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Despite its small size, the Netherlands is one of Europe’s biggest economies. The country makes a large portion of its revenue from exports, which include manufactured, processed, and raw goods. Furthermore, the Netherlands has an established services industry, hosting offices for numerous European enterprises.
It may seem like the Netherlands is set up to be a major economy in years to come, but is that true? In this article, we’ll use SWOT analysis — which considers the Strengths, Weaknesses, Opportunities, and Threats affecting an organization or nation — to review the country’s current and future standings.
Here are the Netherlands’ Strengths:
Perhaps the Netherlands’ greatest Strength is its excellent infrastructure. This includes a transport infrastructure of well-maintained ports, airports, and roads, all of which play an important role in the country’s trade economy. As a part of this, the country has world-class public transport from one border to the next. In addition to transportation infrastructure, the Netherlands also has well-developed energy and telecommunications infrastructures, which play an essential role in the country’s digital transformation.
Thanks to its established transport infrastructure and Central European geographical location, the Netherlands has made a name for itself as a trade hub. In particular, it’s the Netherlands’ seaports — especially in Rotterdam and Amsterdam — that the country is known for. Until 2004, Rotterdam port was the world’s largest port; even now, however, it remains Europe’s largest. These ports are the point of entry for many goods reaching Europe, and Dutch companies are often the ones rewarded for handling them.
Despite its tiny size, the Netherlands has one of the ten biggest export economies in the world. The country exports a number of manufactured goods such as machinery and pharmaceuticals, as well as several raw goods such as fossil fuels and metals. Since the country has such a big export economy, it’s able to have a powerful, thriving overall economy despite its low population and small geographical size.
Finally, it’s worth remembering that the Netherlands is a member state of the European Union. This means it benefits from a strong, unified currency (the Euro) and also has a number of favorable trade and tax deals, which are especially important given the country’s great volume of exports.
Recommended read: PESTLE analysis of the Netherlands
Here are the Netherlands’ Weaknesses:
Being such a developed nation, the Netherlands is able to provide its citizens with top-quality education, nutrition, and healthcare. As a result, it has one of the world’s highest life expectancies. A consequence of this is that, as a whole, the country’s average age is slowly rising. This means that the ratio of working-aged individuals to elderly dependents is skewed unfavorably. It also means that the Dutch government needs to pay out greater pensions than otherwise, placing a strain on the national economy.
Another Weakness the Netherlands faces is its dependence on dirty energy. Dirty energy, as opposed to clean energy, is energy that has a negative effect on the environment (often produced through combustion of fossil fuels). It’s especially surprising that the Netherlands uses as much unrenewable energy as it does given the country’s economic development. While the country’s current use of dirty energy has little consequence, it may prove to be a problem in the future if new European directives are implemented to decentivize fossil fuels.
Geographical size of the Netherlands
The Netherlands is a significantly smaller country than other major European economies, such as France or Germany. In certain ways, this size limitation can be a Weakness. For example, due to the country’s small size, it has fewer natural resources than others. However, it appears that the Netherlands is able to very skillfully manage this limitation, especially by focusing on service or manufacturing-based businesses to drive its economy.
Here are the Netherlands’ Opportunities:
In some ways, the United Kingdom’s decision to leave the European Union (dubbed Brexit) is an Opportunity for the Netherlands. Most notably, London has been a popular financial hub for Europe for decades now; however, with Brexit on the horizon, it appears that thousands of European organizations are looking for a new place to base themselves. The Netherlands could be a serious contender for many of these organizations, which would drive in a new wave of service-based businesses to the country.
Another Opportunity for the Netherlands is that of tourism. The country is already a relatively well-established tourist destination (especially its capital city, Amsterdam), but there’s no doubt it could do more to share its heritage and progressive modern culture with travelers. The Netherlands could look to invest in tourism infrastructure outside of Amsterdam, so as to drive alternative revenue streams to other areas of the country.
Here are the Netherlands’ Threats:
Although Brexit is, on the one hand, an Opportunity for the Netherlands, it may also be a Threat to the country. Almost 10% of the country’s exports reach the United Kingdom, so a change in current tax and trade treaties may affect this significant revenue stream. Also, Brexit may have greater overall consequences on the entire European economy, which could, in turn, affect the Netherlands.
Another growing Threat to the Netherlands is that of climate change. The Netherlands is known for being an extremely low country, which makes it prone to flooding. Despite serious investment in numerous dams and other flood prevention systems, there are concerns that climate change might result in rising sea levels as well as more volatile weather patterns — putting additional stress on the country’s existing weather systems.
Netherlands SWOT analysis: Final Thoughts
As a country, the Netherlands has a lot going for it: excellent infrastructure, high export volumes, and EU membership. It does indeed have several Weaknesses (such as an aging population), but it seems they are well-balanced out by the country’s Strengths.
Looking to the future, Brexit is both an Opportunity and a Threat depending on how governments and companies react. Otherwise, interesting possibilities are that of the active growth of the tourism industry (Opportunity) and the negative consequences of climate change (Threat).
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