The Economy of the Netherlands

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 country is one of the leading European nations for attracting foreign direct investment.

The stern financial policy has been abandoned in 2009 on account of the current credit crises. The relatively large banking sector was pertly nationalized and bailed out through government interventions. Large unemployment, double the current rate of 4% is expected since the Netherlands is an open economy. The government wants to stimulate the economy by accelerating already planned projects. Fundamental reforms for long term recovery will be implemented as well.

While the private sector is the cornerstone of the Dutch economy, governments at different levels have a large part to play. In addition to its own spending, the government plays a significant role through 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.

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%.