This small country in northern Europe is home to just over 17 million people a good part of the territory is below sea level which is why it is famous for its engineering works to face the challenges of constant flooding.
it is also famous for being one of the most stable and wealthy countries in the world by 2017 according to the world bank it had a GDP per capita of $48,000 higher than countries like Australia Canada or the united kingdom the questions addressed in the post are.
What Reasons Explain the Wealth of the Netherlands?
one of the reasons that help explain the wealth of the Netherlands is trade its main port the port of Rotterdam is the largest in Europe ranking 10th among the world’s busiest ports in 2019 above even the port of Los Angeles in the united states the port of Rotterdam plays a very important role in the export and import of goods and raw materials.
not only in the Netherlands but also in Europe in fact it is often referred to as the largest german port because of its vital importance to the german economy since most of the raw materials for German industry arrive through the port of Rotterdam.
but the importance of trade and the fact that it has the most important port in Europe is not new to the Netherlands the dutch have made international trade their main ally for centuries since the 17th century the dutch shipbuilding industry developed rapidly the availability of windmills a cheap source of energy was present in almost every province,
and the invention of the wind-powered sawmill made it possible to quickly process wood that was used to make ships this enabled the port of Amsterdam to become the hub of European trade and to create the dutch east India company in 1602 which was considered the largest company in history.
it was something like the first multinational with 150 trading ships 50,000 employees an army of 10,000 men and 40 warships it was like another state within the Netherlands, it had monopoly privileges and was sometimes granted colonizing functions on other continents.
but the most important achievement of the Netherlands was that the dutch east India company obtained a monopoly on trade with japan and in turn through japan managed to trade indirectly with china and that was significant because these Asian countries traditionally distrusted the intentions of western traders.
so for many years, this dutch company was the only entrance to the western world to japan which gives the Netherlands exclusivity to trade exotic goods from Asia throughout Europe therefore from that time on the north of what would
become today the Netherlands would become one of the main intermediaries in international trade, in general, the republican government of that time was in favor of free trade and the autonomy of each of the seven provinces that were part of the country.
it was also tolerant of the establishment of immigrants who were discriminated against in other parts of Europe such as Jewish merchants and french protestants bankers from northern Italy also arrived all these educated immigrants contributed to making Amsterdam the world’s financial and commercial center of the 17th century,
in fact, the world’s first stock exchange was established in Amsterdam, and that financial development also explains the current level of wealth in the Netherlands the residents of that country were famous for their handling of finance and commercial credit they created products,
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and mechanisms for more and more people to access stock market investment this attracted investors from all over Europe so capital was abundant and as a consequence of the abundant capital interest rates were lower than in other parts of Europe,
but this is not a thing of the past today the Netherlands remains an excellent destination for investors and companies seeking stability and relatively low taxes this is why Amsterdam made headlines in early 2021.
when the united kingdom left the European Union as the Amsterdam stock exchange overtook the London stock exchange as the largest stock trading center in Europe however this friendliness to investment and private initiative not only benefits foreign capital as claimed by those who consider the Netherlands is a simple tax haven in one way.
or another this environment stimulates the dutch entrepreneurial spirit according to the 2019 global entrepreneurship index the Netherlands ranked eighth with the best score among 137 countries evaluated in short free trade with respect for the cult diversity of immigrants.
and the creation of the first stock exchange has attracted traders, investors, and entrepreneurs, for centuries in addition to its privileged location in the center of Europe and having wealthy neighbors such as Germany Belgium the united kingdom and Denmark are reasons that may partly explain why this country is so rich and enjoys the best quality of life indicators.
How Did the Discovery of a Natural Gas Field Almost Ruin the Dutch Economic Miracle?
however, as in all countries, the Dutch economy went through a difficult period in the 1970s the Netherlands discovered large deposits of natural gas in the north sea this on the one hand reduced external dependence on energy sources but on the other hand,
this sudden increase in wealth turned out to be a curse because it contributed to an unsustainable expansion of the welfare state public spending increased from 40 percent of GDP in 1973 to 58 in 1983.
it was invested in generous social programs that encouraged healthy people to leave their jobs to rely on state benefits unemployment rose from 5 to over 17 percent in a few years and economic growth was virtually zero despite natural gas revenues consensus on an urgent change in economic policy direction was reached in the early 1980s with an agreement between labor unions.
and employers’ wage increases and social benefits were moderated to stimulate labor participation and job creation public spending was also reduced and indeed the unemployment rate had fallen by the end of the 1980s to levels of 5 percent the idea had begun to spread that the creation of private jobs was the best social policy,
the unemployment rate would rise again to 7 in 2014 but in 2020 in the middle of a global recession, it was only 3.8 percent one of the lowest among all OECD countries sometimes due to the success of the employment generation policies the dutch case has been considered one of the employment miracles along with other countries such as Switzerland Australia and Ireland.
How Did Such a Small Country Become the World’s Second-Largest Food Exporter?
but if there is a miracle in this country it is that it is the second largest exporter of food in the world with such a small territory the climate fertile soil and flat land make the Netherlands
a perfect place for agricultural crops to grow relatively easily but perhaps the most important feature of dutch agriculture is the use of technology and mechanization of processes they use robots and machines for almost everything their skilled labor force also plays an important role in this field.
Wageningen university is the best agricultural education institute in the world it has numerous research facilities where they are constantly looking for more efficient ways of farming so it is not surprising that much of the agricultural production is done behind closed doors in huge state-of-the-art greenhouses.
so innovative geographical conditions and skilled labor explain part of the dutch export success however there is another reason about 60 percent of the products that enter the Netherlands leave the country within a short time in the form of re-exports.
this is known as the Rotterdam effect refers to the dutch port mentioned at the beginning for some countries it is faster and cheaper to import through the dutch port in 2015 less than half of the exports corresponded to domestic exports the rest were re-exports that is products coming from other countries that only made a transit in the port but statistically are considered as exports from the Netherlands.
in short, this Rotterdam effect boosts the numbers of food exports from this European country however this doesn’t diminish the fact that it is one of the most innovative free, and prosperous countries in the world thanks for reading see you in the next post