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One of Europe's most tolerant, and most prosperous, societies

True to its name, most of the Netherlands is ‘low lands’: more than one-quarter of the country lies below sea level, protected from flooding by coastal dunes and by specially constructed dykes. For centuries, the Dutch have been reclaiming land from the sea and keeping it drained, using pumps that initially were powered by windmills. But even the higher and drier parts of the country seldom rise much above 60 metres.

This is one of Europe's most densely populated countries—456 per square kilometre; most people are concentrated in the west and centre. This makes land expensive and its use is controlled and regulated more closely than in most other countries.

The Dutch enjoy one of the world's most advanced systems of social welfare. They also have very liberal social attitudes: in 1994 this was the first country to permit euthanasia, and in 1998 the first to register homosexual partnerships. The Dutch have also gone a long way towards decriminalizing the use of soft drugs—with marijuana readily available in ‘coffee’ houses.

Like other European countries, the Netherlands is facing a falling birth rate; its fertility rate is only 1.5 children per woman of childbearing age. This has been offset to some extent by immigration. The foreign born make up 20% of the population; previously they came from former colonies such as Indonesia or Suriname, though now the largest national groups are from Turkey and Morocco.

Reclaiming land from the sea helped make the Netherlands one of Europe's leading agricultural nations, even though only around 2% of the labour force now work on the land. Thanks to very productive small farms, it has steadily increased agricultural output. The country is largely self-sufficient in food. Around 60% of production is exported—primarily dairy products, meat, flowers, and bulbs.

Because it had few raw materials, the Netherlands did not develop as much heavy industry as other advanced economies. Instead it based its economy more on processing imported materials and on international trade. Thus Rotterdam is the world's largest port; it contributes around 10% of GDP, and is a transhipment point for imported oil that is destined for other European countries. Amsterdam's Schipol airport is Europe's second largest hub for air freight. The Netherlands' external orientation has also given rise to important multinational companies such as Unilever, Royal Dutch/Shell, Philips, and Heineken. Even so, two-thirds of the workforce are employed in service industries.

Acquired and cured the ‘Dutch disease’

One of the most important economic developments in the 20th century was the discovery in 1959 of huge deposits of natural gas in the north of the country. This rapidly turned the Netherlands into a major gas exporter. Unfortunately, this also distorted other aspects of development, driving up the exchange rate and wages, and making industry less competitive—a phenomenon subsequently dubbed the ‘Dutch disease’. The disease now seems to have been cured. Following decades of wage moderation, the Netherlands enjoyed rapid growth, low inflation, and low unemployment.

This success is the result of a unique social model that allows many different groups to participate in setting social and economic policy. Thus there is a Social Economic Council, with representation from employers and trade unions, that considers such issues as collective agreements and welfare provision and has helped keep wage claims within manageable limits. However, the pact has come under strain as the government has made cuts in welfare.


Subjects: History

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