The Dutch economy is the sixth-largest economy in the euro-zone and is noted for its stable industrial relations, moderate unemployment and inflation, a sizable trade surplus, and an important role as a European transportation hub.Industrial activity is predominantly in food processing, chemicals, petroleum refining, and electrical machinery. A highly mechanized agricultural sector employs only 2% of the labor force but provides large surpluses for the food-processing industry and for exports.

The Netherlands, along with 11 of its EU partners, began circulating the euro currency on 1 January 2002. After 26 years of uninterrupted economic growth, the Dutch economy – highly dependent on an international financial sector and international trade – contracted by 3.5% in 2009 as a result of the global financial crisis. The Dutch financial sector suffered, due in part to the high exposure of some Dutch banks to U.S. mortgage-backed securities. In 2008, the government nationalized two banks and injected billions of dollars of capital into other financial institutions, to prevent further deterioration of a crucial sector. The government also sought to boost the domestic economy by accelerating infrastructure programs, offering corporate tax breaks for employers to retain workers, and expanding export credit facilities. The stimulus programs and bank bailouts, however, resulted in a government budget deficit of 5.3% of GDP in 2010 that contrasted sharply with a surplus of 0.7% in 2008. The government of Prime Minister Mark RUTTE began implementing fiscal consolidation measures in early 2011, mainly reductions in expenditures, which resulted in an improved budget deficit in 2011. In 2012 tax revenues dropped nearly 9%, GDP contracted, and the budget deficit deteriorated. Although jobless claims continued to grow, the unemployment rate remained relatively low at 6.8 percent.

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Forbes used data from several sources to determine its rankings, including Freedom House, Heritage Foundation, Property Rights Alliance, Transparency International, World Bank, and World Economic Forum. The magazine compiled its ranking by grading 145 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.

The Netherlands scored particularly well on several indicators, including technology, innovation, and a first-place ranking for personal freedom.

Source: http://www.forbes.com/best-countries-for-business/list/

January 8, 2014

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