Today, Netherlands is the world`s sixteenth largest economy in the world, a factor contributed to by the early industrialization, location of the country, culture and specialized exports in contrast to its limited surface area and minimal resources. The good economic stability of the country is associated with the good government support through monitoring business interactions, stimulating the economy, stabilizing inflation relative to economic growth and social welfare programs. This economic revolution started after the World War II, when the government decided to work towards liberalizing its economy through securing its place as the distribution hub for imports to the Western Europe (Zanden 2). The country’s economic maturity took place in the 20th century from 1960 to 1980 where there was a positive impact on the labour market, including the rise of modern trade unions. This resulted in the reorganizing of the structure of the payment of wages and salaries and developing a flexibility of the labourers.

The Gross Domestic Product (GDP) of a country determines the crossing point of the three sides of any economy, which are the expenditure, output and income. A country’s GDP will determine the health of the country`s economy, as it represents the total dollar value of all goods and services produced over a certain specified period. Netherlands’ GDP has continued to grow over the past years assisting the country in enjoying the economic freedom it has today. The current population of the country is small and a controlled one, due to the small surface area, with a higher life expectancy and lower birth rates. This has shifted the age distribution towards older persons shifting the scope, structure and future discussion to a more improved pension system, healthcare and social services (OECD 26).

The Dutch’s current GDP is US $42000 per head with many industries and agriculture earning the country major revenues and are at the peak of their productivity. It is a member of the European Union, ranked sixth best economy among the member states and practises an open economy market type. The open economy system has assisted the country to improve its relationship in trade with other countries, making it the fifth largest exporter of goods in the world. The social security system and the room offered by the economy for investments and innovation have been the major causes of the improved development in the country (Central Intelligence Agency). The level of life expectancy is high due to the developed social programmes, good medical services, facilities, and improved technology due to the increased level of literacy among the citizens, encouraging creativity and innovation.

In the last century, Netherlands economy was popular for its employment failure. However, today, its characteristics are of achieving meteoric rise in employment, which has contributed to the maintenance of the big welfare state of the country, extensive social protection and low levels of poverty and inequality. The small portion in inequality is due to the low female employment rate and that most of the new jobs coming up are part time jobs (Marx 187). Critics have also argued that there is a high level of inequality rising against the Muslim community in the country. There seems to be a decrease in the rate of employment and the level of literacy among the Muslim community, which is increasing at a scary rate.

Since 1815 up to today, Netherlands has been governed by a constitutional monarchy system with a parliamentary democracy. It is headed by a king who is the head of state and has several representative functions. They include nominating all the mayors, the politician who forms the government after the general elections and signing of laws approved by parliament. The head of the government is the prime minister who usually comes from the party which wins most of the seats in the elections. The government is made up of a coalition of different political parties made up of a council of ministers who lead the country`s policy, ministers and junior ministers. The parliament of the country is made up of two chambers; the Lower House and Senate. The Lower House is elected after every four years in the national elections made up of 150 members, and its main function is to approve the budget. It also has other rightful duties like the right of legal initiative, submitting amendments, starting its own inquiries and interpellation. The Senate consists of 75 members whose main job is to approve or reject all laws of the country without the right of amendment (Irwin and Andeweg 87). Civil, political, economic, social and cultural rights are protected by the national legislation and international agreements. These rights include freedom of expression, the right to privacy, vote, education, healthcare and employment.

Positive things can be said about Netherlands economy; however, the presence of an economy gloom is evident from the recent analysis of the country. Short-term austerity problems are the cause of past failures of the economy, which have been contributed by the consumer spending. Household consumption over the last years has been falling with the chief source being house market and labour market. The fear of increased inflation, huge international debts and global economic environment are some of the threatening issues affecting the steady development of the economy. However, the main drivers of the economy, which are increased tourism and investments, have shown a huge positive impact recently reflecting signs of a better economy in the future (International Monetary Fund 2).

The endowments factors are associated with the factors of production, which are land, capital, labor and entrepreneurship. Any nations` endowments with factors of production change over time, but Netherlands economy is popularly known to be well endowed with capital and skilled labourers. This has assisted in enabling the country to engage efficiently in trade, both externally and internally. This has been boosted by the dense population with capital-intensive industrial commodities which provide capital in the form of revenues and taxes (Jones 515). The major natural resources that the country earns revenue from include natural gas, petroleum, peat, limestone, salt, gravel and arable land.

Presently, the Dutch have come up with new policies to improve the economic position in the world in order to promote global stability and security, and foster human rights and the rule of law. The interrelationship with other countries, especially her neighbour, Germany, has started taking a positive turn through the recent development of cooperations. Their recent policies also seem to be linked with the international solidarity and the Millenium Development Goals, a strategy which is vital in ensuring predictable and continuous growth of the economy. The policy steps that the country is taking will be very beneficial also in reducing inequality and poverty in the country to open more opportunities (OECD 1).

However, with all the positive factors associated with the country, there is the negative side too. Netherlands is a low-lying nation, hence its vulnerability to flooding. There is a need to build more dams, dykes and dunes with the predicted outcome that is expected with the changing climate accompanied by a rise in sea level. The famous Dutch disease is another factor which the government of the country is going in the wrong direction. The disease is the abnormal relationship that exists between an increase in economic development of natural resources and a decline in the manufacturing sector. This results in an increase in inflows revenue making its currency to grow strong and more valuable to the market. The negative effect is that exports become more expensive for other countries to buy, making the imports cheaper and less competitive, especially in the agricultural sector (Cisse, Muller and Thomas 305).

The country should create and implement new laws to protect cultural, religious and political rights of the minority groups to assist in reducing inequality, in order to facilitate a steady and quick economic growth. The country should also introduce vocational training, intensified employment services and special programmes involving the minority group in market decision projects. Strategies should also be put in place to help women participate in growing the economy.

Works Cited

Andeweg, Rudy B. and Galen A. Irwin. Governance and Politics of the Netherlands. 4th Edition. Basingstoke: Palgrave Macmillan, 2014.

Central Intelligence Agency. The World Fact Book. 2015. 4 May 2015 <;.

Cisse, Hassane, et al. The World Bank Legal Review: Legal Innovation and Empowerment for Development. 4th Edition. Vol. 4. Washington D.C: World Bank Publication, 2012.

International Monetary Fund. Kingdom of Netherlands: Netherlands Antilles. Washington: International Monetary Funds, 2008.

Jones, Barry R. J. Routledge Encyclopedia of International Political Economy: Entries A-F. New York: Taylor & Francis Publishers, 2001.

Marx and Ive. A New Social Question?: On Minimum Income Protection in the Postindustrial Era. Vol. 8. Amsterdam : Amsterdam University Press, 2007.

OECD. OECD Economic Surveys: Netherlands 2008. OECD Publishing, 2008.

—. The DAC Journal: International Development. Vol. 2. OECD Publishers, 2001. 3 vols.

Zanden and L Jan. The Economic History of The Netherlands 1914-1995: A Small Open Economy in the `Long` Twentieth Century. New York: Routledge Publishers, 2005.


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