Netherlands

IV

Economy

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 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 through 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.

In 2004 the GNP of the Netherlands was estimated at US$523 billion, giving an average income per capita of US$39,340 (World Bank estimate). In 2005 the gross domestic product (GDP) was measured at US$624 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 the dominant contributor to the economy, accounting for 73.6 per cent (2005) of GDP.

A

Agriculture, Forestry, and Fishing

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 2005 (in tonnes) included sugar beet, 6 million; potatoes, 6.84 million; and wheat, 1.25 million. There were about 3.80 million cattle, 11.3 million pigs, and 87.9 million chickens.

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 600,561 tonnes in 2004.

B

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.

C

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.

D

Energy

In 2003 the annual output of crude petroleum was 17.1 million barrels, and of natural gas, 73.1 billion cu m (2,583 billion cu ft). The output of electricity totalled 91 billion kWh. During the 1990s wind power has experienced a renaissance, encouraged by environmental concerns about pollution. In 1994 more than 700 modern windmills were installed, able to produce 238 million kWh.