Dutch earnings from international trade
The Dutch economy relies heavily on international trade in goods and services: exports account for more than a third of the country’s Gross Domestic Product (GDP). Exports of Dutch goods, exports of services and re-exports also generate direct and indirect employment. How much do we export and how many goods and services have we imported for that purpose? What do our exports provide in terms of value added and employment, and how has this developed over the years? And how do value added and employment vary between the different sectors?
2.1Key findings
Exports of goods and services are an important source of income for the Dutch economy. The previous edition of Dutch Trade in Facts and Figures showed that the Netherlands exported goods and services worth 616 billion euros in 2017. In 2018, total exports increased by 6 percent to almost 653 billion euros. As a country, we ultimately earned around 262 billion euros from these exports. Production processes of the goods and services exported are spread around the world, which means that the Netherlands has to import a substantial share of the intermediate goods and services needed in the production process. These costs depress the final earnings, that is to say the value added.noot1 In 2018, the Netherlands imported 391 billion euros worth of goods and services (including intermediate goods and services), which was around 7 percent more than in 2017. Most of these are intended for re-export.
In 2018 a number of factors hampered world trade, including the trade policies of several countries such as the United States and China with rising trade tariffs, and the uncertainty surrounding Brexit. CBS (2019a) shows that the volume of world trade declined at the end of 2018. Dutch exports also grew less rapidly in 2018 than in 2017. Due to the fact that exports required more imports in 2018 than in 2017, growth in export earnings in 2018, at 5 percent, was also lower than the previous year, when it was almost 7 percent.
The value added of 262 billion euros represents almost 34 percent of Dutch GDP. This means that we owe more than a third of Dutch prosperity to exports, a share that remained stable compared to the previous year. There is considerable variation in the extent to which branches of industry depend on exports. Agriculture, forestry and fisheries, mining and quarrying, and manufacturing in particular are highly dependent on exports, which generate about three-quarters of their value added. In contrast, this is much less the case for construction, accommodation and food services, and financial services. Less than a quarter of the value added of these sectors is related to exports.
In addition to making an important contribution to GDP, exports also contribute significantly to employment in the Netherlands. In 2018, approximately 2.4 million jobs, or 32 percent of total employment in the Netherlands, were directly or indirectly related to exports of goods and services. Of those 2.4 million jobs, 1.4 million are in the industries that export goods and services, and 1 million are with suppliers. Most employment generated by exports is in business services, but many jobs in manufacturing, trade and transport, and information services are also due to exports.
2.2Contribution of exports to GDP
The gross export value of the Netherlands totalled 653 billion euros in 2018. This is the sum of exports of goods produced in the Netherlands (Dutch goods, possibly using imported parts, raw materials or semi-finished products), exports of goods previously imported here and then exported in a completely or nearly unprocessed condition (re-exports), and exports of services. Compared to 2017, the total export value increased by 6 percent. Growth in 2018 was therefore lower than in 2017, when the export value increased by more than 9 percent compared to 2016.
| Domestic exports | Re-exports | Service exports | |
|---|---|---|---|
| 2015 | 212.1 | 206.3 | 152 |
| 2016 | 209.5 | 211.4 | 142.5 |
| 2017 | 227.5 | 233.3 | 154.8 |
| 2018 | 240.6 | 246.1 | 166.1 |
Goods account for the bulk of the export value, with 241 billion euros in gross exports of Dutch goods and 246 billion euros in re-exports. Exports of services, at 166 billion euros, represent a smaller share of the total export value, but this is the category that grew most strongly in 2018, by 7 percent from 2017. Exports of Dutch goods and re-exports grew less quickly in 2018, with growth of 5.8 percent for goods and 5.5 percent for re-exports.
Imports for the purpose of exports
In 2018, the Netherlands imported goods and services worth some 568 billion euros. As with exports of goods and services, imports have also been rising for years: imports in 2018 were 6 percent higher than in 2017. In addition, during the period under review, the import value always increased slightly faster than the export value. Only one-third of total imports in 2018 were for domestic use: 20 percent for consumption and 11 percent for investments. The majority of imports – the remaining 69 percent – were used for exports of goods and services, either in the form of re-exports or in the production of goods and services to be exported. In 2018, 185 billion euros of imported goods and services were needed to produce Dutch exports of goods and services. More than 205 billion euros of imported goods and services left the Netherlands in the form of re-exports in 2018. Chapter 6 of this publication will focus more closely on these import and export flows, and examine what type of products they consist of.
The share of total imports used to produce exports rose from 64 percent in 2015 to 69 percent in 2018. Figure 2.2.2 shows that the imports needed to produce exports have been increasing for a number of years. After a small decline in imports for exports of services in 2016, imports for the purpose of exports increased in 2017 and 2018 for all three export categories.
| Jaar | Domestic exports | Re-exports | Service exports | Domestic consumption |
|---|---|---|---|---|
| 2015 | 100.7 | 178 | 54.5 | 185.8 |
| 2016 | 97.9 | 181.6 | 49.4 | 162.0 |
| 2017 | 109 | 200.8 | 55.5 | 171.1 |
| 2018 | 117.8 | 211.7 | 61.1 | 177.2 |
Figure 2.2.2 also shows that the largest share of imports are used for domestic exports of goods: 58 percent of total imports in 2018, to be precise. Re-exports account for 37 percent of total imports of goods and services, and the production of Dutch goods for about 21 percent. Only 11 percent of total imports of goods and services was intended for exports of services. The Netherlands earned 123 billion euros from domestic exports in 2018.
Exports represented 34 percent of GDP in 2018
The Netherlands earned 262 billion euros from exports of goods and services in 2018, an increase of nearly 5 percent relative to 2017. The country earned most from domestic exports, at 123 billion euros, which made up nearly 16 percent of GDP. Exports of services brought in nearly 105 billion euros, or about 14 percent of GDP. The value added of re-exports was around 34 billion euros, accounting for 4 percent of GDP. As a result, the share of Dutch GDP contributed by exports of goods and services was 34 percent in 2018, the same as in 2017. Moreover, the contribution of the various export flows to this share has remained the same.
| 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|
| Domestic exports | 52.5 | 53.3 | 52.1 | 51 |
| Re-exports | 13.7 | 14 | 13.9 | 14 |
| Service exports | 64.1 | 65.3 | 64.1 | 63.2 |
Exports of services earn the most revenue
The Netherlands does not earn the same amount from every euro of exports. In 2018, the Netherlands earned an average of 40 cents from every euro of exports. Figure 2.2.3 shows the development of export earnings by category. Exports of services provide the most revenue, at around 63 cents per euro. Domestic exports yield 51 cents per euro, and re-exports 14 cents. The value added per euro of exports has therefore remained the same or declined slightly for all export categories compared to 2017. The value added per euro of domestic exports has gone down by more than 2 percentage points since 2016.
Figure 2.2.4 illustrates the composition of one euro of exports for each export category in 2018. It shows which share of exports ultimately constitutes earnings for the Dutch economy, and which share is made up of imported goods and services (what is called import intensity). For total exports of goods and services together, the import intensity was 60 percent, which was a small increase of 1.5 percent compared to 2015. This means that Dutch exports of goods and services have seen a growing share of imports in recent years. Figure 2.2.4 shows the import intensity by category of exports. Exports of services involve the smallest share of imports, at about 37 percent of the export value – an increase of 1 percentage point compared to 2017. For domestic exports, almost half of the export value – 49 percent – is imported. This is also where the greatest growth in import intensity has been seen in recent years. For re-exports, which make up a large share of total export value, the import intensity is 86 percent.
The high and increasing import intensity of Dutch exports of goods and services shows on the one hand that the Netherlands is highly integrated into international value chains. On the other hand, it also means that the value added created in the Netherlands through the production of goods and services for export is decreasing. This can be seen in declining earnings per euro, mainly in exports of Dutch goods and exports of services. Figure 2.2.4 shows that the higher the import intensity, the lower the value added of exports.
| Exportcategorie | Import intensity | Value added |
|---|---|---|
| Domestic exports | 49 | 51 |
| Re-exports | 86 | 14 |
| Service exports | 37 | 63 |
Manufacturing earned most from exports in 2018
Companies can sell their goods and services in the Netherlands or export them to other countries. Some branches of industry know how to seize the opportunities offered by the globalised world, and they create substantial value added when manufacturing products that they then export. Figure 2.2.5 shows the composition of value added per sector. In 2018, manufacturing earned the most from exports of its goods and services, at nearly 64 billion euros. Companies active in business services, trade and transport, and information services also generate substantial value added by exporting goods and services.
Dutch domestic exports most important for export earnings of industries
The wholesale and retail trade sector is the only one where re-exports play a major role in the total earnings of the sector; in the majority of sectors, domestic exports play the largest role in export-related value added. Exports of services create a large part of the value added in business services and in the transport, information and communication sector.
| Domestic exports | Re-exports | Service exports | Domestic consumption | |
|---|---|---|---|---|
| Agriculture and fishing |
9.42 | 0.18 | 0.38 | 2.64 |
| Mining and quarrying and water management |
7.70 | 0.31 | 2.11 | 9.31 |
| Manufacturing | 55.22 | 1.59 | 6.86 | 22.30 |
| Construction | 0.79 | 0.21 | 2.67 | 29.75 |
| Trade | 19.67 | 19.86 | 8.43 | 46.69 |
| Transport and information | 6.79 | 3.56 | 30.28 | 26.89 |
| Accommodation and food services |
0.34 | 0.13 | 2.97 | 11.41 |
| Financial services and real estate |
4.34 | 1.25 | 9.84 | 81.54 |
| Business services | 14.63 | 4.91 | 33.47 | 53.72 |
| Public administration | 0.75 | 0.14 | 0.97 | 46.40 |
| Education | 0.32 | 0.09 | 0.98 | 32.46 |
| Health and welfare | 0.09 | 0.03 | 0.30 | 61.75 |
| Culture and other | 0.45 | 0.11 | 1.95 | 13.05 |
Agriculture, mining and quarrying, and manufacturing depend most on exports
The ratio of earnings from domestic consumption to earnings from exports varies from one sector to another. Figure 2.2.5 shows that some sectors obtain most of their revenues from domestic consumption, while other industries are closely linked to the foreign market, where they earn money through exports of Dutch goods, exports of services or re-exports.
Agriculture, forestry and fishing, mining and quarrying, and manufacturing are highly dependent on exports. They therefore create value mainly through their exports. The strong connection of these sectors with foreign countries is not surprising: the Netherlands is the world’s second largest exporter of agricultural goods (CBS, 2019b). Moreover, Chapter 3 of this publication shows that a large proportion of companies in the mining and quarrying sector export goods and/or services.
Sectors such as accommodation and food services, construction, and culture focus mainly on domestic consumption: the share of exports in their value added is very low. Education, health and welfare, and cultural services are mainly national matters, with companies being nearly independent of foreign demand for their goods and services.
If we look more closely at manufacturing, we also see some variation in the degree of dependence on exports. For example, the food, chemical and machinery industries generate a lot of value added by exporting their products, while furniture and other manufacturing industries are mainly linked to the domestic market.
2.3Export-related employment
Exports of goods and services accounted for approximately 2.4 million direct and indirect full-time jobs (FTEs) in the Netherlands in 2018.noot2 Around 32 percent of total employment in the Netherlands can therefore be attributed to exports (CBS, 2020). Exports of Dutch goods and exports of services both accounted for 14 percent of total employment in the Netherlands in 2018, while re-exports were responsible for just over 4 percent. The jobs created by exports can be subdivided into direct jobs, for example in the exporting sector itself, and indirect jobs with suppliers. Examples are the caterer who works for an exporting company (indirect employment) and the mechanical engineer who works for the exporting company itself (direct employment). Figure 2.3.1 shows the number of jobs associated with the various export categories and the extent to which they are direct or indirect jobs for the period 2015–2018. It shows, for example, that employment through exports of services rose sharply by more than 5 percent in 2017 and by about 4 percent in 2018, and this applies to both direct and indirect jobs. Direct and indirect jobs also increased in the other export categories in 2018.
| Werkgelegenheid | Direct employment due to domestic exports | Indirect employment due to domestic exports |
Direct employment due to re-exports |
Indirect employment due to re-exports |
Direct employment due to service exports |
Indirect employment due to service exports |
|---|---|---|---|---|---|---|
| 2015 | 518.5 | 446.5 | 174.8 | 87.3 | 601.7 | 357.0 |
| 2016 | 531.0 | 458.6 | 181.9 | 92.7 | 602.4 | 336.5 |
| 2017 | 541.7 | 480.1 | 194.6 | 102.4 | 637.0 | 354.1 |
| 2018 | 560.8 | 493.8 | 201.9 | 107.9 | 664.4 | 369.7 |
Exports of services provide most of direct employment
In 2018, the production of exports of goods and services generated 1.4 million FTEs of direct employment in the Netherlands.noot3 These jobs are the direct result of international demand for Dutch goods and services. Exports of services provide the most jobs – about 664 thousand – and exports of Dutch goods account for about 561 thousand. The smallest number of jobs are created by re-exports, with around 202 thousand jobs in 2018. Exports of services not only provided the largest number of direct jobs in 2018, but this area of employment also grew most quickly, increasing by more than 4 percent compared to 2017. Direct employment from exports of Dutch goods and re-exports increased by more than 3 percent during 2018.
Most indirect employment through domestic exports
In addition to direct jobs, 971 thousand jobs are indirectly involved in the process of producing goods and services for export. Examples are employment at suppliers, such as agriculture, at companies that produce packaging materials or at firms that provide services such as cleaning, job placement or internet services. Exports of Dutch products provide the most indirect jobs, totalling around 494 thousand. In 2018 exports of services created 370 thousand indirect jobs and re-exports about 108 thousand jobs.
Exports created most employment in business services
Employment resulting from international trade is spread across the various branches of industry, and there are a number of sectors where a large proportion of employment results from exports. Figure 2.3.2 shows that in 2018, exports generated the most employment in business services. Manufacturing, trade, and transport and information also provide considerable employment due to exports of goods and services.
| Direct employment due to exports | Indirect employment due to exports | Employment due to domestic consumption | |
|---|---|---|---|
| Agriculture and fishing |
0.102 | 0.035 | 0.037 |
| Mining and quarrying and water management |
0.012 | 0.015 | 0.039 |
| Manufacturing | 0.375 | 0.091 | 0.259 |
| Construction | 0.026 | 0.023 | 0.423 |
| Trade | 0.319 | 0.106 | 0.676 |
| Transport and information | 0.283 | 0.096 | 0.262 |
| Accommodation and food services |
0.046 | 0.019 | 0.229 |
| Financial services and real estate |
0.022 | 0.029 | 0.202 |
| Business services | 0.203 | 0.508 | 0.843 |
| Public administration | 0.006 | 0.012 | 0.434 |
| Education | 0.005 | 0.011 | 0.419 |
| Health and welfare | 0.003 | 0.003 | 1.046 |
| Culture and other | 0.024 | 0.024 | 0.278 |
Exports do not provide a comparable share of direct and indirect jobs in the total number of jobs created in the different sectors. In trade, manufacturing and agriculture, for example, exports provide a relatively large number of direct jobs. Manufacturing and agriculture are sectors in which many products for export are produced. The core business of wholesale and retail trade is the trade in goods and services, and this sector is therefore directly involved in exports. In contrast, a lot of employment in the business services sector is indirectly due to exports. Companies in that sector, such as temporary employment agencies and companies specialising in legal and management advice, provide services or find staff for the companies directly involved in exports.
As mentioned previously, Figure 2.3.1 shows that exports of services are increasingly creating employment. This increase is mainly attributable to service sectors such as IT, legal and management consulting, other business services and banking. These sectors are generating increasing direct employment. Indirectly, these sectors play an important role in supporting the production of export goods, but they also export many services, creating direct employment in the Netherlands.
Value added and employment through exports
This chapter shows that exports are responsible for about a third of both Dutch prosperity and employment. When we look at how exports of goods and services by the various sectors contribute to the Dutch economy, we see major differences between those sectors. The differences in labour productivity between the sectors may play a role in this (see CBS, 2019c). Figure 2.3.2 shows, for example, that exports generate a relatively large number of jobs in agriculture, but Figure 2.2.5 in the previous section shows that exports in this sector generate relatively low value added. Exports of goods and services also create many jobs in the business services sector, especially in the temporary employment sector. The value added from exports is also relatively low in this sector.noot4
Conversely, in the mining and quarrying, energy, water and waste management sectors, exports provide relatively few jobs, but exports of goods and services account for a large share of the sectors’ value added. CBS (2019c) also shows that these sectors, in particular mining and quarrying, have very high labour productivity compared with other sectors. The same is true of financial services, where exports do not provide many jobs but, at the same time, substantial value added is created mainly through exports of services.
2.4References
References
CBS (2019a). De Nederlandse economie in 2018: Jaaroverzicht. Statistics Netherlands: The Hague/Heerlen/Bonaire.
CBS (2019b). Landbouwexport ruim 90 miljard euro in 2018. Statistics Netherlands: The Hague/Heerlen/Bonaire.
CBS (2019c). De invloed van de toename van het aantal gewerkte uren op de productiviteit. Statistics Netherlands: The Hague/Heerlen/Bonaire.
CBS (2020). De arbeidsmarkt in cijfers: 2019. Statistics Netherlands: The Hague/Heerlen/Bonaire.
Noten
When we refer in this chapter to value added related to exports, we mean the sum of value added and the balance of taxes and subsidies on products linked to exports. This is slightly broader than the usual value added created by Dutch industries, and it has the advantage of enabling comparison with GDP.
When determining labour volume in full-time equivalents (FTEs) over a period of time, the start and end date of a job as well as the weekly working hours are taken into account. Because many people work part-time, some work only part of the year and some have several jobs, the number of individual jobs is higher than the number in FTEs.
Due to an adjustment and further refinement of the method, the figures for direct and indirect employment differ significantly from those in the publication Dutch Trade in Facts and Figures of 2019. This applies mainly to the wholesale and retail trade sectors, and the transportation and storage sector.
One reason for this is that all the employment is attributed to business services, but only part of the value added created by the workforce in that sector (CBS, 2019c).