Economy of the Netherlands
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| Economy of the Netherlands | ||
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 Dutch one euro coin |
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| Currency | €1 = 100 cent | |
| Fiscal year | Calendar year | |
| Trade organisations | EU, WTO and OECD | |
| Statistics [1] | ||
| GDP ranking | 23rd by volume (at PPP) (2005); 7th by per capita (at PPP) (2005) | |
| GDP | $629.911 bn (2006) | |
| GDP growth | 4.2% (Q3 2007) | |
| GDP per capita | $38,500 (2006) | |
| GDP by sector | agriculture (2%), manufacturing (19%), services (79%) (2002) | |
| Inflation | 1.3% (2006) | |
| Labour force | 7.53m (2005) | |
| Labour force by occupation | services (64%), manufacturing (29%), agriculture (4%) (2005) | |
| Unemployment | 2.8% (July 2008) [2] | |
| Main industries | agriculture-related industries, metal and engineering products, electronic machinery and equipment, chemicals, petroleum, construction, microelectronics, fishing | |
| Trading partners | ||
| Exports | Exports $365.1 bn(2005) | |
| Main partners | Germany (25%), Belgium (12%), France (10%), United Kingdom (9%), Italy (6%) and the United States (4%) | |
| Imports | $326.6 bn (2005) | |
| Main partners | Germany (17%), Belgium (9%), United States (8%), United Kingdom (6%) and France (5%) | |
| Public finances | ||
| Public debt | $291.8 bn (48.7% of GDP) (June 2006) | |
| External debt | $1.645 trillion (June 2005) | |
| Economic aid | €4 bn. (2005) | |
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Life in the Netherlands |
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On the Index of Economic Freedom Netherlands is the 13th most laissez-faire capitalist economy out of 157 surveyed countries. At this moment the Netherlands is the 16th largest economy of the world. (see: List of countries by GDP (nominal)) Between 1998 and 2000 annual economic growth (GDP) averaged nearly 4%, well above the European average. Growth slowed considerably in 2001-05 as part of the global economic slowdown. 2006 however, showed a promising 2.9% growth. Yearly growth accelerated to 4.2% in the third quarter of 2007. Inflation is 1.3% and is expected to stay low at about 1.5% in the coming years.
According to the definititon used by the Dutch Statistics Agency CBS, unemployment is currently at 4.0% of the labor force. By Eurostat standards however, unemployment in the Netherlands is at only 2.9% - the lowest rate of all EU member states.
The Netherlands is member of the European Union, the OECD and the World Trade Organisation
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[edit] Overview
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 mechanized 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.[1]
The stern financial policies of the Balkenende cabinets, which are often identified with finance minister Gerrit Zalm, have led to a deficit of only 0.3% of GDP in 2005, coming from 2.1% in 2004. The deficit is expected to show a small rise to 0.5% in 2006, and slight surplus in 2007. In 2006 public debt stood at 51% of GDP and is expected to fall below 50% in 2007 for the first time in 25 years, down from over 80% in the early nineties.
[edit] Government Role
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, is at 47.9% of GDP (2005). Total tax revenue was 37.5% of GDP (2005), which is 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 (trade unions and employers' organizations). The three parties come together in the Social-Economic Council (‘Sociaal Economische Raad’), the main platform for social dialogue.
[edit] Trade and Investment
The Netherlands, which derives more than two-thirds of GDP from merchandise trade, had strongly positive balance of payments for 2005 estimated at €31.5 billion. [link cbs] Leading export markets (2005) are Germany with 25.1%, Belgium with 12.2% and the United Kingdom and France with both 9.4%. Leading suppliers (2004) are Germany (17%), Belgium (9.4%), China (8.8%) and the United States (7.8%). As becomes clear from these figures, Germany is by far the most important trading partner of The Netherlands.
Leading foreign investors in the Netherlands (2005) are the United States with 18.5%, the United Kingdom (14.1%), Germany (12.0%) and Belgium (10.1%).
[edit] Sectors of the economy
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. 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%.
[edit] Energy
While its oil reserves in the North Sea are of little importance, the Netherlands is presently the second-greatest natural gas producer in the European Union and the ninth-greatest 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-greatest natural gas exporter. Partly as a result of this large reserve of natural gas, nuclear power accounts for only 3.8% of the country’s electricity production.
[edit] 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 1973, the Netherlands had its first commercial nuclear reactor Borssele operational. Currently, the country has one pressurized water reactor (PWR) with a capacity of net MWe 485, which produces 3.8% of the country’s electricity. [2]
In the 1970’s, the Dutch chose a policy that required reprocessing all spent nuclear fuel. In 1984, the government decided to create a long-term (100 years) 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.[2]
In 1994, the Dutch government agreed with the operator of Borssele 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. The current Dutch government decided to postpone any decision to build - or not - another nuclear power plant - to the next government[3].
[edit] See also
- De Nederlandse Bank (Central Bank of The Netherlands)
- Social-Economic Council (economic advisory council of the Dutch government)
- Polder Model (Dutch version of consensus policy in economics)
- Dutch disease
- VNO-NCW (Confederation of Netherlands Industry and Employers)
- Bureau for Economic Policy Analysis
- Ministry of Finance (Netherlands)
- Ministry of Economic Affairs (Netherlands)
[edit] 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
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[edit] References
- ^ [https://www.cia.gov/library/publications/the-world-factbook/geos/nl.html#Econ Source: CIA World Factbook (2008)
- ^ a b “Nuclear Power in the Netherlands.” World Nuclear Association. March 2008. <http://www.world-nuclear.org/info/inf107.html>
- ^ FT.com / Home UK / UK - Dutch to weigh up benefits of nuclear power
