The Netherlands consistently ranks among the world’s most competitive industrialized economies. It offers an attractive business and investment climate and remains a welcoming location for business investment from the United States and elsewhere.
Strengths of the Dutch economy include the Netherlands’ stable political and macroeconomic climate, a highly developed financial sector, strategic location, well-educated and productive labor force, and high-quality physical and communications infrastructure. Investors in the Netherlands take advantage of its highly competitive logistics, anchored by the largest seaport and fourth-largest airport in Europe. In telecommunications, the Netherlands has one of the highest internet penetrations in the European Union (EU) at 96 percent and hosts one of the largest data transport hubs in the world, the Amsterdam Internet Exchange.
The Netherlands is among the largest recipients and sources of foreign direct investment (FDI) in the world and one of the largest historical recipients of direct investment from the United States. This can be attributed to the Netherlands’ competitive economy, historically business-friendly tax climate, and many investment treaties containing investor protections. The Dutch economy has significant foreign direct investment in a wide range of sectors including logistics, information technology, and manufacturing. Dutch tax policy continues to evolve in response to EU attempts to harmonize tax policy across member states.
In the wake of the worldwide financial crisis a decade ago, the Dutch government implemented significant reforms in key policy areas, including the labor market, the housing sector, the energy market, the pension system, and health care. Dutch reform policies were crafted in close consultation with key stakeholders, including business associations, labor unions, and civil society groups. This consultative approach, often referred to as the Dutch “polder model,” is how Dutch policy is generally developed.
Until the coronavirus crisis, years of recovery and associated “catch-up” economic growth had placed the Dutch economy in a very healthy position, with successive years of a budget surplus, public debt that is well under 50 percent of GDP, and record-low unemployment of 3.5 percent. This has allowed the Dutch government significant fiscal space to implement coronavirus relief measures aimed at specific commercial sectors and at the economy at large.
Prior to the coronavirus crisis, the Netherlands Bureau for Economic Policy Analysis (CPB) forecast stable but low growth for the coming years, with annual GDP growth at around 1.5 percent. The CPB has now revised its projection downward, with various scenarios of economic decline and recovery depending on the duration of coronavirus-related mitigation measures. In late March, the CPB calculated four scenarios, all of which anticipate a recession, and the Netherlands is bracing itself for an across-the-board economic decline, the full ramifications of which are not yet captured in CPB models.
In the best-case scenario, which involves three months of mitigation measures, the Dutch economy shrinks 1.2 percent in 2020 with unemployment of around 4 percent, and grows 3.5 percent in 2021 with unemployment of around 4.5 percent. Scenario two involves six months of mitigation measures in which the economy shrinks 5 percent in 2020 and grows 3.8 percent in 2021. Scenario three involves six months of mitigation measures in which the economy shrinks 7.7 percent in 2020 and grows 2 percent in 2021. In the worst-case scenario which involves 12 months of mitigation measures and additional problems in the Dutch financial sector and from abroad, the Dutch economy shrinks 7.3 percent in 2020 with unemployment of around 6.1 percent, and shrinks 2.7 percent in 2021 with unemployment of around 9.4 percent. In the worst-case scenario, government debt will reach 73.6 percent of GDP at the end of 2021.
The Netherlands is a top destination for U.S. FDI abroad, holding just under $900 billion out of a total of $6 trillion total outbound U.S. investment – about 16 percent. For the Netherlands, inbound FDI from the United States represents 17 percent of total inbound FDI. Dutch investors contribute $367 billion FDI to the United States of the $4 trillion total inbound FDI– about 10 percent. For the Netherlands, outbound FDI to the United States represents 16 percent of all Dutch direct investment abroad.
|TI Corruption Perceptions Index||2019||8 of 180||https://www.transparency.org/cpi2019?/
|World Bank’s Doing Business Report||2019||42 of 190||http://www.doingbusiness.org/
|Global Innovation Index||2019||4 of 126||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, stock positions)||2018||$883,188||https://apps.bea.gov/international/
|World Bank GNI per capita||2018||USD 51,260||http://data.worldbank.org/indicator/