Economy of Netherlands

The Netherlands has played a special role in the European economy for many centuries. Since the 16th century, shipping, fishing, trade, and banking have been leading sectors of the economy, and trade with the Dutch colonial empire was important in the 19th and the first half of the 20th centuries. Since the independence of Indonesia in the late 1940s, the Dutch economy has been redirected from colonial trade to trade with European nations; a diversified manufacturing base was created as employment in agriculture fell; and the country became a major energy exporter as large deposits of natural gas were discovered. In all these changes, the national government played a major role, particularly by its economic planning. The government's influence is great, even though most firms are privately owned, because it distributes nearly half the country's national income. Also important in the economic growth of the Netherlands are the activities of a number of large private firms.

National Output
In 1994 the gross national product (GNP) of the Netherlands was estimated at US$338.1 billion, giving an average income per capita of US$21,970 (World Bank estimate; 1992-1994 prices). In 1993, the gross domestic product (GDP) was measured at US$309 billion. Between 1980 and 1990, the country's GDP grew at an average yearly rate of 1.9 per cent. About 27 per cent of GDP is produced by manufacturing, construction, and energy-related activities, while agriculture contributes about 3 per cent. However, the service sector including the financial and public sectors, is also the dominant contributor to the economy, accounting for more than 69 per cent of GDP.

Agriculture
The Netherlands' small size and its dense population means that agriculture is highly intensive. The sector is highly productive and a major generator of exports. The export value of meat, flowers, vegetables, butter, cheese, and other dairy products substantially exceeds the value of imported grain, tropical products, and animal fodder. Most farms are small family units. Meadows and pastures occupy about 50 per cent of the agricultural land; 40 per cent is devoted to crops; and the remainder primarily to market gardening, and bulb and flower cultivation. Annual crop production in the mid-1990s (in tonnes) included sugar beet, 7.5 million; potatoes, 7.7 million; vegetables and fruit, 4.4 million; wheat, 981,000; and other cereals, 366,000. There were about 4.7 million cattle, 14.9 million pigs, and 96 million chickens.

Forestry and Fishing
Because so little of the Netherlands is forested, timber production is of minor importance. Fishing, however, is a traditional activity that continues to be significant despite the reduction of fish stocks resulting partly from pollution in the North Sea. Herring, cod, plaice, sole, mackerel, mussels, and shrimp are leading components of the annual catch, which totalled 486,900 tonnes in the early 1990s.

Energy and Mining
The industrial structure of the Netherlands is closely related to the country's sources of energy. For centuries the Dutch relied heavily on windmills and peat for energy. As new technologies emerged, coal increased in importance. Deposits in Limburg Province supplied a part of Dutch needs, but most coal was imported. Petroleum and natural gas became increasingly important after World War II; these fuels also were imported, and the port of Rotterdam became a leading centre for receiving and refining petroleum. In the 1950s and 1960s the Dutch discovered large natural gas reserves in Groningen Province. Production rose rapidly, permitting the last domestic coal mines to be closed in 1973 and making the Netherlands a major exporter of natural gas. In the early 1990s the annual output of crude petroleum was 19.5 million barrels, and of natural gas, 83.6 billion cu m (2.95 trillion cu ft). Installed electricity-generating capacity was 17.52 million kilowatts; the output of electricity totalled 79.4 billion kilowatt-hours. During the 1990s wind power has experienced a renaissance, encouraged by environmental concerns about pollution. In 1994 more than 700 "high-tech" windmills were installed, able to produce 238 million kilowatt-hours.

Manufacturing
The Dutch manufacturing sector is highly diversified, and much of it is of recent origin; industrial production was relatively unimportant until after World War II. Heavy industry, such as the manufacture of steel, transport equipment, and large machinery, is much less important in the Netherlands than in neighbouring countries. The rapid post-1945 growth of manufacturing has been led by the chemical and electronics industries. Also important to the manufacturing sector are the production of processed food and beverages, tobacco items, construction materials, ships, refined petroleum, rubber and plastic products, and printed materials.

Currency and Banking
The Dutch currency unit is the guilder (Dutch, gulden) (1.8988 guilders equal US$1; 1997). It is issued and regulated by De Nederlandsche Bank (1814), the state-owned central bank. The exchange rate of the guilder is closely tied to that of other major western European currencies, particularly the German mark. Amsterdam is the leading banking and insurance centre and the home of the country's principal stock exchange.

Foreign Trade
The Dutch economy is extremely open to world trade. Much of the flow of goods into its ports is intended for trans-shipment to other countries, mainly other members of the EU. Throughout the 1980s and early 1990s the value of Dutch exports generally exceeded that of its imports; in 1995, for example, the country's imports cost about US$133 billion, and its exports earned about US$146 billion. Major imports are manufactured goods (about 25 per cent of total imports), machinery and transport equipment (44 per cent), crude petroleum and petroleum products (7 per cent), food and live animals (8 per cent), and chemicals (8 per cent). Leading exports are mineral fuels and petroleum (about 11 per cent of total exports), food, beverages and tobacco (20 per cent), chemicals (14 per cent), machinery and transport equipment (30 per cent), and manufactured items (about 18 per cent). Fellow members of the EU account for the majority of both imports and exports. Germany is the Netherlands' most important single trading partner, accounting for more than 26 per cent of all trade. Natural gas exports have helped increase foreign exchange earnings, as has the growth of tourism. More than 7 million foreigners visit the Netherlands every year, attracted by its bulb and flower fields, by boating on its rivers and lakes, by historical, artistic, and cultural heritage, and by its relaxed, tolerant society. The Dutch are themselves eager travellers, however, and they generally spend at least twice as much money abroad as foreigners spend in the Netherlands.

Transport and Communications
Because the Dutch economy is internationally oriented, good transport facilities have long been essential to its prosperity. Rotterdam is one of the world's leading seaports; Amsterdam is also a major port. Both owe their importance to the canals and rivers that link the North Sea with the interior of Europe.
The New Waterway links Rotterdam to the North Sea, which is connected to Amsterdam by the North Sea Channel. A comprehensive system of inland waterways, with a total length of 5,046 km (3,135 mi) serves almost all of the country; 2,647 km (1,644 mi) of these waterways are navigable by vessels up to 1,000 gross tonnes. The Dutch ocean-going merchant fleet comprised 3.4 million deadweight tonnes in the early 1990s, and some 5,500 commercial vessels plied the inland waterways.
The state-owned railway network of some 2,810 km (1,750 mi) of track, about 70 per cent of which is electrified, covers the whole country and provides frequent passenger train services. Barge competition prevents the railways from being major freight carriers, however.
About 2,320 km (1,440 mi) of limited-access highways and numerous bridges, tunnels, and ferries help to speed the flow of Dutch motor-vehicle traffic. In the early 1990s there were about 5.7 million cars registered, or about one for every three inhabitants. Bicycle use continues to be important for local travel, and many roads have separate bicycle lanes.
The Netherlands' busiest international airport is Schiphol, near Amsterdam; smaller airports serve Groningen, Maastricht, Rotterdam, and other cities. Domestic air travel is of little importance. Royal Dutch Airlines (KLM) is the country's leading carrier.

The Media
In addition to the many regional and local newspapers, the Netherlands has six nationally distributed daily newspapers, each tending to be associated with a particular political or social grouping. For example, the NRC-Handelsblad (published in Rotterdam) is liberal and non-sectarian, the Volkskrant (Amsterdam) has Roman Catholic ties, Trouw (Amsterdam) is close to the Reformed Church, and Het Vrije Volk (Rotterdam) is linked to the Socialist Party. The daily with the largest circulation is the independent Telegraaf of Amsterdam. Under the Media Act of 1988, two national organizations coordinate radio and television broadcasting: an independent consortium provides production facilities, while a firm representing both government and the private sector transmits general-interest programming. Most programmes are produced by non-profit associations that are given funds raised by taxing radio- and television-receiver owners and are allocated air time according to the number of members they have. The major producers include VARA (socialist), NCRV (Protestant), KRO (Roman Catholic), and AVRO and TROS (both non-sectarian). The country has many smaller producers, making Dutch radio and television pluralistic even though private transmission facilities are not permitted. In 1993 some 5.6 million television receivers were licensed; there were an estimated 12 million radio sets.

Labour
Of the approximately 6.6 million employed workers, about 61 per cent work in trade and services, 23 per cent are employed in manufacturing and industry, 10 per cent are in business and finance, and 4 per cent work in agriculture, forestry, and fishing. Approximately 29 per cent belong to trade union organizations, the largest of which are the Netherlands Trade Union Confederation and the Christian National Federation of Trade Unions in the Netherlands. The government systematically enters into negotiations between employers and unions in order to secure collective bargaining agreements that are consistent with its economic plans.