Major Growth Of The Dutch Economy example essay topic

The Netherlands is low-lying country in western Europe located west of Germany and north of Belgium. According to a 1993 estimate, the Netherlands had a population of 15,224,942. The overall population density was about 449 persons per sq km (about 1162 per sq mi) which makes it one of the most densely populated countries in the world. About 89 percent of the population live in urban areas. The largest cities are Amsterdam (population, 1992 estimate, 713,407), the country's capital; Rotterdam (589,707), one of the world's leading seaports; The Hague (445,287), the nation's seat of government; and Utrecht (232,705), a manufacturing hub. The official language of the Netherlands is Dutch, which is spoken throughout the country.

The Netherlands is a constitutional monarchy with a parliamentary system of government operating under an 1812 constitution with amendments. The hereditary monarch, who has had little power in running the government since the constitution was revised in 1848, acts as the head of the state while the principal executive official of the country is the prime minister. He is appointed by the monarch and heads a cabinet that is responsible to the States-General (legislature). The Dutch parliament, called the States-General, consists of a First Chamber, composed of 75 members elected to terms of up to six years by the provincial legislatures, and a Second Chamber, made up of 150 members popularly elected to terms of up to four years under a system of proportional representation. Either or both chambers may be dissolved by the monarch on condition that new elections be held within 40 days.

The Second Chamber is by far the more important of the two; the First Chamber has little more than a rarely exercised veto power over the legislative process. The Netherlands uses systems of proportional representation in electing municipal, provincial, and national assemblies. This allows even small politica parties to win a seat. In the 1986 Second Chamber elections, for example, more than 25 parties took part and nine won seats. On the national level, the Netherlands has always been governed by coalitions of parties, the formation of which has often proved difficult. However, one such coalition was formed in 1994 between the PvdA (Labor), VVD (Conservative Liberals), and D 66 (Social Liberals).

The PvdA and VVD are parties that have both been around for quite some time. What made the 1994 election so big was the defeat of the CDA (Christian Democrats) by D 66. This combination of parties proved to be quite advantageous to the Netherlands. "It was the first government since 1917, when the suffrage was extended to all male adults, without Christian Democrats" (Van der Brug 179).

During the reign of this coalition, the economy of the Netherlands soared. Consumer spending increased and unemployment decreased to a low of 5 percent in the first quarter of 1998 "There is no such doubt about the performance of the Dutch economy. Gross domestic product (GDP) has expanded strongly in the last two years - by 2.7 percent in 1996 and 3.4 per cent in 1997- and analysts expect GDP Growth to be even higher in 1998 (Mottershaw 9). With all of the economic growth that happening in the Netherlands, one would assume that the elections of 1998 would keep the same coalition together. "However, in a multiparty system such as the Netherlands, things are never that simple. Governing parties may be collaborating partners in coalition, but, in the run-up to the election they increasingly become opponents competing for votes" (Van der Brug 180).

This competition for votes is exactly what took place in the 1998 elections. The popularity of the prime minister Wim Kok and his party, PvdA, won the party more seats which were taken from the D 66. D 66 also gave up some seats to other small parties such as the Socialist Party and the Green Left. The results of this recent election have caused a major stir in the country and around the world. "Since the purple' coalition was created in 1994 D 66 has played a pivotal role, bridging the gap between the two main parties.

However, with their seats reduced by nearly half - from 24 to 14 - the party's participation in the ruling coalition is no longer guaranteed" (Mottershaw 9). After having a successful four years in the coalition, D 66's loss of nearly half of their seats was a major blow. The party is so upset over the matter that they may decide not to join in the coalition again and instead sit on the opposition benches. If D 66 does not take part in the coalition, then building a new one may be quite difficult because the central issue which divides the two main parties is economics. The PvdA, the big winner in the 1998 election, interprets the election results as sign that the people want the stringent fiscal policy of the last four years relaxed. The VVD, on the other hand, wants to see a continuation of budget cuts, deficit reduction, and tax relief.

Even if the politicians do nothing but argue, normally the Netherlands would be fine, and they could simply ride on their booming economy. However, the coming launch of the new European currency could throw the whole thing off because the Dutch are set to play a major role in it. How can the Dutch launch a new currency to rule Europe when they can't even decide what to do with their own money "How the two parties will resolve their differences and form a workable alliance remains to be seen" (Mottershaw 10). Others seem to show less concern over the Netherlands' political matters.

An article in The Economist says that the Dutch themselves are losing little sleep over the matter. "Indeed, the calm is pervasive that no one seems sure what is coming next. Maybe nothing: although Wim Kok, the popular center-left prime minister, resigned on May 19th, it remains unclear whether he or his government will actually be gone for good" (So what 50). Although Kok has resigned, he has shown signs of wanting to stick around.

His stay will all depend on whether or not the old coalition can put itself back together again. If it does not, then Kok will probably remain in office to take care of matters until the next general election. "Either way, it is a safe bet that little will change in the way the prosperous Dutch are ruled" (So what 50). In addition to the political stir caused by the 1998 election, there are also a couple pieces of legislation that are cause some trouble of their own. The first is the euthanasia law in the Netherlands. As it is everywhere else, assisted suicide is illegal in the Netherlands.

However, on August 10th, the Dutch ministers of justice and health proposed a bill that would allow for children as young as 12 to be assisted in committing suicide, even if their parents disagree (Spanjer 660). The bill will also set up a set of strict criteria that, if followed, will protect doctors from prosecution. "This will end a 15 year anomaly whereby doctors performing euthanasia committed a serious crime but avoided prosecution if similar, though non-statutory criteria, were met" (Sheldon 467). The question that everyone is asking is, "Why would the government want to make assisted suicide legal."Research shows that only 41 per cent of an estimated 3600 euthanasia cases each year are reported by doctors to the authorities. By removing euthanasia from a criminal context, the government hopes to increase this figure" (Sheldon 467). The Royal Dutch Medical Association seems to support the idea, but they are almost the only ones.

"Dr Karel Gunning of the World Federation of Doctors Who Respect Human Life fears that the proposals give doctors too much freedom as the review committees base their judgments solely on a report which the doctors themselves have written" (Sheldon 467). Along with doctors all over the world, many of the parties in parliament don't seem to happy about the proposal either. The Christian Democrats and other right-wing parties disagree vehemently with the proposals and promise "aggressive" criticism when the proposals are debated later this year (Spanjer 660; Sheldon 467). The other major issue in Dutch politics is the drug policy. Since the late 1970's, it has been legal to smoke marijuana and use other soft drugs.

While this may seem like an absurd idea to other countries, the Dutch drug policy seems to be working quite well. For example, the use of cannabis in the Netherlands is lower than in the United States (Barnard 68). The trouble starts when other countries, namely France, try to impose their ideas on drug enforcement on the Netherlands. While trying to control the flow of drugs within their own countries, European nations are blaming the Netherlands' loose policy on drugs for all of the problems.

However, the policy on cannabis has not led to an increase in the number of hard-drug users, and therefore, the steppingstone hypothesis cannot be confirmed (Barnard 69). In fact, only about 1.6 percent of the Dutch population are said to be addicted to hard drugs. "This compares with an estimated 160,000 addicts in France, or 2.8 percent of the population; 200,000 in Germany, or 1.5 percent; and 175,000 in Italy, or 3 percent" (Gross 41). Moreover, Bob Keizer, a senior drug-policy adviser in the health ministry, notes that about 50 people a year die of drug-related causes in the Netherlands, which is the lowest rate in the Western world (Gross 41). Never the less, the Netherlands has agreed to control more closely the flow of soft drugs inside their own borders to make France and all the rest of European countries happy. The Dutch have reduced the number of coffee shops from 1,400 to 1,200, raised the age at which youths can buy soft drugs in coffee shops from 16 to 18, and limited purchases of soft drugs to one-sixth of an ounce at a time, down from 1 ounce.

Also, coffee shops may stock only 1.1 pounds of marijuana and hash, down from 2.2 pounds (Gross 41). While these changes satisfy the criticizing nations, they are not really a big deal in the Netherlands, and the Dutch do not plan to make any serious changes. Herbert Barnard, a counselor for Heath and welfare at the Royal Netherlands Embassy, says, "Our policy has produced results that are demonstrably better than those in many of the countries criticizing us. While we realize that an ongoing dialogue with all those involved with the drug problem is a precondition for any progress, we are not going to change our policy on the basis of unjustified criticism" (69).

As I have already mentioned, the Netherlands has a strong economy with an emphasis on exports. 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 Dutch economy, and trade with the country's colonial empire was important in the 19th and the first half of the 20th centuries. Since the independence of Indonesia in the late 1940's, the Dutch economy has been redirected from colonial trade to that 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 by its economic planning.

The government's influence is great even though most firms are privately owned, because it distributes nearly half the Dutch national income. Also important in the economic growth of the Netherlands are the activities of a number of large private firms. In 1992 the gross domestic product (GDP) of the Netherlands was measured at $324.6 billion. Between 1980 and 1990, the country's GDP grew at an average yearly rate of 1.9 percent. About 32.5 percent of the GDP is produced by manufacturing, construction, and energy-related activities; agriculture contributed 5 percent, and the service sector was also a major contributor.

As of late, however, the major growth of the Dutch economy has been due to stock growth and, as I already mentioned, large activity among private firms. "Previously, investing in stocks and bonds in the Netherlands, like in other European countries, had been a matter primarily for those in the financial industry and the wealthy" (Janssen 42). In fact, not until the late 1980's did it occur to middle class Dutchmen or women to invest their savings in the stock market. Now all of that has changed. Currently in the Netherlands, everybody talks about owning stocks. The stock market-fad is sweeping through the country.

Investor clubs have become extremely popular, and there are a number of investing courses, seminars and fairs welcome to the public. "About 2 million people in the Netherlands are share owners in one way or another" (Jansen 42). Throughout history, the Netherlands has always been about owning stock. For example, the VOC, the Dutch East Indies Company, founded in 1602, was the first stock-owned company in the world. Today the Amsterdam Stock Exchange (AEX), one of the oldest exchanges in Europe, ranks fourth in Europe, after London, Frankfurt, and Paris. Some of the big boosters of the AEX are pension funds.

"Pension funds play an important role in the Dutch economy, as all workers are obliged to save for their old age through their employer's pension fund" (Jansen 42). Some of these funds are huge players in the world market. For example, the fund for Dutch public servants is one of the largest funds in the world. In addition, the government actively promotes individual savings for retirement. Consequently, with everyone thinking about their later years, the AEX will always have a good market.

Another major factor in the Dutch economy are the numerous amounts of large, independent companies. One such company is a gas and oil company known as Royal Dutch / Shell. Shell gas stations are located all over the world, primarily in North America and in Europe. Despite outrageous gas prices in the Netherlands, like $4.15 per gallon, Shell has 12,954 gasoline stations in Europe alone (Jansen 44; Firms Agree NA). The high gas prices in the Netherlands are due to a government tax on gas. Almost 80 percent of the price of gas goes to taxes.

The government has placed such a high tax on fuel in an attempt to cut down traffic and environmental pollution. Shell is not going to let the high gas price affect their growth, however. In a recent deal between Shell and Petro Fina, the companies have agreed to swap Shell gasoline stations in the Netherlands for Fina Inc. stations and other marketing activities in Norway (Firms Agree NA). If the deal goes through without any hindrance from the EU Commission antitrust authorities, then Shell share would be the highest in the Netherlands, where they would control 42.3 percent of the pumps.

Their closest competitor is Texaco which only has 2,984 gas stations which are mostly in Britain. In addition to the large companies, entertainment is starting to play vital role in the economy. As of late, there has been a big stir among television companies over the anticipated arrival of the new Fox channel. Fox television hit America and practically took over. They show a wide variety of family shows, shows that are geared more towards women, and, to satisfy the men, numerous sporting events. "Commercial channels in Holland, already strapped with meager profits and splintered audiences, are bracing for a new round of competition with the relaunch of niche channel TV 10 as a new Fox Group outlet...

". (Edmunds 52). Previously, TV 10 had been showing Fox Kids shows during the day and getting rave reviews. However, their night time line-up has not been doing so well. Showing shows like "The A-Team" and "Kung Fu" has been attracting audiences in the 50-and-over range, which advertisers hate. The new Fox line-up, however, plans to change all of that.

Hans Bloem, managing director of TV 10, says that the new line-up will consist of "new and interesting" shows from Fox, as well as some Dutch programs (Edmunds 52). "Bloem has said the programming will be so-called family entertainment' aimed at capturing the parents of the children who watch Fox Kids' " (Edmunds 52). There are some skeptics out there, however. Some industry observers question whether or not there is room in the market for another channel. .".. Netherlands I and RTL 4 already program a fair amount of family entertainment, and their audience shares have been dipping rather than growing in recent years" (Edmunds 52).

However, TV 10 is hopping that the addition of Fox Entertainment will completely steel all of the viewers in Holland and shut down the competition for good. Another plus in the entertainment industry is the record numbers in the movie industry. "It took several years of intense plex-building activity, a sophisticated marketing campaign, a rash of decent pies, and two Oscars in the course of three years, but the Dutch finally are getting out of their homes and back in front of the big screen" (Edmunds 74). Because of the new push towards the cinemas, attendance last year rose to 18.9 million, the highest point in 20 years. Experts believe that, if the attendance figures follow the same pattern set in 1997, attendance could climb as high as 21 million by the year's end. This boom in movie going could possibly generate close to $120 million in sales.

With the economy going so well, it is no doubt that the Dutch have superb international relations. Although the Netherlands is a small country, its engineering and consultancy services are some of the strongest in the world. "It ranks third after the US and the UK in terms of fees earned by consultants, and the sector is still growing" (Faith wins 9). Holland's main areas of traditional expertise are hydraulic engineering, agriculture and transport. These skills, developed over centuries of land reclamation at home and trading around the world, have earned the Dutch a long standing respect and a demand for their expertise in areas such as the Middle East.

Another key aspect to the Netherlands' international success is the country's position, which ensures that its economy is built on trade with other countries. "The country ranks among the world's top 10 exporters and is the fifth largest exporter in the EU" (Location is key 12). The countries around the Netherlands account for the vast majority of Dutch exports, namely her neighboring country, Germany. The Middle East, however, accounts for a good portion of the country's remaining exports. "In 1996 Dutch exports to Asia totaled just over $10,000 million. Of these, 21.3 percent ended up in the Middle East" (Location is key 12).

A major interest to the Dutch economy is Iraq. It is a large country with a large population and a lot of oil. "Dutch companies are interested in Iraq, but only when the bans [UN sanctions] are lifted" (Location is key 12). Because of this keen interest in Iraq and the country's immense respect among international affairs, the Netherlands has teemed up with the UK and presented a proposal to the UN Security Council to replace the UN Special Commission (UNSCOM) with a new weapons inspections body (IRAQ 17). The new body, called the UN Commission for Investigation, Inspection & Monitoring, would oblige Iraq to allow inspection teams immediate, unconditional and unrestricted access to all areas, facilities, equipment, records and means of transportation (IRAQ 17). In exchange for this, the new plan would eliminate the $5,250 million limit on the amount of oil Iraq can sell under the UN oil-for-food deal and it would set up an UN committee to recommend ways of increasing Iraq's oil production.

Whether this plan works or not will remain to be seen. The Netherlands would like to see it go through, however, so that trade with Iraq can begin as soon as possible. If you wanted to move to another country, then the Netherlands would be the place to go. The government, although in a bit of a crunch right now, is very stable and the economy is better that good. The liberal atmosphere in the Netherlands would create a cozy place to call home and success would not be hard to find. Barnard, Herbert.

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