World Economy

Dutch Economy Needs Some Fixes

Close to 40% of business revenue in the country  is driven by foreign-owned companies.Close to 40% of business revenue in the country  is driven by foreign-owned companies.

The Dutch economy risks losing its status as a top destination for American companies venturing into Europe, warns a new report by AmCham Netherlands and Bain & Company. To remain at the forefront of competitiveness, four points need to be addressed–human capital, taxation, innovation and infrastructure.

Foreign direct investment is an important driver of the Dutch economy. In 2016 total FDI stood at around $850 billion (the highest level in two decades), which represents around 10% of all FDI that flows into Europe. Not surprisingly, Britain, Germany and France are the continent’s largest havens for foreign capital, reported.

The Dutch economy is however in relative terms highly internationalized, with about 40% of business revenue in the country driven by foreign-owned companies. North America, in particular the US, is a key player, accounting for a large share of this total.

In 2016, North America was the largest contributor to job creation in the Netherlands driven by foreign funding, ahead of the rest of Europe and Asia. However, its role in the Dutch scene is sliding, the report by the US-headquartered global strategy consultancy, warned.

Their joint research, titled “The Dutch Investment Climate Survey”, questioned over 70 local executives on their opinion of the attractiveness of the Netherlands to US businesses.

The respondents said that the Netherlands remains an attractive destination for US companies to establish or expand their business. Almost 84% of executives are positive about the economic outlook of the Netherlands, while 46% are very likely to recommend the country to their peers.

Overall, the picture for the Dutch landscape is solid, building on similar results in previous years. Several factors are highlighted as strong points for the country, including technological/digital readiness, quality of the workforce (which besides functional skills also enjoys a high English proficiency) and the overall economic environment.

Data from the CBS, the Dutch national statistics office, shows that the Netherlands is on a roll economically–the 3.1% GDP growth in 2017 was the highest level in a decade, with 2018 forecasted to be just as sunny.

However, the survey also pinpoints to a number of areas which are “concerning” said Patrick Mikkelsen, director of AmCham, the American Chamber of Commerce in the Netherlands.

“The Netherlands is no longer the automatic destination of choice for internationally expanding American companies”, he told the Dutch newspaper AD, adding that “they are increasingly eyeing for example France, Germany, the UK and Switzerland.”

Data from the Netherlands Foreign Investment Agency endorses his concern. In 2016, US companies concluded 88 investment projects in the Netherlands. One year later, this figure had dropped to 68. Following the slash in investments, the numbers of jobs created by US companies dropped from more than 4,000 in 2016 to under 3,000 last year.

“The Netherlands needs to address a number of priority areas,” the agency said.

Add new comment

Read our comment policy before posting your viewpoints