The Netherlands has a strong and well-developed economy focused on trade, logistics, manufacturing, services, innovation, technology, and renewable energy. It is the 18th largest economy in the world by nominal GDP and the 28th largest by purchasing power parity (PPP). It is the fifth largest economy in the European Union by nominal GDP. The Netherlands has the 11th highest nominal per capita GDP and the 13th highest PPP-adjusted per capita GDP as of 2023, making it one of the highest-earning nations globally. Many of the world's largest technology companies, such as IBM, Microsoft, Google, Oracle, Cisco, Uber, and Netflix, are based in Amsterdam or have their European headquarters there. Rotterdam, the second-largest city, is a major global trade and logistics center and Europe's largest seaport. The Netherlands ranks fifth on the Global Innovation Index and fourth on the WEF Global Competitiveness Report. Among OECD countries, the Netherlands has a highly efficient social security system, with social spending at about 25.3% of GDP.

The Netherlands has a prosperous and open economy that relies heavily on international trade. The economy is known for stable industrial relations, low unemployment and inflation, a large current account surplus (even larger than Germany’s when compared to the country’s size), and a key role as a European transportation hub. Rotterdam is Europe’s biggest port, and Amsterdam has one of the world’s largest airports. Industrial activity includes food processing, chemicals, petroleum refining, high-tech industries, financial services, the creative sector, and electrical machinery. The highly mechanized agricultural sector employs less than 2% of the workforce but provides significant food surpluses for domestic use and exports. The Netherlands, along with 11 EU partners, began using the euro currency on January 1, 2002.

The Netherlands has had natural gas resources since 1959, when a large reserve was discovered. Today, the Netherlands holds more than 25% of the European Union’s natural gas reserves. Revenue from natural gas sales increased significantly over the following decades. However, this energy wealth initially hurt the competitiveness of other economic sectors, leading to the theory of "Dutch disease," named after the discovery of the large Groningen gas field.

The Netherlands is a "conduit country," helping to transfer profits from high-tax countries to tax havens. It has been ranked as the 7th largest tax haven in the world.

The financial crisis of 2009 led to the abandonment of a strict financial policy. A large part of the banking sector was temporarily taken over by the government to stabilize the economy. The unemployment rate dropped to 5.0% in the summer of 2011 but rose sharply to 7.3% in May 2013 and 6.8% in 2015. It fell again to 3.9% in March 2018. The state budget deficit was about 2.2% in 2015, below the EU average of 3.0%. In 2016, the state budget showed a surplus of 0.4%, and it was expected to grow to over 1.0% in 2017. The Dutch invented and introduced the stock market, which initially focused on trading goods through the Dutch East India Company. The Netherlands is a founding member of the European Union, the OECD, and the World Trade Organization.

History

After gaining independence from the empire of Philip II of Spain in 1581, the Netherlands experienced nearly 100 years of fast economic growth. A technological change in banking and trade, led by Protestant merchants from Flanders who moved to the Netherlands, helped the new Republic become the leading trade power by the middle of the 17th century. By 1670, the Dutch merchant fleet had 568,000 tons of ships—about half of all European shipping. This success was due to the strong role of Amsterdam as a trade hub and the influence of the Dutch East India Company (VOC) and West India Companies in global trade. These companies were inspired by the English model of joint-stock businesses and trade groups.

In addition to trade, early industrial progress (using wind, water, and peat for power), land reclaimed from the sea, and improvements in farming helped the Dutch economy reach the highest standard of living in Europe (and possibly the world) by the mid-17th century. This prosperity led to the Dutch Golden Age. However, by around 1670, economic growth slowed because of political conflicts and economic challenges. Despite this, the Netherlands remained wealthy due to trade and farming.

By the 1800s, the Netherlands industrialized more slowly than some other European countries. One reason was the difficulty of adjusting to losing its leading economic and political role. Griffiths suggests that government actions helped create a unified Dutch economy in the 19th century. These actions included removing trade barriers between regions, creating a single currency, improving tax collection, standardizing measurements, and building roads, canals, and railroads.

During the 19th century, the Netherlands gradually became a modern middle-class industrial society. Fewer people worked in farming, while the country tried to regain its position in global trade and industry. The Netherlands fell behind Belgium in industrial growth until the late 1800s, but caught up by about 1920. Major industries included textiles and the later development of the Philips company. Rotterdam became an important center for shipping and manufacturing. Poverty slowly decreased, and working conditions improved over time.

In the early 1930s, the Dutch government began to consider more active economic policies. The Great Depression of 1930 raised questions about the fairness of a free market system and its ability to fix economic problems on its own. In 1940, Nazi Germany invaded the Netherlands in just five days, followed by five years of German control. During the later years of the war (1942–1945), Germany faced financial difficulties and exploited the Dutch economy. By 1947, the Dutch economy had fully recovered, making it the fastest to recover in Western Europe after the war. The period from 1950 to 1973 is known as the second Dutch Golden Age.

This second Golden Age was driven by close cooperation between businesses, workers, unions, and the government. The government also introduced more direct economic rules, such as controlling wages, limiting control by shareholders, and expanding social welfare programs.

In 1959, the Netherlands discovered large natural gas reserves. Exporting this gas brought major financial gains. However, this also led to a decline in the manufacturing industry in the Netherlands.

Government

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The private sector is the main part of the Dutch economy, but governments at different levels also play an important role. Public spending, not including social security payments, was 28% of the country’s GDP in 2011. In 2010, total tax revenue was 38.7% of GDP, which was less than the average in the European Union. In addition to its own spending, the government influences the economy through rules and permits that affect almost all areas of economic activity. The government follows strict and stable microeconomic policies and makes wide-ranging changes to improve the structure and regulation of the economy. Since the 1980s, the government has gradually reduced its role in the economy. Privatization and deregulation continue to this day. Regarding social and economic policy, the government works with its so-called social partners, which include trade unions and employer organizations. These three groups meet together in the Social-Economic Council (‘Sociaal Economische Raad’), the main place where social and economic issues are discussed.

The Dutch social security system is very complete and includes two main parts: national insurance (Volksverzekering) and employee insurance (Werknemersverzekering). National insurance covers everyone living in the Netherlands and provides social benefits, while employee insurance provides benefits related to employment. All people living in the Netherlands, including those from other countries, are required to pay into the social security system, except for a few exceptions.

National insurance is required for everyone and covers the following:

• Long-term care under the Long-Term Care Act (Wet Langdurige Zorg (WLZ)) (previously known as the Exceptional Medical Expenses Act (Algemen Wet Bijzondere Ziektekosten (AWBZ)))
• Pension benefits under the General Old Age Pensions Act (Algemene Ouderdomswet (AOW))
• Survivor benefits under the General Surviving Relatives Act (Algemene nabestaandenwet (ANW)) (previously known as the General Widow's and Orphans’ Act (Algemene Weduwen-en Wezenwet (AWW)))
• Child benefits under the General Family Allowances Act (Algemene Kinderbijslagwet (AKW))

This system is managed by the Social Insurance Bank (Sociale Verzekeringsbank (SVB)) and is funded by contributions from employers and employees, up to a certain income limit. Employed people have their contributions taken automatically from their wages, while the unemployed pay by themselves. The AKW is funded by employers, and the AOW is funded by employees. The AOW also receives a small amount of money from the government.

Employee insurance is required for all employed people in the Netherlands. It covers the following:

• Unemployment benefits under the Unemployment Insurance Act (Werkloosheidswet (WW))
• Sick leave benefits under the Sickness Benefits Act (Ziektewet (ZW))
• Disability benefits under the Disablement Insurance Act (Wet werk en inkomen naar arbeidsvermogen (WIA))

The cost of employee insurance is automatically taken from the employee’s income by the employer.

Unemployment benefits in the Netherlands, as defined by the WW, cover most employees who have a working contract. The following people are not covered by the WW: self-employed individuals, nationally employed people, those who work less than four days a week, heads of stockholders, and voluntary workers who earn up to €150 per year.

To receive unemployment benefits, the unemployed person must apply to the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen (UWV)) within one week of becoming unemployed and also register as a job seeker. The WW only covers employees who have a sufficient work history, meaning that the applicant must have worked for at least 26 weeks in the past 36 weeks before becoming unemployed. If this requirement is met, the employee is eligible for benefits. Additionally, the employee must have become unemployed through no fault of their own, such as being fired by the employer.

The benefits received through the WW are based on the employee’s previous earnings and amount to 75% of the daily earnings (based on 5 working days per week) for the first two months. After two months, the benefits reduce to 70%. Part-time work is considered in the calculation based on the number of working hours. If the benefit is less than the minimum income, it can be increased under the Additional Allowances Act (Toeslagenwet). If the employee changes jobs, all jobs in the previous twelve months are included in the calculation of the benefits. To continue receiving benefits, the individual must be actively looking for work. Moreover, the individual must participate in e-coaching three and twelve months after the start of unemployment. After one year of unemployment, the individual must register with an employment agency.

The Dutch labor market has strict rules for employers when it comes to firing employees, although by June 2014, the House of Representatives agreed to make these rules less strict. Because of the costs of employees and the costs of firing them, a large part of the workforce (about 15%) consists of independent one-person companies (ZZP). These individuals are independent and are paid by delivery without higher social costs. Another large part of the workforce is hired as temporary workers. State unemployment benefits in the form of 70% of the employee’s last-earned salary for up to three years (with a maximum of about €2,500 per month) are available for fired employees, provided that they have worked for a certain minimum time period, usually 26 weeks. Moreover, self-employed individuals (zelfstandigen zonder personeel (ZZP)) are not automatically covered under the Werknemersverzekeringen and are not required to enroll in unemployment, sickness, or disability insurance. Self-employed individuals are therefore required to enroll themselves with private insurance companies. The Dutch government is working to stop fake self-employment by making significant changes and tightening the rules under the Wet Deregulering Beoordeling Arbeidsrelaties (DBA).

Under the AOW (General Old Age Pensions Act) of 1956, every Dutch citizen was entitled to a state pension from the age of 65. However, the act was changed in 2012 to increase the pension age in several stages up to 67 in 2024. Married couples and those who live together receive 50% of the minimum wage per person, and a single person receives 70% of the minimum wage. Most (about 70%) earn an extra pension from private pension funds. Employees are required to participate in sector pension funds. The total amount of pension funds at the end of 2009 was about 664 billion euros and by the end of 2019 had increased to 1,560 billion euros, for a population of just over 17 million. Employees receive on average about 70% of their final salary. During the economic crisis and because of low interest rates, pension funds have had difficulty keeping up with inflation.

With a Gini coefficient of 25.1 (2013), income inequality is relatively low in the Netherlands. However, when measuring household wealth, inequality is high, with the top 1% owning 24% of all net wealth, and the top 10% owning 60%. Large wealth differences also exist in relation to age, where those under 35 years of age own only 10% as much as older workers. This is because of low taxation on home ownership and generous mortgage interest deductibility, which benefit wealthier households. Due to generous pensions, pension-related savings are the most important part of wealth in the Netherlands, yet are not subject to capital income taxation, which increases inequality. Taxation occurs as income tax when the saved pension is paid out. People who only earn minimum wages will not…

Primary sector

In 2018, the Netherlands produced the following amounts of various agricultural products, along with smaller amounts of other crops:

• 1.2 million tons of onions;
• 14 million tons of cow milk;
• 247,000 tons of barley;
• 269,000 tons of apples;
• 295,000 tons of lettuce;
• 300,000 tons of mushrooms and truffles;
• 355,000 tons of bell peppers;
• 402,000 tons of pears;
• 410,000 tons of cucumbers;
• 538,000 tons of carrots;
• 6.0 million tonnes of potatoes (10th largest producer in the world);
• 6.5 million tons of sugar beet, which is used to produce sugar and ethanol;
• 910,000 tons of tomatoes;
• 961,000 tons of wheat.

Energy sector

The discovery of the large Groningen natural gas field in 1959 and the large profits earned over the following decades were thought to have caused a decline in the manufacturing sector in the Netherlands, leading to the theory of Dutch disease.

Although the Netherlands has little oil in the North Sea, it holds about 25% of the European Union’s natural gas reserves. As of 2014, the country had approximately 600 billion cubic feet of natural gas, or about 0.3% of the world’s total. Between 2014 and 2015, the government decided to greatly reduce gas production in Groningen due to problems such as sinking ground, uneven ground movement, and small earthquakes that damaged buildings. By the end of 2018, the government planned to stop gas production in Groningen completely by gradually reducing output each year, with full shutdown expected by 2028. On June 23, 2023, the government announced that the remaining five gas production sites would close by October 1, 2023. The possibility of reopening some sites remains open, depending on international conditions or extreme cold weather. All wells will be permanently closed and dismantled by October 1, 2024.

To reduce greenhouse gas emissions, the government of the Netherlands is supporting a shift away from natural gas for all homes by 2050. In 2023, 78% of businesses in the Netherlands had invested in reducing carbon emissions and preparing for weather-related disasters. Six out of ten (60%) plan to invest in these areas over the next three years. These numbers are higher than the EU average (56% and 54%, respectively). The largest investments focus on reducing waste or recycling (86% of Dutch companies).

Most Dutch businesses reduce emissions by improving energy efficiency (76%) or recycling (86%). About 48% of Dutch firms set and track their own emission targets, compared to 98% of businesses that are reducing emissions overall. Dutch companies are more likely than other European companies to view stronger climate laws as an opportunity (39% vs. 23%).

Researchers in the Netherlands began studying nuclear energy in the 1930s and built the Dodewaard research reactor in 1955. Their goal was to introduce nuclear power by 1962 and replace fossil fuels. In 1968, a test reactor was connected to the power grid but was shut down in 1997. In the 1970s, the Netherlands decided to reuse all spent nuclear fuel. In 1984, the government planned a long-term (100-year) storage facility for low- and intermediate-level radioactive waste and researched methods for final disposal. In 2003, the Central Organization for Radioactive Waste created a temporary storage site for high-level waste.

The only commercial nuclear reactor in the Netherlands is Borssele, which started operating in 1973 and produced about 4% of the country’s electricity as of 2011. Dodewaard was a test reactor connected to the national grid but closed in 1997. A small research reactor called Reactor Institute Delft (RID) in Delft is used for scientific studies, not for energy production.

In 1994, the Dutch government voted to stop using nuclear power after discussions about managing nuclear waste. Dodewaard was closed in 1997, and the government planned to shut down Borssele by 2003. This deadline was later moved to 2034, provided the plant met strict safety standards. After the 2010 election, the new government considered expanding nuclear power. Both companies that own Borssele proposed building new reactors, but in 2012, Delta announced it would delay decisions about building a second nuclear plant.

Tourism

In 2011, 11.3 million foreign tourists visited the Netherlands. In 2012, the tourism industry added 5.4% to the country's GDP and 9.6% to its employment. The Netherlands ranked 147th globally for GDP contribution and 83rd for employment, showing that tourism is a small part of the economy. North Holland was the most visited province in 2011, with 6 million of the 11.3 million tourists. South Holland was second, with 1.4 million visitors. Most visitors were from Germany, the United Kingdom, and Belgium, with 3 million, 1.5 million, and 1.4 million people respectively. As of 2020, the Netherlands has nine World Heritage Sites. The country is known for its art and rich history.

In the fast food and snack bar industry, McDonald's is the largest chain and employs the most people. Burger King, FEBO (the only national chain), and Kwalitaria follow. Other chains include Pizza Hut, Domino's Pizza, and Kentucky Fried Chicken. The Belgian chain Quick left the Dutch market in 2000.

Data

The table below displays important economic numbers from 1980 to 2021, along with estimates from IMF experts for the years 2022 to 2027. Inflation rates below 5% are shown in green.

Companies

In 2022, the sector with the most companies registered in the Netherlands was Services, with 761,749 companies. This was followed by Finance, Insurance, and Real Estate, with 693,255 companies, and Retail Trade, with 101,025 companies.

In the Netherlands, 91% of businesses reported investing appropriately over the past three years (2020–2023). This is higher than the EU average of 82%. Dutch companies are more likely to focus on developing new products or services (26%) compared to replacing existing ones (34% in the EU). Only 7% of Dutch businesses do not plan to invest, which is lower than the EU average of 10%. Dutch companies were affected by the energy crisis in 2022–2023, but less than businesses in other EU countries. While most Dutch companies are worried about energy prices, only 30% see this as a major problem, compared to 59% in the EU.

Dutch businesses face long-term challenges to investment, such as a shortage of skilled workers (71%) and high energy costs (66%). These challenges are becoming less common, with fewer Dutch companies facing them than the EU average and than in 2021. For example, fewer Dutch businesses report funding as a barrier (23%) compared to the EU average of 44%.

In 2023, 13% of Dutch businesses introduced new products, processes, or services to the Dutch or global market. Most Dutch companies are more focused on technology than EU businesses—78% used at least one digital technology, compared to 70% in the EU. The majority of Dutch businesses use digital platforms (59%), robots (56%), and the Internet of Things (55%). Fewer Dutch businesses use 3D printing (19%) or augmented or virtual reality (15%).

Largest companies

The Netherlands has many large companies that operate in many countries. These companies include Heineken, Ahold, Philips, TomTom, Randstad NV, and ING. All of these companies have their main offices in Amsterdam. Many companies from other countries also have their main offices in the Netherlands. Examples include EADS, LyondellBasell, and IKEA. These companies choose the Netherlands because it offers lower taxes for businesses. The largest companies from the Netherlands listed in the Fortune Global 500 in 2022 are as follows:

Mergers and acquisitions

Between 1985 and 2018, 22,484 deals occurred in the Netherlands, with a total value of 2,226.6 billion USD. The year with the most deals was 2000, which had 1,169 deals. The year with the highest total value was 2007, with about 394.9 billion USD. However, this was followed by a big drop during the Great Recession.

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