The root of the Netherlands’ economy lies upon its free capitalistic market. The Netherlands’ economic freedom score is 77, making its economy the 12th freest in the 2009 Index of Economic Freedom. It has the 16th largest economy in the world and ranks 10th in GDP (nominal) per capita.
According to the CIA Factbook, the GDP is currently 670.2 billion USD and the Purchasing Power Parity is 2.8 billion USD while the Dutch are experiencing 1.8% real growth, 4.5% unemployment, and 1.6% inflation rates. Centraal Bureau voor de Statistiek reports the average disposable income of Dutch households amounted to 28.5 thousand euro in 2004. The real disposable income of Dutch households rose by nearly 4 percent in 2007. Households spending exceeded household income by 2 billion euro. In 2006, Dutch households spent 6 billion more than they received in income.
With a population of 16.7 million, the country has been one of the leading European nations for attracting foreign direct investment and is one of the four largest investors in the United States. The increasing ties of the Netherlands with global trade are reflected in the increasing shares of exports and imports in GDP. Data from the Centraal Bureau voor de Statistiek shows that exports rose from to 77% of GDP in 2008 in addition to imports rising to 68%. Despite its small size, the Netherlands ranks seventh in the world in total value of its corporations. Furthermore, its online retail market is amongst Western Europe’s largest, with the Netherlands also ranked as one of Europe’s top five e-commerce nations states techpubinc.com.
The Netherlands began circulating the euro currency on January 1, 2002. The Euro remains strong against the US Dollar, with 1 Euro equaling 1.4114 USD. Because of the weakening of the US dollar for the last two years, the Euro has appreciated vis-à-vis US dollar (x-rates.com). So steeply has the greenback fallen in value against the Euro that economists are talking about the dollar losing its status as the world’s reserve currency, a position it has held since 1945.
Best Industry Segments
The Dutch industry is diversified, with a variety of businesses that range from manufacturing, mining, and energy production to construction and chemical manufacturing. The government initiated many programs to encourage the development of new industries, specifically, aerospace industry, biotechnology, and microelectronics. Figures from Eurostat indicate that, in 2007, the Netherlands was the EU’s third top exporting country after Germany and France. Dutch exports also grew substantially in 2007. If the current trend continues, the Netherlands will move up to take second position in 2008. Relative to other countries, the Netherlands exported large volumes of food products, gas oil and natural gas.
Regulatory and Tariff Landscape
Along with the United States, the Netherlands has consistently been one of the main advocates of international free trade and the reduction of duties and tariffs on goods and services. The average tariff rate is low. The Netherlands’ trade policy is the same as that of other members of the European Union. The common EU weighted average tariff rate was 2.1% in 2005 according to the Heritage Foundation. The EU policy upholds non-tariff barriers in agricultural and manufacturing subsidies, import restrictions for some goods and services, market access restrictions in some services sectors, non-transparent and restrictive regulations and standards, and inconsistent customs administration across EU members. Supplementary biotechnology and pharmaceuticals rules exceed EU policy.
In order for many products in the European Economic Area (EEA) market to pass the consumer safety, health, and environmental requirements, it must receive a CE marking. By affixing the CE marking, the manufacturer asserts that the item meets all the essential “Health and Safety” requirements of the relevant European Directive(s) that provide for the CE marking. Examples of European Directives requiring CE marking include toy safety, machinery, low-voltage equipment, medical devices and electromagnetic compatibility.
Based on statistics from internetworldstats.com, there are currently 13,791,800 Internet users in the Netherlands, with a penetration rate of 82.9%. The Netherlands is ranked 7th among the top internet countries in the European Union yet 2nd behind Greenland with the highest internet penetration rate. Over the span of eight years (2000-2008), user growth stands at 253.6%. In terms of type of connection, the Netherlands exhibits a positive trend towards broadband internet adoption. It can be located 4th on the list in broadband penetration, leading the OECD along with Iceland, Finland, and Norway. Despite the wide availability of Internet connections, nearly 4 million people (about 25% of the population) have never used the Internet at all according to data from the Organisation for Economic Co-operation and Development.
Online Language Preferences
The two official languages of the Netherlands are Dutch and Frisian. However, Dutch is the mother tongue of almost all people in the Netherlands. The 500,000 inhabitants of Friesland, a province of the Netherlands, speak Frisian. Most of Dutch people speak at least one foreign language, mostly English that is taught at school during the basic education. Many Dutch people speak also German, which is similar to Dutch language and some of them speak French. Like any other country, internet users prefer to search in their native language, Dutch.
Search Engine Profile
Data from a checkit.nl shows Google Netherlands (Google.nl) overwhelmingly leads the way as the top search engine with 95%. Ilse.nl and live.nl take the second and third spot, respectively.
Netherlands being the small country is a big player in the world’s trade and the global transfer of capital. Its thriving and open economy serves as an inviting potential global trading partner to other countries. The economy is noted for stable industrial relations, moderate unemployment and inflation, a sizable account surplus, and an important role as a European transportation hub. Based on the current and future potential of the market, Global eMarketer ranks the Netherlands as a Tier I market for global online market opportunity.