| Economy of the Netherlands |
Zuidas in Amsterdam |
| Rank |
24th (PPP, 2012 est.) |
| Currency |
Euro |
| Fiscal year |
calendar year |
| Trade organisations |
EU, WTO and OECD |
| Statistics |
| GDP |
 $709.5 billion (PPP, 2012 est.[1] |
| GDP growth |
-0.5% (Real, 2012 est.) |
| GDP per capita |
$42,300 (PPP, 2012 est.) |
| GDP by sector |
agriculture: 2.8%; industry: 24.1%; services: 73.2% (2012 est.) |
| Inflation (CPI) |
 2.4% (CPI, 2012 est.) |
Population
below poverty line |
10.5% (2010 est.) |
| Gini coefficient |
30.9 (2007) |
| Labour force |
7.746 million (2012 est.) |
Labour force
by occupation |
agriculture: 2%; industry: 18%; services: 80% (2005 est.) |
| Unemployment |
8.1% (March 2013)[2] |
| Average gross salary |
3,728 € / 5,035 $, monthly (2006)[3] |
| Average net salary |
1,980 € / 2,673 $, monthly (2006)[3] |
| Main industries |
agriculture-related industries, metal and engineering products, electronic machinery and equipment, chemicals, petroleum, construction, microelectronics, fishing |
| Ease of Doing Business Rank |
31st[4] |
| External |
| Exports |
$556.5 billion (2012 est.) |
| Export goods |
machinery and equipment, chemicals, fuels; foodstuffs |
| Main export partners |
Germany 25.4%, Belgium 13.7%, France 8.9%, United Kingdom 8.8%, Italy 5.2% (2008) |
| Imports |
$490.1 billion (2012 est.) |
| Import goods |
machinery and transport equipment, chemicals, fuels, foodstuffs, clothing |
| Main import partners |
Germany 14.5%, China 11.8%, Belgium 8.6%, United Kingdom 6.1, Russia 6.0%, France 4.0% (2011) |
| FDI stock |
$608.9 billion (31 December 2012 est.) |
| Gross external debt |
$2.655 trillion (30 June 2011 est.) |
| Public finances |
| Public debt |
68.7% of GDP (2012 est.) |
| Revenues |
$347.4 billion |
| Expenses |
$386.6 billion (2012 est.) |
| Economic aid |
€ 4 bn (As of 2005[update]) |
| Credit rating |
|
| Foreign reserves |
US$51.27 billion (31 December 2011 est.) |
|
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars
|
At the time of writing the Netherlands is the 17th largest economy of the world. (see: List of countries by GDP (nominal)) GDP per capita is roughly $42,000 which puts it in the top 10 of richest nations in the world (see: List of countries by GDP (PPP) per capita). Between 1996 and 2000 annual economic growth (GDP) 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. Several banks went bankrupt, and a number of others had to receive governmental aid. In 2009 the economy declined with 3.5%, followed by two years of mild growth. The Dutch economy is currently in a recession again, with an economic decline of 0.5% in 2012. Inflation is at 3.2% in February 2013. Unemployment has been relatively low compared to other EU nations for decades but after mid-2012 it has seen a fast increase and in February 2013 it has hit 7.7%. The Netherlands managed to maintain its AAA rating at least until March 2013 according to the three major credit rating agencies.[6]
Historically, the Dutch introduced and invented the stock market [7] by the merchandise trading through Dutch West India Company. The Netherlands is a founding member of the European Union, the OECD and the World Trade Organization.
Overview [edit]
The Netherlands has 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 sizable current account surplus, and an important role as a European transportation hub. Industrial activity is predominantly in food processing, chemicals, petroleum refining, 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 country is one of the leading European nations for attracting foreign direct investment.[8]
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. Unemployment rates dropped to about 5% in the summer of 2011, but then rebounded, and are currently at 6%.[9] The state budget deficit for 2011 was 4.7%, considerably larger than expected, and much larger than the EU-mandated maximum of 3%.[10] The government already implemented austerity measures in 2011, but the economic turndown in the latter half of that year made a next round of austerity measures inevitable. The current precarious situation of the Rutte cabinet makes easy decision on new austerity measures difficult, which has resulted in a de facto new round of coalition talks solely about austerity measures.[11][12][13] Those talks should be finished at least before late April 2012, as the EU demands a budget proprosal before May 1.[14]
History [edit]
Government [edit]
While the private sector is the cornerstone of the Dutch economy, governments at different levels have a large part to play. Public spending, including social security transfer payments, was at 28% of GDP in 2011.[15] Total tax revenue was 38.7% of GDP in 2010,[16] which was below the EU average.[17] 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 (trade unions and employers' organizations). The three parties come together in the Social-Economic Council (‘Sociaal Economische Raad’), the main platform for social dialogue.
Controversial issues [edit]
Labour market and social welfare [edit]
The Dutch labour market has relatively strict regulations for employers on firing employees, although currently[when?] the House of Representatives has agreed to loosen these regulations as a part of austerity measures to reduce the governmental budget deficit to less than 3%. Unemployment benefits in the form of a 70% benefit of the employee's last-earned salary for up to three years (with a maximum of roughly 2500 euros per month) are available for fired employees, provided that they have worked for a certain minimum time period.
Age of retirement [edit]
Every Dutch citizen gets the AOW, a state pension, from age 65. Married couples or those who live together receive 50% of minimum wage per person (about 750 euros per month), single-person households receive 70% of minimum wage (about 1000 euros per month). Because of an aging population and the current economic crisis, there is a political debate on raising the retirement age. Current plans from the parliament include a gradual annual increase of the pension age until it reaches 67 in 2023, after which it is pegged to the average lifespan.[18]
Home mortgage interest deduction [edit]
The Netherlands is one of the few countries in the world where the interest paid on mortgages is fully deductible from income tax. This deduction is a politically controversial subject. Some argue that it inflates housing prices and that it has an anti-leveling effect on income distribution, since people with higher incomes generally have a more expensive house and pay a higher percentage income tax, and therefore benefit relatively more from the deduction than lower incomes. Proponents of the deduction argue that it stimulates private house ownership and that abolishing the deduction would de-stabilise the housing market. Although many political parties and economists have argued for a (partly) abolishment of the deduction, it is still in place as of 2012.
Sectors [edit]
Services account for more than half of the national income and are primarily in transportation, distribution, and logistics, and in financial areas, such as banking and insurance. The breadth of service providers in financial services and an Protestant work ethic have contributed to the Netherlands achieving a DAW Index score of 5 in 2012. Industrial activity, including mining, generates about 20% of the national product and is dominated by the 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%.
Energy [edit]
While its oil reserves in the North Sea are of little importance, the Netherlands is presently 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 (as of January 2005) at about 50-60 trillion cubic feet, or about 0.9% of the world total. Although the Netherlands owns substantial gas reserves in the North Sea, most of its production is presently from on-shore wells, and much of the natural gas produced by the Netherlands comes from Groningen Province, which borders the North Sea. Consumption of natural gas in the Netherlands is only about two-thirds of its production; the rest is exported and the Netherlands is presently the world's fifth largest natural gas exporter. Almost all Dutch households are connected to the national grid of gas used for heating and cooking, and most electricity in the Netherlands is generated by gas burning power plants.
The Netherlands has a liberalized energy market. The share of the large three companies in the electricity and gas market steadily declines every year, and was in 2011 beneath 80%.
Nuclear energy [edit]
In 1994, the Dutch government agreed with the operator of Borssele nuclear power plant, the countries' only operational nuclear power plant, that it would be closed down by 2003. This decision was fought by the employees of the plant, which pushed the closure date to 2013, and in 2005, the closure was postponed to 2033.
Largest companies [edit]
The Netherlands is home to a few very 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 the extremely low Corporate tax. Multinationals that pay tax in the Netherlands can agree a special rate with 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 lead to the Netherlands being called a Tax haven, both by critics within the Netherlands as by foreign governments and politicians from France, the United Kingdom and the United States among others.
See also [edit]
Sources [edit]
Further reading [edit]
- 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 (Mar. 1996), 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 (1976) pp 1–71
- Vlekke, Bernard H. M. Evolution of the Dutch Nation (1945) 382 pp. online edition
- Wintle, Michael P. An Economic and Social History of the Netherlands, 1800–1920: Demographic, Economic, and Social Transition (Cambridge University Press, 2000) online edition
- van Zanden, J. L. The Economic History of The Netherlands 1914–1995: A Small Open Economy in the 'Long' Twentieth Century (Routledge, 1997) excerpt and text search
References [edit]
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$709.5 billion (PPP, 2012 est.[1]
2.4% (CPI, 2012 est.)
