Netherlands

Overview

Ever since a small, flood-prone, Northern European state rose to become the world’s leading trading nation in the eighteenth century, the Netherlands has punched above its weight. Having been one of the original pioneers of globalization, it has turned those forces to its advantage, building on its strengths to become a world-leader in shipping, trade, food and financial services. The Netherlands is ranked fifth in the Wake Up 2050 rankings. Strong across all five dimensions, it does particularly well in the areas of knowledge and resilience, while there are some isolated weaknesses in household debt and levels of employment.

Strengths

Like its European neighbours, Germany and Belgium, the Netherlands has a highly productive workforce, outstripping the UK and France. This is behind the success of a number of its world-beating companies, including Unilever, ING and Royal Dutch Shell.   Productivity is built on the foundations of high rates of educational attainment. PISA rankings are good, better than the UK and France. This is bolstered by an economy that is effective at utilizing the talents of women. As a result innovation is high, reflected in strong, if not spectacular, levels of patent applications.   A founding member of the European Union, and part of the Eurozone, it has an open economy, reflected in high levels of foreign direct investment (which exceed its GDP) and trade.

Like other European nations such as Luxembourg, Germany, and Switzerland, the Netherlands offers a social, political and legal environment that is highly supportive of long-term prosperity. It is one of the least corrupt and most democratic states in our study. Nor has its prosperity been bought at the expense of rampant inequality; it’s more equal than Germany, France, and the UK. Only Belgium and the Scandinavian nations do better.

Weaknesses

The Dutch economy has two main weaknesses that prevent it from achieving pole position in our rankings. The first is a very high level of household debt – the legacy of a past housing bubble – which as a proportion of disposable income is the second highest of all thirty-five countries analysed. This poses a significant risk; should interest rates rise, or household incomes fall, perhaps because of an external shock inside or outside the eurozone, the potential implications for the macro-economy are serious.

The second weakness concerns the rate of employment of older workers, which while higher than Germany, is significantly lower than Switzerland and the UK. Fortunately generous funded private pension provision means that it is not yet posing a serious financial burden on the public purse. However, if left unreformed it may cause problems in the future and will anyway be a depressing influence on productivity and output.

Fact File

Population: 16.8 million (OECD, 2014)

GDP: $839 billion (OECD, 2015)

GDP per capita: $49,544 (OECD, 2015)