product (GDP) was ¤27,900. The unemployment rate was 5.3%. And growth was strongest in the public sector, education and health care.
The Dutch consensus culture also seems to withstand recession. Employers and employees always manage to agree, for instance, to limit pay increases in the long term in order to compete on world markets. Dutch competitiveness has been under strain since 2000 as the euro has risen in value and labour costs have grown.
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Economic activity % of GDP
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Agriculture and fisheries 3
Extractive industries 2
Industry 36
Services 50
Public sector 9
Total 100
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Country Exports
in billions of USD
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United States 957
Germany 692
Japan 480
France 409
United Kingdom 384
PR China (Mainland) 358
Italy 309
The Netherlands 295
Canada 288
PR China (Hong Kong) 243
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Its advantages include an advanced infrastructure both for transport and telecommunications. Many Asian and North American imports to Europe are transhipped at Rotterdam or Amsterdam, the country's two transport centres.
The seaport of Rotterdam is the largest in the world, transshipping tens of millions of tonnes of goods per year. And Amsterdam Schiphol Airport is the fourth largest airport in Europe for both passenger and goods traffic.
Dutch transport companies are clustered around the two main import and export centres: Amsterdam Schiphol Airport and the seaport of Rotterdam.
The best-known transport companies are Nedlloyd, Frans Maas and Smit International. The world's oldest national airline, KLM Royal Dutch Airlines, had to merge with French airline Air France in 2003.
A large proportion of Dutch imports, including computers, are destined for other countries. They are re-exported with little or no processing - typifying the country's role as a hub of distribution.
Two-thirds of Dutch exports go to just five countries: Germany, France, Belgium, the United Kingdom, and the United States. Twenty-four per cent goes to Germany, the Netherlands' largest trading partner.
On 1 May 2004, the European Union welcomed ten new member states, As before, the Netherlands can benefit from enlargement. Dutch trade with the new member states is already growing fast. From 1993 to 2002, Dutch exports to these countries grew by 17%.
Dredging is a Dutch specialty and companies such as Boskalis, HAM and Ballast Nedam have larger foreign operations than domestic ones. And KPN Nederland is a major player in international telecommunications, working with many non-Dutch companies.
Dutch manufacturers too have a global outlook. They export goods world-wide, maintain subsidiaries in many countries and often join forces with foreign partners. The main manufacturing industries are chemicals, food processing, metalworking and the refining of gas and oil.
The printing and electronic engineering industries are also world-class. Dutch metalworking companies specialise in making machinery driven by advanced electronic controls, a speciality that has turned the Netherlands into a world leader in the manufacture of vehicles, food processing equipment and machinery for the chemical industry. It has also bolstered the electronics industry.
In 2002, computers and computer parts contributed most to the growth of exports to emerging markets such as Central and Eastern Europe.
The two largest banks are ABN Amro and ING, which operate world-wide, serving Dutch and non-Dutch businesses as well as governments.
Although commercial services as a whole contracted in 2003, telecommunications and financial services expanded. Information and communications technology (ICT) seems best positioned to grow, especially where combined with innovation. ICT is expected to benefit productivity in all sectors. By linking businesses in networks, it enables them to benefit from each other's investments.
By drawing on each other's knowledge and expertise, businesses will become better placed to face the competition, improve their knowledge base and make the Dutch economy more innovative. Around 5,000 Dutch companies are conducting research to develop new products and to boost quality and efficiency.
The country's five largest multinationals - Philips, Shell, Akzo Nobel, DSM and Unilever - are at the forefront of industrial research and development.
A crucial link in Western Europe's energy supply chain is the seaport of Rotterdam, where large quantities of crude oil arrive by vessel. The port is home to large transhipment companies and refineries, from which considerable quantities of crude oil and its petroleum products are carried directly to the industrial areas of Germany and Belgium.
The presence of refineries and offshore installations has led to an array of activities serving the oil and gas industries. Four large steel construction companies, for instance, design and build entire chemical factories, oil refineries and offshore installations. And dozens more businesses produce specialist equipment. Several Dutch research institutes even have laboratories for simulating offshore conditions.
But the Netherlands' emissions of carbon dioxide have increased in recent years, mainly because the export-driven Dutch oil, transport and chemical industries are all such voracious consumers of energy.
Given the Dutch economy's strong focus on exports, acting nationally to cut greenhouse gas emissions is more expensive than acting internationally. Emission-reducing measures raise the cost of Dutch exports substantially.
The European system of trading emissions due to start in 2005 offers the Netherlands an efficient way of meeting the Kyoto Protocol target. It will allow the Netherlands to buy emission permits from other countries, which will then reduce their emissions accordingly, saving the Netherlands from having to take more expensive measures.
For more information on the topics discussed in this chapter, contact the Ministry of Economic Affairs: www.minez.nl.
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Value Period
Population 16,338,190 February 2006
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Economic growth 1.6% 4th Quarter 2005
Unemployed labour force 6.2% January-March 2006
Consumer confidence -6 April 2006
Inflation 1.0% March 2006
Victims of frequently occurring crime 25.4% 2004
Health 79.9% 2005
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