The Netherlands maintains a flexible and competitive economy that benefits from openness to global trade and investment and from an efficient regulatory environment that encourages robust entrepreneurial activity. Monetary stability is well maintained, and the judicial system, independent and free of corruption, provides strong protection for property rights.
The center-right coalition led by Prime Minister Mark Rutte collapsed in April 2012 when the Freedom Party’s Geert Wilders refused to back Rutte’s austerity package. Rutte’s party, the center-right People’s Party for Freedom and Democracy, and its principal coalition partner, the center-left Labor Party, won increased support during elections in September 2012. The Netherlands is a founding member of the European Union but under Rutte’s leadership has been one of the most outspoken supporters of turning power back to EU member states. The Dutch economy was one of the hardest hit by the 2008 financial crisis but has rebounded with solid growth. Today, it is a center of international commerce. Important sectors include tourism, manufacturing, technology, and agriculture.
Rule of LawView Methodology
Property Rights 90.0Create a Graph using this measurement
Freedom From Corruption 83.0Create a Graph using this measurement
Political corruption presents few problems. Effective anti-corruption measures and minimal societal tolerance for graft ensure government integrity. The Netherlands is a signatory to all major international anti-corruption conventions. The legal framework ensures strong protection of private property rights and enforcement of contracts. Independent of political interference, the judiciary is respected and provides fair adjudication of disputes.
Limited GovernmentView Methodology
Government Spending 34.4Create a Graph using this measurement
Fiscal Freedom 52.7Create a Graph using this measurement
The top personal income tax rate is 52 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax and environmental taxes. The overall tax burden equals 37.4 percent of total domestic income. Government spending amounts to 46.8 percent of GDP. The budget has been in deficit, and public debt exceeds 65 percent of GDP. The pension system has been reformed to address spiraling costs.
Regulatory EfficiencyView Methodology
Business Freedom 80.0Create a Graph using this measurement
Labor Freedom 64.0Create a Graph using this measurement
Monetary Freedom 83.4Create a Graph using this measurement
The overall regulatory framework is transparent and competitive. Launching a business is subject to minimum capital requirements, but establishing a company takes only five days. Labor regulations are relatively rigid, and the non-salary cost of employing a worker is high. Monetary stability has been well maintained, but the government subsidizes mortgages and heavily controls, subsidizes, and regulates the prices of wind energy.
Open MarketsView Methodology
Trade Freedom 88.0Create a Graph using this measurement
Investment Freedom 90.0Create a Graph using this measurement
Financial Freedom 80.0Create a Graph using this measurement
EU members have a 1 percent average tariff rate. Trade agreements are currently being negotiated with countries that include the United States and Japan. There is no general screening of foreign investment, but investment in a few sectors is restricted. The well-developed financial sector has been competitive, although the banking sector is under strain and has become more oriented toward the domestic market.
(Article source: http://www.heritage.org/)