The Internationalisation Monitor describes trends in internationalisation and the consequences thereof for the Dutch economy and society. The Internationalisation Monitor is published quarterly as part of the Globalisation programme at Statistics Netherlands (CBS), which is commissioned by the Dutch Ministry of Foreign Affairs.
In this edition of the Internationalisation Monitor, we present an overview of Dutch international trade from a global and historical perspective. In order to determine the Netherlands' position in the current world economy, we start off by comparing our country with its trading partners. This is done in Chapter 1 for trade in goods, trade in services, foreign direct investment and foreign-born workers. Next, Chapter 2 places Dutch trade figures in a historical context. Statistics Netherlands started recording international trade statistics in the year 1917, which allows for an analysis of a century of trade data. Dutch imports and exports have increased exponentially over the past 100 years. Measured as a share of GDP, exports increased from 22 percent in 1917 to 64 percent in 2017. Over the course of the past century, there were periods of war, crisis and economic hardship, which were reflected in a decreasing share of international trade in GDP alternated with an increasing share of trade during periods of reconstruction, economic recovery and prosperity. As of the 1980s and ‘90s, globalisation has intensified, resulting in growing trade volumes and steadily increasing trade surpluses. The most important factors influencing these export flows have been identified by means of a gravity analysis on Dutch exports.
The enterprises responsible for these enormous trade flows are the main topic in Chapter 3. Previous analyses showed that small enterprises mainly export their goods and services to countries close by while larger enterprises also export to more remote countries. Which types of companies export to which parts of the world and how important are the exports going to these regions for total trade and turnover? Chapter 4 further explores the role and importance of the EU (and other trading blocs) as a destination for Dutch exports. The EU15 Member States are by far the most important destinations for Dutch made goods and services, in terms of export value and number of companies exporting to this region. But exports to the EU15 Member States account for a decreasing share in total value added embodied in Dutch exports. The value added associated with exports and the trading blocs responsible for this value added are also discussed in Chapter 4.
Some of the main findings are:
Chapter 1: Position of the Netherlands in brief
- The Netherlands has lost some ground to other countries in terms of export of goods and, to a lesser extent, export of services. However, the Netherlands still takes a prominent spot on the world stage.
- The Netherlands is – relatively speaking – the world’s biggest foreign direct investor. Even on an absolute scale, the Netherlands ranks among the top three of countries by outstanding foreign direct investments. The most probable explanation for this overwhelming amount of net outstanding foreign direct investment is the fact that the Netherlands has a particularly appealing fiscal climate which is attractive for multinationals. Additionally, a large part of these investments is related to so-called Special-Purpose Vehicles or Entities (SPVs/SPEs) and do not pertain to the Dutch economy.
- Foreign-born workers living in the Netherlands have the widest gap in net labour participation rate compared to native workers throughout the western world. This is due to Dutch natives having a very high net labour participation rate, but also to foreign-born people in the Netherlands having a relatively low net labour participation rate compared to other countries.
Chapter 2: Registering 100 years of Dutch goods trade
- Statistics Netherlands has registered goods trade with other countries for a period of 100 years. In 2017, Dutch export values were approximately 1,260 times higher than they were in 1917. Dutch imports are about 930 times higher than 100 years ago.
- An important reason for this explosive growth of Dutch trade in goods are higher price levels (inflation). However, compared to Dutch GDP, imports and exports have also risen remarkably. Dutch exports have increased from 22 percent of GDP in 1917 to 64 percent in 2017.
- Germany has been the Netherlands’ most important trade partner since the mid -1950s, both as a supplier and a customer. Previously, the UK (for Dutch exports), the USA (for Dutch imports) and Belgium (for both imports and exports) were recorded as most important trade partners
- Until the early 1980s Dutch imports almost always exceeded Dutch exports, resulting in trade deficits. Since then, however, it has become a trade surplus. One reason for this historic switch was the Dutch policy of keeping job wages low in order to improve the Netherlands’ competitive position. Moreover, gas exports have become increasingly important. Over the past few years, the Netherlands has recorded very high trade surpluses for many types of goods, e.g. for agriculture and specialised machines.
- Over the last 15 years, the volume of Dutch trade has grown substantially despite the prolonged worldwide economic recession. New markets with great potential have emerged, China has joined the WTO, EU economic integration has deepened and broadened and production processes have become more and more fragmented. Moreover, re-exports have gained importance in the Netherlands with Rotterdam as the gateway to Europe, offering innovative container terminals and communication systems as well as infrastructure suitable for efficient transportation and distribution of goods.
- Despite all these developments, the structure of Dutch trade is still very similar to how it was in 2002. Top countries and goods in 2002 are also top countries and goods in 2017. Russia, Norway and Poland have entered the top ten of importing countries, and for Dutch exports, Poland and China are the newcomers in the top ten.
- As for what can be expected in Dutch goods trade with other countries, one can explain Dutch exports in the past using the gravity model of bilateral trade. This model suggests that the economic size of a partner country and the Netherlands’ distance to a partner country are the best explanatory predictors of Dutch trade to that particular country. Furthermore, access to sea and economic globalisation are also good predictors.
Chapter 3: Which companies export to which regions in the world?
- In 2016, around 100 thousand companies in the Netherlands exported goods or services, at a minimum value of 5 thousand euros. The EU15 Member States are by far the most important destination for Dutch-made goods and services, in terms of export value and companies exporting to this region.
- The Netherlands exported a total value of 117.8 billion euros in goods to the EU15 countries that were either manufactured or modified in the Netherlands, and 61,6 billion euros in services. Of all EU15 countries, Germany, the United Kingdom and Belgium are the most important destinations for exporting companies in the Netherlands.
- The manufacturing industry is responsible for over half of the value of Dutch manufactured export goods. The food, chemical and machine industry export many Dutch products in particular. Service companies are responsible for the lion's share of the total export value of services ranging; from 46 percent to EU15 countries to 58 percent to non-EU countries.
- In 2016, small and medium-sized businesses were responsible for almost 60 percent of Dutch-made goods exports. Independent SMEs mainly export Dutch goods to Europe. Large companies account for more than half of the trade value of Dutch goods exports to North America and East Asia. These large corporations are also responsible for 52 percent of total value of service exports by companies in the Netherlands.
- More than three-quarters of the export value of goods produced or modified in the Netherlands, leave the country via multinational companies. What is notable is the role of foreign multinationals. Of the nine defined world regions, Dutch multinationals only export more Dutch-made products to East Asia and Latin America and the Caribbean than foreign multinationals. This foreign role is even more prominent in service exports.
- Companies in the Dutch provinces of Noord-Brabant, Noord-Holland and Friesland are relatively the least focused on the EU15 market with their exports of Dutch-made products. Nonetheless, the export value to these 'old' EU countries is still more than half of the total export value of Dutch products in these provinces. Zuid-Holland and Flevoland are the only provinces that export more services to non-EU countries than to EU countries.
- In relative terms, Dutch goods exports to the EU13 countries, Latin America and the Caribbean have grown most significantly. In absolute terms, however, the largest increase was seen in exports to the EU15 countries, particularly to Belgium, the United Kingdom and Spain. The EU15 market therefore remains the most important market for many companies in the Netherlands. Seven out of ten companies that export goods to the EU15 countries are almost completely dependent on this in terms of exports.
- Companies in the Netherlands – with at least 5 thousand euros in export – exported 114 billion euros worth of services in 2016. This represents an increase of 27.8 billion euros compared to 2012. At nine out of ten companies which export services to the EU15 countries, at least half of their service exports goes to these countries. Over four out of ten companies which export services to non-EU countries, depend on these countries for at least half of their service exports.
Chapter 4: Trade with the EU. Gateway to rest of the world?
- In 1996, nearly 80 percent of Dutch commodities exports went to the EU15. In 2017 this share was much lower, namely 64 percent. Especially Dutch-made exports are increasingly destined for countries outside the EU15. Exports to trading partners outside the EU15 are growing at an even higher pace than exports to the EU15.
- Our main trading partners in Europe – Germany, Belgium (together with Luxembourg), the UK, France and Italy – all receive a smaller share of Dutch exports than twenty years ago. In 1996 approximately 68 percent of commodities exports went to these five countries; in 2017 this share has declined to 54 percent. This is also due to a decreasing share of Dutch-made exports going to our main trading partners.
- For a small, open economy like the Netherlands, international trade is an important source of income and prosperity. Nowadays, the production of export goods and services accounts for approximately one-third of the total value added created in our country. This share is lower than in European countries such as Denmark and Austria, but much higher than in countries such as Germany, France, the UK and the US.
- For most countries under scrutiny in this chapter, the value added created by exports as a share of total value added is relatively constant over time (1995–2014). The most notable increase is reported for Germany. The German economy has become more dependent on foreign demand over the past twenty years.
- Over time, the European countries investigated in this chapter have become less dependent on exports to the EU15. Nevertheless, for most of them (with the exception of Germany) more than half of the value added associated with exports still arises from direct exports to the EU15. However, if we take into account that these exports need not be consumed in the EU15, this share decreases further still.
- Whereas the relative role of the EU15 as a consumer has declined during the past years, it acts more and more like a gateway that connects Dutch manufacturing production with the rest of the world. This role is quantified here for the very first time. In 1995, 10 percent of total value added in the Netherlands due to exports to the EU15 was embodied in EU-15 exports to countries outside the EU15. In 2014 this had already increased to 20 percent. This reflects the unbundling of production, where a commodity is no longer produced in a single country, but being the result of production processes in several countries that together form a global value chain.