Netherlands Market

The Netherlands Market is characterized by a prosperous open economy model which is heavily dependent on foreign trade. The Dutch economy is often noted for its low inflation and unemployment rates 1.3% and 3.8% respectively as in 2006), a sizable current account surplus and facilitates as a transportation and communications centre for European trading activities. The Netherlands economy is categorized as the 14th freest economy of the world and according to the Index of Economic Freedom, the economy is 77.1% free with Investment Freedom at 90% followed by Business Freedom at 88.3% and Monetary Freedom at 87%. Since about half of a century, the economy has emerged as a major energy exporter where the government economic planning played a major role in marketing the products and reaping much needed foreign exchange. The growth of the Netherlands economy in the last year or two after the global economic slowdown from 2001-05 can be attributed to the activities of the private firms although the polity and government plays a major role distributing nearly half of the Dutch national income. Extensive privatization and deregulation has started in full flow since the 1980’s and the government still plays an important role permit requirements and regulations pertaining to almost every economic activity.

Some of the key Netherlands Market can be identified as :

•  Goods and services market: The main industries include agriculture-related industries, metal and engineering products, electronic machinery and equipment, petroleum refining (Royal Dutch Shell), construction industry and microelectronics. Food-processing and fishing are two very important industries in the country which sources its raw materials derived from the surpluses of the agricultural sector which employs only 2% of the total workforce and is also one of the most efficient sectors of the economy. Food-processing industries (Unilever and Heineken) are also responsible for a sizable portion of the country’s export earnings. Merchandise Trade accounts for nearly two-thirds of the GDP (Gross Domestic Product) for the country and has had positive balance of payments since 2005 estimated at 31.5 billion euros. The economy ranks the third in worldwide agricultural exports after the United States and France. A significant portion of Dutch agricultural exports are appropriated from fresh-cut plants, flowers and bulbs and vegetables such as tomato, cucumber and peppers. Leading trading partners include Germany, Belgium, USA, China and UK. Leading export markets for Netherlands as well as the prime source of imports for the year 2005 was Germany with exports leading the way at 25.1%. Services accounting for more than half of the country’s national income are in the fields of transportation, logistics and financial services such as banking and insurance. Industrial production including mining account for about 20% of the GDP whereas agriculture and fishing account for 2% of the country’s GDP. Netherlands is the second-largest natural gas producer in the European Union and the ninth-largest in the world accounting for about 30% of the annual gas production for the EU and 2.7% for the annual world total.

•  Money and capital markets: The money market in the Netherlands is controlled by the Dutch Central Bank or De Nederlandche Bank (DNB). DNB is accused of undertaking monetary policy and its quest for an orderly money market is often jeopardized by hectic movements in the international money and foreign exchange markets. Netherlands adopted the Euro by replacing the Guilder on 1 st January 1999 and has since performed well on the economic front with low inflation rates consistently. The Amsterdam Stock Exchange, the main stock exchange of the Netherlands is the oldest in the world and was founded in 1602 by the Dutch East India Company and it later merged with the European Options Exchange in 1978 and was named the AEX, or the Amsterdam EXchange. However, in September 2000, the Brussels and Paris Stock Exchanges to form Euronext and is now called the Euronext Amsterdam.

•  Labour market: Although low unemployment is the present situation in Netherlands, labour market reform is heavily needed to increase macroeconomic resilience and more utilization of labour. Long unemployment benefits and low female working hours and employment rates for older workers are the causes of concern. There is the need to sharpen incentives for unemployed persons in the early stages of their unemployment. To encourage the employability of older workers, many steps on the part of the government have been taken. On the part of the encouraging women to work more, childcare benefits and out-of-school-hours care arrangements should also be made by the government.