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Investing in the Netherlands
The business climate for the Netherlands

Summary Paper-The Netherlands
Intro -
In the following paper, I will provide an overview of the business climate for the Netherlands, and discuss various aspects of the country’s economic, cultural and political climate. Key considerations such as the recent release of the European Economic Union’s (EU) Eurodollar, as well as the Netherlands’ role and involvement within the EU coalition will also be discussed.

History - The Netherlands has a rich history of being a center for trade on the European continent, and has subsequently been continental Europe’s maritime link with the Americas, Africa and Asia.
The Netherlands’ strategic location on the North Sea, and its mild (er) climate (relative to other counties in the region) has made it especially interesting to European powers through the ages. The Romans, Spaniards, English and French attempted to subjugate the country from 55 BC, until it was granted independence in 1815 (Hunter, 1995). By that time, the Dutch had already established themselves as highly capable seafarers and entrepreneurs, amassing large naval and merchant shipping fleets. The Dutch were especially focussed on using their maritime strengths in developing and trading the vast riches available from their colonies in Indonesia. Rubber, oil, spices and precious minerals from the East Indies were brought back to the ports of Amsterdam and Rotterdam, and were introduced and traded with continental Europe. In 1949, after 300 years of colonial rule the Netherlands allowed free elections and independence in Indonesia (Hoffman, 1991).
Since the Dutch were liberated from the brutal Nazi occupation of 1940-45, the Netherlands has been a member of the North Atlantic Treaty Organization (NATO).

Current Political Situation - The government of the Kingdom of the Netherlands is formally considered a "constitutional and hereditary monarchy" (Hunter, p.989), with the central executive power belonging to the Crown, currently held by Queen Beatrix. The legislative parliament working in concert with the Crown enforces and regulates the Dutch Constitution created in 1814. As stated in the Statesman’s Yearbook, "the Kingdom is divided into 12 provinces and 636 municipalities...each province has its own representative body, the Provincial States...Each municipality is governed by a Municipal Council" (p.989).
These provincial and municipal bodies are entitled to issue ordinances, bylaws and levy taxes over their respective domains, with final approval being reserved for the Crown in each instance.

The current political environment has a three party coalition currently in the parliamentary majority. These parties, the Labor Party, the Liberal Party and the Democrats have held power since the 1998 elections, and per the Guide, these parties are "implementing a coalition agreement aimed at fiscal consolidation, restructuring the social welfare system, and improving the business climate" ( This moderate pro-business approach appears to bode well for investors considering business in the Netherlands; a reelection in 2002 and subsequent continuation of the coalition’s majority appears imminent.

Current Economic Situation - The Dutch economic climate has progressed dramatically since the European recession in the early-to-mid 1980’s, "During this period, 100,000 jobs were lost every year, partly due to the sharp rise in labor costs. Furthermore, public finances had got completely out of hand" ( This "Dutch Miracle" of economic recovery, dubbed the Polder [Dyke] Model, borrowed a centuries-old Dutch gentry tactic for increasing taxes and levies (purported to be for dyke repairs), by reminding the local constituents that without these increases or economic sacrifices, the sea will wash away their homes and villages. The late 20th century version of this tactic reminded the Dutch that without the sacrifices of decreased wages, pensions and health benefits, the sea of international competition would wash away their current quality of life. Since these reforms were implemented the Dutch economy has responded quite positively. According to the Dutch Ministry of Foreign Affairs, the average growth rate in the Netherlands since 1994 has been 3.2%, this growth is equivalent to the phenomenal US growth during this period, while exceeding the EU average of 2.5%. Because the Dutch coalition government has placed a high priority on job creation, the Dutch employment growth average of 2.1% since 1994 (vs. the EU average of 0.4%) is also a positive indicator of the Polder Model’s success ( Although the Dutch inflation rate of 2.1 % is slightly higher than the EU average of 1.75 %, the increase is attributed to same recent increase in oil prices experienced in the US.

External Influences - One of the most notable external influences American entrepreneurs should consider when looking towards trade relations with the Netherlands, is the country’s participation in the European Economic (EU) community. Although the US and the Netherlands have privately registered relatively few trade-related complaints, there have been a number of instances where the US and the EU have had discernible disagreements in recent years. As stated in the Country Guide for the EU, the EU has levied restrictions, "on flights by hushkitted aircraft, and on imports of bananas, beef produced with growth hormones, genetically modified agricultural and food products, biotechnology, and a range of...other products containing items the EU described as Specified Risk Materials" (
Additional growth in electronic commerce may also be potentially hampered by EU restrictions on personal data transmissions that have been in effect since 1998. Because of the Netherlands’ membership in the EU, these restrictions would of course prevent and undermine trade of Specified Risk Materials between US companies and the Netherlands.
An additional concern with Dutch membership in the EU is the apparent hesitancy of many EU counties such as Great Britain and Denmark to fully participate within the original design outlined in the Treaty of Maastricht. This has delayed the full participation by qualified EU member states in the European Monetary Union (EMU), and the subsequent acceptance and widespread use of the Euro currency. The Netherlands is however, a leading member and supporter of a common EU economic structure and currency, and has already begun the three-year transition from the Dutch Guilder (fl) to full Euro currency usage and circulation (

Although the previous paragraphs have outlined some of the uncertainties, risks and additional regulations that the Netherlands’ participation in the may introduce into trade relationships with foreign investors, the US and the EU have what may be termed as a mature trade relationship, with obvious benefits, such as the $325 billion in total trade dollars recorded in 1998. A greater framework and platform for continued trade growth between the US and the EU was solidified by the newly created Transatlantic Economic Partnership (TEP) ( An additional benefit of the Netherlands’ participation in the EU’s commonization for foreign investors, are the potential inroads into other western and central European areas once trade relations within the country have been approved and initiated. Economic forecasters also predict "lower transaction costs, reduced risk of political interference in interest and exchange rate management" and higher growth rates stimulated by the circulation of the Euro ( These benefits, in my opinion, far outweigh the potential risks of EU regulations against US productions, and should accelerate business and investment growth with the EU.

Cultural Considerations - On the surface, the Dutch culture appears to be a clear and homogenous arrangement, with one common language, and a rich, shared history of trading, seafaring, and battling against the waters of the North Sea. The Dutch legend of the boy with his finger in the dyke, sacrificing himself to protect his village from total disaster is world renown, and embodies a traditional Dutch respect for the welfare of neighbors and the community. This balances with the respect for hard-work, competition, and success suggested in the legend of the Silver Skates (
Dutch Web-Entrepreneur, Rob Franken felt that these two legends in particular, weigh heavily in the mind-set and business attitude of the Dutch, because they embody the average individual’s concern for the greater society, while remaining fully cognizant of the importance of being individually successful and competitive.
Franken also feels that Dutch religious beliefs and attitudes have also played a large role in shaping the business climate in the Netherlands. This may be attributed to the unanimous Protestant victory over Catholicism in the Netherlands in the 1600’s, which helped to create and solidify a staunchly conservative and rigid Protestant work ethic.
Because the Dutch protestants truly believed that hard work was its own (and only) reward, earnings were heavily reinvested instead of squandered. It is widely perceived that the wealth and successes of large Dutch multinational corporations such as Unilever, Phillips, and Royal Dutch Shell can be attributed to these unwavering Protestant beliefs (Franken, 2000).

Business Environment - The Dutch penchant for trade, commerce and an outward-reaching mentality, combine to make the business environment in the Netherlands a dynamic experience. In May of 2000, the Economist magazine’s Intelligence Unit (EIU) predicted that "the Netherlands will be the best country in the world to conduct business over the next five years. Unlike many other economies, the Netherlands has no obvious weakness in its business environment" ( In another recent EIU study on e-commerce in the 21st century, the Netherlands was ranked 5th (out of 60 countries) in e-commerce readiness, the highest rating for an EU country (
The Netherlands’ portfolio of viable industries includes microelectronics, electrical machinery and equipment, chemicals, petroleum, metal and engineering products, and agroindusties. The Netherlands’ ranking as the world’s third largest exporter of agricultural products is noteworthy based on the country’s size (roughly the size of New Jersey) (
The demographic mix in the Netherlands creates a challenge for foreign entrepeurs however. The Netherlands currently has a large, diverse mix of foreign nationalities that have settled there, for the most part due to the country’s liberal immigration laws, especially those created for inhabitants of former Dutch colonies. The Dutch Central Bureau of Statistics reported that over 17% of the Netherlands’ total population is comprised of first and second generation foreigners ( Communication and language barrier issues with this diverse workforce should be expected. Chris O’Connell, a commodity buyer with Bendix-Honeywell International, who worked for a period of two years for a Dutch/Japanese electronic assembly Joint Venture near Amsterdam, confirmed this concern.
O’Connell’s first response to my inquiry about the business environment in the Netherlands was to recall difficulties he encountered in communicating with all functional areas in the facility. Because of the large presence of the Japanese JV partners, as well as the diverse, multinational workforce, there appeared to be very little of the cohesive, team-dynamics that are stressed in US companies. O’Connell also felt that each nationality or language group gravitated into numerous social and work cliques that complicated the most mundane of activities (O’Connell, 2000).
This diversity, if foreseen and prepared for, may be considered as a benefit for businesses that are attempting to truly globalize, and harness the unique differences that this type of workforce can provide.

Strategic Value - The strategic value of conducting business in a country with the world’s largest shipping port cannot be understated. As cited in, "The amount of sea-transported goods that pass through Rotterdam's harbor and that of its out-port, Europoort, is the largest in the world in terms of capacity... Rotterdam is also one of the largest grain and general-cargo harbors on the continent. It is a major transshipment port for inland Europe, with tens of thousands of Rhine River barges using its facilities". Additionally, Amsterdam’s Schipol International Airport, "ranks among the top European airports in volume of passenger and freight traffic" ( The Netherlands’ compact size and superb infrastructure make business and logistic travel from anywhere within the country to these strategic trade centers possible in less than one hour.

Business Incentives - It is worth repeating that the expected growth and improved ease of business that will be facilitated by the predictable success of the EU, will represent the most appreciable business incentive that foreign entrepreneurs trading with the Netherlands should expect to enjoy.
An additional business incentive that foreign entrepreneurs may expect, is the efficiency, and cost effectiveness that is realized when a company enters into what is termed the Dutch Distribution System. A clearer, albeit subjective description of this system is given by Jan Derck van Karnebeek, President, CEO, and Founder of the Holland International Distribution Council, "The Dutch excel at transportation and distribution. The advanced know-how the Dutch exhibit in all modes of transport; water, air, rail, and road; enables highly effective distribution channels that draw foreign companies to the Netherlands" ( These logistical skills and know-how are an added bonus for foreign companies that are competing internationally for low cost, and immediate delivery.

Conclusion - In the previous sections I have provided an overview of the business climate for the Netherlands, and discussed various aspects of the country’s economic, cultural and political climate. Based on the current levels of economic and political stability, the dynamic business environment, and the strategic values and added benefits for entrepreneurs, I believe the Netherlands should be considered as a primary location for US companies considering future trade with the European Economic Community.


  • Brian Hunter (Editor), (1995). The Statesman’s Yearbook 132nd Edition.
  • New York: St. Martin’s Press. Hoffman, Mark.S., (Editor) (1991).
  • The World Almanac and Book of Facts. New New York: Pharoah’s Books.
  • Franken Rob, Dutch Web-Entrepreneur. Interview. 7.July, 2000
  • O’Connell, Chris. Commodity Buyer, Bendix Commercial Vehicle Systems. Interview. 16. June, 2000.
  • US Department of Commerce, (2000). Country Commercial Guides/Netherlands.
  • US Department of Commerce, (2000). Country Commercial Guides/EU.
  • Foreign Investment Agency, (1998). Investment News.
  • Dutch-Central Bureau voor de Statistiek, (2000). Key Figures and Economic Indicators.
  • Dutch Ministry of Foreign Affairs, (2000).
  • The Economist Intelligence Unit, (2000). Press Releases-Business Rankings
  • Encyclopedia Brittanica, (2000). Web Searches-Rotterdam, Amsterdam.

    Author :
    David Joecken
    Jack Nettis-Facilitator
    Date : July 8, 2000

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