Daniela Glocker
OECD
OECD Economic Surveys: Netherlands 2025
Abstract
The Netherlands is a highly open economy and deeply integrated into global value chains, owing to its strategic location as Europe’s gateway, low regulatory burden on trade, and efficient border procedures. However, rising geopolitical tensions and a global shift towards protectionism present urgent challenges for the Dutch economy. This calls for strategies to enhance resilience by diversifying trade partners, lower trade costs, and boosting competitiveness through non-tariff measures. To strengthen resilience, the Netherlands must diversify and reduce the reliance on geographically concentrated critical raw materials, and strengthen domestic framework conditions to support competitiveness. Small and medium sized enterprises (SMEs) play an important role in domestic supply chains, innovation and productivity. However, administrative burdens, a rigid insolvency framework and financing constraints during critical growth phases have hindered their ability to enter and expand. Lacking digital skills amid a tight labour market further hamper businesses to reap competitiveness gains from digitalisation and adoption of new technologies. Addressing these challenges requires targeted policies to diversify trade, strengthen supply chains, and enhancing domestic competition through a lean regulatory environment, improved access to finance to encourage innovation and growth, and improving access to digital skills.
The Netherlands is a small yet highly open economy and Europe’s gateway for trade due to its strategic location and world class infrastructure. Historically, trade has been a cornerstone of its economy, driving innovation, productivity, and economic growth. From its dominance during the Dutch Golden Age to its central role in global value chains, the Netherlands has consistently leveraged trade to achieve one of the highest standards of living globally. However, its heavy reliance on international trade also exposes the economy to global fluctuations, geopolitical fragmentation and supply chain disruptions. The COVID‑19 pandemic and Russia's war of aggression against Ukraine underscored these risks, putting pressure on global supply chains (Figure 4.1, Panel A) and highlighting the Netherlands’ dependence on key suppliers for essential resources such as energy and raw materials.
Note: In Panel A, GSCPI readings measure standard deviations from the index’s historical average. In Panel B, the TPU index is derived from automated text searches across the digital archives of seven newspapers: The Boston Globe, Chicago Tribune, The Guardian, Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post. It is calculated by determining the monthly proportion of articles that discuss trade policy uncertainty relative to the total number of published articles in each newspaper. The index is then standardized to a value of 100 for every one percent share of such articles. Latest data is preliminary. In Panel C, liberalising and harmful interventions are considered according to the relative treatment of foreign versus domestic commercial interests, including both tariff and non-tariff measures. Reporting lags understate the total for recent years. *2025 refers to trade interventions implemented until 28 May 2025.
Source: Federal Reserve Bank of New York; Caldara, Dario, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo (2020[1]), “The Economic Effects of Trade Policy Uncertainty,” Journal of Monetary Economics, 109, pp.38-59; and Global Trade Alert Global Dynamics (database).
Looking ahead, the Netherlands must navigate an increasingly complex global landscape. Trade policy uncertainty has risen sharply since the beginning of 2025 (Figure 4.1, Panel B) amidst geopolitical fragmentation, and on the back of shifting trade alliances and rising trade protectionism (Figure 4.1, Panel C). As reflected in Chapter 1, recently imposed tariffs could not only affect the Dutch economy directly through weaker external demand, but also indirectly as higher costs are passed through the value chain, calling for strategies to enhance resilience by diversifying trade partners, lower trade costs, and boosting competitiveness through non-tariff measures. Trade is also evolving due to the green and digital transitions, requiring businesses to reduce carbon emissions, integrate circular economy practices and adopt new technologies to maintain competitive. Additionally, supply chain vulnerabilities have come to the forefront, particularly for critical raw materials and digital infrastructure components that are geographically concentrated and for which global demand is intensifying. Domestically, the Netherlands faces widespread and persistent labour shortages and an ageing population, which are pushing up labour costs and constraining business expansion (Chapter 1). The challenge of transitioning to a low carbon economy further increases production costs, particularly for the Netherlands’ emission intensive industries, which are critical for exports but face rising carbon pricing under the EU Emissions Trading System (EU-ETS). Addressing these challenges is essential to maintain the Netherlands’ trade competitiveness in the coming years.
Trade remains a fundamental pillar of the Dutch economy, with earnings from exports of goods and services accounting for more than a third of domestic GDP (Statistics Netherlands, 2024[2]). Dutch trade activities support a substantial number of jobs across various industries (Figure 4.2, Panel A), particularly in logistics, manufacturing, and services (Figure 4.2, Panel B), as well as contribute to broader economic spill-overs by boosting competition, fostering innovation and enhancing efficiency. Trade opens access to foreign markets, allowing firms to specialise in high-value production segments, enhancing productivity. At the same time, trade improves consumer welfare by offering a wider variety of goods at competitive prices. Openness to trade and strong integration into value chains have enabled the Netherlands to consistently rank among the most prosperous economies, benefiting from economies of scale, technological exchange, and availability of diverse products and services. However, in a rapidly changing global trade landscape, securing these advantages requires a proactive approach to strengthen economic resilience and maintain international competitiveness.
Note: In Panel B, values refer to within sector shares.
Source: OECD Trade in Employment (TiM) 2023 edition (database).
This chapter provides a comprehensive analysis of the Netherlands’ trade performance, with a focus on its integration into global value chains, supply chain dependencies, and the challenges posed by emerging trade trends. It aims to propose actionable policy measures to enhance the Netherlands’ trade competitiveness. While trade policy falls under the responsibility of the European Union, the Dutch government can strengthen competitiveness and thereby trade by ensuring robust domestic framework conditions that promote competition and innovation. The chapter starts by examining the Netherlands’ trade and investment performance and integration into global value chains. It then discusses policies to strengthen supply chain resilience, diversify trade and export markets, leverage digitalisation for trade, and improve the business environment to boost innovation, and address labour market constraints and developing talent to increase digitalisation. By adopting a forward-looking strategy that strengthens productivity, enhancing investments in innovation, digitalisation, education and leveraging artificial intelligence, the Netherlands can reinforce its position as a global trade leader while safeguarding its economic prosperity.
The Netherlands consistently ranks among the most open economies globally, with trade and capital flows playing a critical role in its economic success. This high openness is underpinned by its strategic location, low regulatory burden to facilitate trade, and deep integration into global value chains. However, a high openness and deep integration into global markets expose the Dutch economy to risks from supply chain disruptions and increasing protectionism.
4.2.1. Trade openness shapes economic performance
Over the past decades, the Netherlands has experienced a significant increase in the trade of goods and services. In 2024, the value of exports and imports were at an impressive 159% of GDP, far exceeding the OECD average of 106% and the OECD EU average of 136% of GDP (Figure 4.3, Panel A). The Netherlands’ increasing trade openness since the early 2000s has been fuelled by growth in global trade on the back of advancements in transport and communication technologies, alongside considerable trade liberalisation efforts (Franco‐Bedoya and Frohm, 2021[3]). Lower trade costs have enabled the development of global value chains (GVC), which have played a pivotal role in the country’s economic growth. Participation in GVCs has enhanced productivity, spurred investment, and boosted income per capita (Ignatenko, Raei and Mircheva, 2019[4]; André and Gal, 2024[5]), contributing to the Netherlands’ high standard of living. However, despite its strong position as a global trade hub, the country’s export performance has declined in the past few years (Figure 4.3, Panel B). This development is not only mirroring a slowdown in the global economy (OECD, 2025[6]; 2024[7]), but also reflects domestic challenges such as labour market constraints (Chapter 1), skill mismatches, and low business dynamism (discussed below).
Note: OECD is a simple average across OECD countries and EU is a simple average across OECD EU member countries. In panel B, export performance is calculated by comparing the growth of a country's export volumes with that of its export market. This shows whether the country's exports grow faster or slower than its market, i.e. if over time it is experiencing market share gains or losses.
Source: OECD National Accounts (database).
The Netherlands’ trade network is heavily concentrated within the European Union, with 70% of exports going to and 42% of imports coming from EU countries in 2024. Germany, the Netherlands’ largest trading partner, accounts for significant trade in machinery, chemicals and automotive products, while Belgium and France are also key partners (Figure 4.4). Despite its departure from the European Union Single Market, the United Kingdom remains an important trading partner, particularly for refined petroleum, broadcasting equipment and medicinal and pharmaceutical products. Agricultural products contribute about 14% of Dutch goods exports, with about two-thirds going to other EU countries and the United Kingdom, highlighting not only the Netherlands’ global importance as key agricultural supplier but also manifests the country’s importance in ensuring food security.
Outside the European Union, the United States and China are key partners for the Netherlands. The United States accounts for 6% of Dutch goods exports, while China accounts for 3%, with trade largely concentrated in high value goods. About 2.1% of total Dutch good exports is machinery to the United States and about 1.9% to China, while chemical products account for 1.4% and 0.3%, respectively. The Netherlands’ reliance on imports of natural liquified gas (LNG) from the United States, which increased significantly from 8.5% to 10.4% of imports in 2023, highlights the evolving trade landscape following Russia’s invasion of Ukraine. Imports from China, primarily of electronics and consumer goods, demonstrate the interconnectedness of the Netherlands with global supply chains (Statistics Netherlands, 2024[2]).
Source: UN Comtrade (database).
A large part of Dutch goods export consists of low value-added re-exports, where the goods have been imported by a person or company established in the Netherlands and are exported without significant processing. In 2023, about 49% of total exports were re-exports with most of them destined to EU member states (Statistics Netherlands, 2024[2]). Particularly to close neighbours like Germany, France and Belgium the shares of re-exports are high, at 60%, 63% and 55%, respectively, highlighting the Netherlands’ function as a European trade hub (Figure 4.5, Panel A; Box 4.1). A large part of re-exports are machinery and equipment (59%), and manufactured goods (62%) (Figure 4.5, Panel B). Typical products are computers, telephones and laptops, clothing and various consumer articles, which are imported from countries such as China and the United States. As these products do not undergo significant processing, the value added from re-exported goods is significantly lower (EUR 0.11 per euro of exports) than for domestic goods exports (EUR 0.53) or services exports (EUR 0.64) (Statistics Netherlands, 2024[2]).
Source: CBS (2024), Dutch Trade in Facts and Figures 2024.
Trade in services plays an increasing role for the Dutch economy. Between 1995 and 2022, the contribution of service exports to Dutch GDP almost doubled from 7% to almost 14%. By contrast, domestic goods accounted for about 17% of GDP and re-exports about 4% of GDP in 2022 (Statistics Netherlands, 2024[2]). Key partners in services trade include the United States, Germany, United Kingdom, Ireland and France, with most imports and exports in business services, transport services, and telecommunications, computer and information services. Of all globally exported services, the Netherlands contributed 3.8% making it the ninth-largest services exporter in the world. Similarly, the Netherlands is also a significant consumer of international services (Statistics Netherlands, 2024[2]). In 2022, the country imported 4% of all globally imported services, making it the seventh-largest services importer in the world by value, favoured by low regulatory burden as captured by the OECD Services Trade Restrictiveness Index (OECD, 2024[8]).
The Port of Rotterdam is the largest seaport in Europe and a critical gateway for international trade. Handling over 435 million tonnes of cargo in 2024, it functions as a primary entry and exit point for goods not only to and from the Netherlands, but also for much of continental Europe, particularly Germany, Belgium, and northern France (Port of Rotterdam, 2025[9]).
As a deep-sea port with excellent hinterland connectivity via rail, road, and inland waterways, Rotterdam serves as a central logistics and transshipment hub. Almost 30% of all EU container traffic passes through the port (European Commission, 2024[10]), and it is integrated into key Trans-European Transport Network (TEN-T) corridors, including the Rhine-Alpine corridor. This connectivity is vital for maintaining efficient and sustainable supply chains across the European Union.
Economic Role:
In 2024, the direct added value of the Rotterdam port has been EUR 18.6 billion. Also including indirect added value, the Rotterdam port contributed EUR 29.6 billion, about 2.9% of GDP. The Rotterdam port offers direct and indirect employment to 192 364 employees (Port of Rotterdam, 2025[9]).
The port plays a crucial role in supporting industries such as petrochemicals, agriculture, and manufacturing, both domestically and across the European Union (Port of Rotterdam, 2025[9]).
Enables access to global markets, especially for bulk goods, energy products, and industrial inputs (Port of Rotterdam, 2025[9]), enhancing the competitiveness of European industries.
Implications for Trade Statistics:
Rotterdam’s role as a transshipment hub introduces statistical complexity in interpreting national and EU trade data. Known as the “Rotterdam Effect", Dutch trade statistics often overrepresent Dutch exports and imports because goods transiting through Rotterdam may be registered in Dutch trade figures—even if they are destined for or originate in other EU countries. This statistical distortion affects bilateral trade balances and can inflate Dutch trade volumes, making it important for analysts to distinguish between gross flows and final destinations or origins. The OECD recommends using corrected trade data to account for these flows (OECD, 2023[11]).
Source: Port of Rotterdam (2025[9]), European Commission (2024[10]), OECD (2023[11]).
4.2.2. A strategic hub for capital and foreign direct investment
The Netherlands is a key financial centre and investment hub in Europe. External assets and liabilities stood at about 1800% of GDP in 2023 (Figure 4.6, Panel A), the third highest among OECD countries. The country has one of the largest pension systems in the world relative to GDP, is a key international location for insurance companies and hosts some of the world’s largest commodity trading companies.
Foreign direct investment (FDI) assets and liabilities contribute strongly to the country’s financial openness. Despite a drop in foreign direct investment flows in 2023, likely due to the introduction of the global minimum tax of 15% on the profits of multinationals (Chapter 1), inward and outward FDI stocks stood at 241% and 288% of Dutch GDP, respectively. The Netherlands is therefore placed second in the world with respect to its FDI outward and fourth with respect to its FDI inward position (OECD, 2024[12]). The United States and the United Kingdom are key investment partners, with the Netherlands investing about 10% and 14% of total direct investment in the two countries, respectively. Inflows are even larger, with direct investments from the United States (21%) and the United Kingdom (18%) indicating a strong FDI inward partner concentration (European Commission, 2024[13]; DNB, 2024[14]; DNB, 2024[15]). This warrants continuous monitoring as an economic downturn or policy shifts in one of those partner countries could lead to a sudden withdrawal or reduction of investment with negative consequences for the Dutch economy.
Note: Panel A: Financial openness is measured as financial assets and liabilities as % of GDP. OECD refers to the median of OECD member countries and EU is the median across OECD EU member countries. Panel B: OECD FDI Regulatory Restrictiveness Index (FDIRRI) by sector, from 0 ("fully open to FDI") to 1 ("fully closed") for 2023.
Source: External Wealth of Nations (database); and OECD FDI Regulatory Restrictiveness Index (FDIRRI) (database).
The Netherlands’ international investment position has been supported by its central location, good infrastructure, highly educated workforce, a stable legal system, and a lean regulatory stance towards FDI (Figure 4.6, Panel B) that have attracted multinational enterprises (Statistics Netherlands, 2024[2]). Nevertheless, FDI faces challenges in the current geopolitical climate, with increased scrutiny, particularly in knowledge sensitive sectors like semiconductors, that could deter inflows.
While the Netherlands remains broadly welcoming towards greenfield investment, tighter investment-screening rules and increased regional scrutiny of non-EU inflows reflect a more interventionist approach due to concerns over intellectual property leakage. In June 2023, the Security Assessment (VIFO) Act, which implements EU investment screening regulations, came into effect. This legislation covers most investments and acquisitions involving Dutch-domiciled firms, namely when controlling a stake 10% or more in companies with “very sensitive technologies”, having a controlling stake in “vital suppliers”, or in companies involving “sensitive technologies”. In late 2024, the Dutch government has additionally announced plans to further expand its investment screening regulations to include artificial intelligence and biotechnology to safeguard knowledge security and leveraging the VIFO Act to prevent undesirable investments, mergers and acquisitions. It is important that new legislation on FDI remains narrow in scope and carefully balances the need for economic efficiency and national security needs. Misplaced impediments can curtail investments, dampen productivity growth, and ultimately undermine resilience.
4.2.3. Strong global value chain integration contributes to competitiveness
The Netherlands is highly integrated into global value chains, with strong backward and forward linkages that enhance its trade competitiveness. Access to foreign markets exposes Dutch companies to greater competition, fostering innovation and efficiency. Additionally, importing immediate goods and services enables firms to specialise in high-value segments of production, a key driver of productivity growth. Since 2000, the Netherlands has significantly increased its backward participation in GVCs, with the share of foreign content in its exports rising from 25% to 30% in 2020, above the OECD average of 26.7% (Figure 4.7, Panel A). Forward linkages are also high in international comparison, with 36% of the Netherlands’ domestic value added driven by foreign final demand, compared to the OECD average of 29.8% (Figure 4.7, Panel B). The Dutch economy has also experienced a notable shift towards services within GVCs for manufactured goods. Services, such as research and development, logistics, and marketing, are playing a growing role in the production and export of manufactured products (Wache et al., 2024[16]). These trends reflect the evolving nature of the Netherlands' participation in global trade, underscoring the increasing importance of services in driving economic value.
Note: Backward participation is the foreign value added embodied in a country's exports as a share of this country’s total exports. Forward participation is the domestic value added driven by foreign final demand. Data does not account for re-exports.
Source: OECD Trade in Value Added (TiVa) 2023 edition (database).
The Netherlands’ critical role in global production networks is highlighted by its reliance on imported components and raw materials for its manufacturing activities, which is higher than the OECD average (Figure 4.8, Panel A and B). The manufacturing sectors most dependent on foreign inputs are motor vehicles, computer, electronic and ICT, coke and refined petroleum, chemicals, and other transport equipment (Figure 4.8, Panel B). A significant portion of these inputs is sourced from suppliers within the European Union, alongside contributions from other OECD member countries (Figure 4.8, Panel C). However, there are two notable exceptions. The manufacture of computer, electronic and ICT relies heavily on inputs from China, while coke and refined petroleum largely depended on Russia in 2020. Before Russia’s invasion of Ukraine, it was the Netherlands’ largest supplier of natural gas, accounting for around 20% of the country’s energy imports. By the end of 2023, this share had fallen to below 5% as the Netherlands diversified its energy sources, turning to suppliers like the United States for liquefied natural gas (LNG) and Norway for pipeline gas (Statistics Netherlands, 2024[2]).
Note: The FIR is an import side measure that can be interpreted as the share of total domestic output exposed to upstream foreign disruptions in GVCs, accounting for the size of direct and indirect exposure to a partner in the value chain; and the distance to this partner in the value chain. As it is a gross trade indicator, meaning that the intermediate inputs sourced from a specific partner country may be counted more than once when goods or services cross borders multiple times, the FIR can take values greater than 100%. Panel C: OECD EU refers to the 22 OECD EU countries, OECD Asia and Australia refers to Australia, Japan, Korea, and New Zealand; NAFTA refers to USA, Canada, and Mexico.
Source: OECD (2024), Gross Output Flows in Global Value Chains.
Given its small domestic market, the Netherlands relies more heavily on foreign markets than most OECD economies (Figure 4.9, Panel A). Approximately one-third of the country’s GDP is earned through exports (Statistics Netherlands, 2024[2]), making the Dutch economy particularly sensitive to fluctuations in global demand and economic uncertainties, as seen in recent years (Chapter 1). Reliance on foreign markets is especially pronounced in the mining, manufacturing and the agricultural sector, with key export destinations concentrated in the European Union (Figure 4.9, Panel B and C). Structural shifts in demand within key markets could reverberate through global value chains and affect the Dutch economy, emphasising the need for careful monitoring. For instance, recent OECD research (Smith, Huang and Dlugosch, 2024[17]) highlights that population ageing, a challenge not only for the Netherlands’ production capacity, but also for key trading partners such as Germany, could negatively affect Dutch exports. Mitigating these risks requires robust contingency planning and diversification of export markets.
Note: The FMR is an export side measure that can be interpreted as the share of total domestic output exposed to downstream foreign disruptions in GVCs accounting for the size of direct and indirect exposure to a partner in the value chain; and the distance to this partner in the value chain. As it is a gross trade indicator, meaning that the intermediate inputs sourced from a specific partner country may be counted more than once when goods or services cross borders multiple times, the FMR can take values greater than 100%.
Source: OECD (2024), Gross Output Flows in Global Value Chains.
The Netherlands’ strong integration into global value chains increases its economic vulnerability to external factors. Supply chain disruptions, whether due to geopolitical tensions, natural disasters, or global pandemics, can cascade through these chains, causing delays in production, increasing costs, and leading to potential loss of market share. The Dutch National Bank (Bolt et al., 2023[18]) explored the risks of global value chain disruptions, finding that a negative trade shock in form of higher non-tariff trade barriers between the United States, the European Union and the Rest of the World, would not only lead to a fall in Dutch exports by a maximum of almost 4% and imports by nearly 10%, but also decrease GDP by about 1.7% in the medium-term, while inflation would go up, driven by higher trade and production costs. The Netherlands is more exposed to trade shocks than the average European Union country due to its high openness, and while simulation models of unilateral trade shocks also indicate that the source country of the unilateral action would be negatively affected (Box 4.2), strategies to reduce exposure are needed, especially in the context of rapidly rising trade protectionism and tensions.
United States introduction of 10% universal import tariff
Research modelling the economic impact of potential US import tariffs, including a general 10% and sector-specific increases, on the Netherlands and the European Union have been found to have modest direct effects on the Dutch Economy with a total reduction of trade of about 1% (Boeters and Meijerink, 2024[19]). Certain sectors in manufacturing are however more exposed. For instance, machinery, electronics, and vehicles face export declines of 5-6% each. By contrast, the Dutch services sector benefits from improved international competitiveness as US service costs rise.
At the EU level, similar trends emerge: manufacturing sectors like vehicles and pharmaceuticals experience losses, while services gain. Trade flows within the EU and to other regions are expected to partially offset reduced exports to the United States. Nevertheless, simulating retaliatory measures by the EU, such as a matching 10% tariff, is estimated to have limited additional impact but could escalate trade tensions.
For the United States, the tariffs are projected to boost domestic production in key sectors like vehicles and textiles. However, these gains are counterbalanced by higher consumer prices and reduced competitiveness, particularly in services. The overall economic benefit to the U.S. is marginal (+0.2% real output), and efficiency losses are estimated to be significant.
A 25% reduction of trade between EU members and China
The Netherland Bureau for Economic Policy Analysis in conjunction with Statistics Netherlands studied China's economic interwovenness with the EU and the Netherlands using a combination of approaches (Freeman et al., 2022[20]). Using an international input output analysis with a nonlinear optimisation framework to allow for industry response, they measured the degree of Dutch-China dependency using a potential impact factor (PIF) which measures the change in gross production (output) of an industry relative to the size of the shock ― which was assumed to be a 25% reduction in trade between the EU Members and China. For the Netherlands, the estimated potential impact factor was estimated to be around one, meaning that a 25% reduction in trade between the EU and China would lead to a 25% reduction in production, though the effect would vary across sectors.
A 10% reduction of trade between OECD and emerging non-OECD economies
Recent OECD work by Arriola et al (2024[21]) has modelled the impact of a scenario of a 10% reduction of trade between OECD and emerging non-OECD economies (MNOEs) on the Dutch economy. While the Netherlands would be stronger affected than the EU average, with a decline in GDP of about 0.6% compared to a decline of about 0.5% at EU average, the effect is moderate compared to OECD countries hit most. Thus, under the same scenario, Korea would see a decline in its GDP of about 1.4%, Australia of 1.2% and Japan of 0.6%. The Netherlands’ reduction in GDP is mainly driven by a decrease in trade with China, with whom it has strong trade linkages. However, because of strong interconnectedness, the model also shows that the impact of the trade shock is more pronounced for MNOEs than for OECD countries, indicating that MNOEs are more economically dependent on trade with the OECD countries than the other way around (Arriola et al., 2024[21]).
Source: Boeters and Meijerink (2024[19]), Freeman et al (2022[20]), Arriola et al (2024[21]).
The Netherlands’ strong integration into global value chains exposes its economy to vulnerabilities, especially from external dependencies and supply chain disruptions. While businesses themselves are usually well-placed to assess the risk in their individual operations, they can overlook the broader consequences of their actions on the overall economy and society (Acemoglu et al., 2012[22]). Particularly in areas of strategic national interest, there is scope for the Dutch government to strengthen its multipronged strategy including developing robust monitoring systems, mitigating dependences on raw materials and fossil fuels, and supporting diversification of trade partners.
4.3.1. Strategies to mitigate supply chain risks can be strengthened further
The Dutch government has developed several strategies to improve the resilience of its supply chains, particularly in response to risks associated with natural resource dependencies, economic shifts, and global disruptions. Notably, in 2022, the government initiated a task force to explore strategic dependencies and identify potential policy solutions to mitigate risks from critical dependencies (Ministry of Economic Affaires and Climate Policy, Ministry of Foreign Affaires, Ministry for Foreign Trade and Development Cooperation, 2023[23]). The task force highlighted the need for early intervention, with a strong focus on the identification and monitoring of high-risk dependencies, as well as measures to reduce resource dependencies through the National Raw Materials Strategy (see below). Moreover, the taskforce highlighted that businesses should have the primary responsibility to mitigate risks in their supply chains, in line with the OECD policy toolkit on resilient supply chains (Box 4.3), in order to avoid unnecessary and costly state intervention. It is welcome that private-sector forums and stakeholder consultations are in place to facilitate knowledge sharing and risk management, particularly for SMEs that lack the capacity to independently address supply chain risks. Building on these initiatives, the Netherlands should further strengthen policies to anticipate risks and minimise exposure to shocks as discussed below.
Modern supply chains face increasing disruption from factors like geopolitical conflicts, natural disasters, and cyber threats. To address these risks, governments and private sectors are implementing strategies to boost resilience. Key strategies include:
Risk anticipation: Governments are encouraged to use risk assessment and early warning systems to understand and prepare for potential disruptions. This includes scenario planning and data-driven analyses to predict and mitigate impacts from different types of shocks. Supply chain due diligence, in line with OECD standards on Responsible Business Conduct, can further help unlock responsible, reliable and diversified global supply chains.
Minimise exposure to shocks: Investment in critical infrastructure (both physical and digital) enhances resilience by supporting uninterrupted flows of goods and services. Streamlined regulations and trade facilitation practices can further help to minimise disruption.
Public-private partnerships: Governments can play a supportive role by fostering trust and collaboration with the private sector. Frameworks for information sharing through platforms and preparedness conferences are recommended to ensure faster and more effective responses. Working closely with the private sector to design efficient stockpiling systems and co‑ordinating selective stockpiling on international or regional levels could be considered.
Strengthen international co-operation: Maintaining open markets, regulatory harmonisation, and transparent trade policies is vital for resilient global supply chains. Agreements and collaborations, such as those facilitated by the WTO, help countries align on standards and co‑ordinate crisis responses.
Notes: OECD standards on Responsible Business Conduct include: The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and the OECD Due Diligence Guidance for Responsible Business Conduct, as well sectoral due diligence guidance for the minerals, agriculture, financial and garment and footwear sectors.
Source: OECD (2024[24]).
4.3.2. Enhancing monitoring of high-risk dependencies in supply chains
Dependencies are not inherently problematic, as mutual dependencies are the foundation of the global trade system. They foster specialisation, drive innovation, keep products affordable, facilitate the exchange of scientific knowledge and enhance purchasing power. However, strategic dependencies can pose significant vulnerabilities when they affect critical sectors that underpin national interests, such as healthcare, energy and security. Recent global events that have disrupted international markets and supply chains have heightened concerns about supply chain resilience and the risks transmitted through international trade linkages. In the context of growing geopolitical fragmentation and the potential reduction in trade linkages underscores the need for robust monitoring systems. These systems should identify trade linkages and dependencies that could have adverse economic effects if disrupted (Arriola et al., 2024[21]), allowing for early intervention.
The Netherlands developed the national 2023 Geo-Economic Monitor (Bijlsma et al., 2022[25]) to assess trade dependencies and related economic vulnerabilities. This is a key step forward allowing policy makers to better identify high-risk sectors and develop mitigation strategies. The monitor has identified 21 product groups in which the Netherlands has a strategic dependency on a non-EU country, and 11 product groups in which a possible strategic dependency exists. According to the monitor, China plays a crucial role in supplying antibiotics, rare earth materials, and digital components, which are essential for healthcare, food security and the digital transition. Similarly, the United States is identified as a key supplier of defence-related technologies, critical to national security.
The government should continue to enhance data collection and regularly update the monitor to identify emerging vulnerabilities in supply chains. The 2023 Geo-Economic Monitor faces several data limitations. An effective monitoring system for supply chain vulnerabilities should leverage all available data sources, acknowledging their respective strengths and limitations, and facilitate information-sharing between private and public sector stakeholders to address emerging challenges. Timely private-sector data can track developments in near real-time, while global input-output tables can provide insights into sectoral interlinkages across the global economy. Harmonised international trade statistics, on the other hand, offer a detailed view of vulnerabilities at the product level. However, private-sector data often lack consistent statistical classifications, making it challenging to align with official sources. Additionally, constructing and releasing global input-output tables requires extensive data, strong assumptions, and often takes several years. Moreover, trade in services and investment flows is difficult to accurately measure, making it challenging to identifying dependencies in these segments (Bijlsma et al., 2022[25]).
In the context of heightened geopolitical fragmentation and increasing protectionism (Box 1.1. in Chapter 1), the government should use the findings from the monitor to conduct scenario analysis to identify the nature and severity of potential trade shocks on the Dutch economy (Box 4.2). Developing a national trade risk strategy that integrates regular scenario analysis would allow to better identify reasonable crisis response mechanisms to prepare for global trade disruptions. While direct trade responses must be decided at the EU level, a national trade risk strategy should focus on identifying and reducing exposure to potential shocks. Key measures include reducing logistics frictions, promoting regulatory co-operation and flexibility, and maintaining regular contact with public and private stakeholders to strengthen coordination and preparedness for future crises. (Thakur-Weigold and Miroudot, 2024[26]). A clearer understanding of the economic impact of different types of trade shocks, such as supply disruptions or rapidly rising trade costs, can help to distinguish between routine business risks and those requiring government intervention.
A national trade risk strategy can also support the identification of the most vulnerable sectors. It would further help to assess whether government support could be justified to ease short-term adjustments. However, drawing on lessons learned during the pandemic and the energy crisis, such measures—if used—should be temporary and well-targeted, taking into account their cost and benefits. Over the longer term, the government should use the assessment of regular scenario analysis to minimise exposure to risks through structural responses such as diversifying trade, strengthening innovation and investment, and reducing regulatory barriers within the EU single market as they will be more effective in enhancing resilience and competitiveness.
4.3.3. Reducing dependence on critical raw materials for the digital and green transition
Critical raw materials are a key compound for emerging technologies such as artificial intelligence, quantum computing, big data, as well as clean energy technologies, healthcare and defence. These materials, both in primary but also processed form are very concentrated geographically, with a significant amount of minerals being extracted and processed in China. Rapid demand growth is putting the global supply-demand balance at risk (IEA, 2022[27]), with additional challenges posed by the limited diversification opportunities of suppliers (Figure 4.10). Moreover, as critical raw materials are positioned upstream in the international supply chain, suppliers used export restrictions to support downstream domestic sectors. For example, China substantially increased the number of restrictions, growing by a factor of nine between 2009 and 2020, establishing itself as the country with the most extensive array of export restrictions on critical raw materials (Draghi, 2024[28]).
Note: Panel A and B exclude quasi-transit trade.
Source: CBS (2023), Dutch Trade in fact and figures 2023.
The Netherlands is aiming to improve its critical raw material supply security and reduce dependencies, also in the context of limited diversification opportunities. The National Raw Materials Strategy (Nationale Grondstoffenstrategie) is aligned with the 2023 European Critical Raw Materials Act (CRMA) (see Box 4.4), by promoting refining and circularity of critical raw materials, building strategic alliances, stockpiling critical raw materials, and knowledge building and monitoring. From the Dutch perspective, most efforts should be complemented with action at the European level, including building strong alliances with trusted suppliers to minimise disruptions caused by geopolitical or market shifts, and exploring stockpiling possibilities at the EU level. The Netherlands complemented these welcomed collective efforts at the European level with a recently launched Netherlands Materials Observatory (NMO), which aims to monitor supply risks, assesses vulnerabilities, and provide early warnings when disruptions in critical raw material supply chains occur, and collaborate with national observatories of other EU member states. While understanding the supply and availability of critical and strategic raw materials is crucial to reduce the dependence on non-EU suppliers, domestic policies to further promote recycling and substitution of critical raw materials can complement these efforts.
The EU Critical Raw Materials Act (CRMA), implemented in April 2024, is a comprehensive policy framework aimed at securing sustainable and resilient supply of critical raw materials (CRMs) essential for Europe to meet its climate and digital objectives.
1. Diversification of Supply Chains: The CRMA sets a target to extract 10% of the EU’s demand of minerals domestically, and to process 40%, and recycle 25% of it domestically by 2030; and source no more than 65% of any single CRM from outside the EU to reduce the dependency on any one country. The EU promotes partnerships with reliable international suppliers, while enhancing domestic extraction and processing capabilities.
2. Strategic CRM Reserves: The Act encourages EU member states to establish strategic stockpiles of the most critical raw materials, ensuring supply chain resilience during global disruptions, particularly for materials like lithium, cobalt, and rare earth elements.
3. Boosting Circular Economy and Recycling: The CRMA emphasises recycling and reusing CRMs, setting goals to recover more materials from waste. The CRMA sets a target to recycle 30% of the EU’s demand of minerals domestically by 2030. The EU supports technologies for recycling batteries, electronics, and other products, reducing the need for primary raw material imports.
4. Support for innovation and substitution: To decrease reliance on CRMs, the Act funds research into alternative materials and technological innovations that reduce or replace CRM usage, particularly in high-demand sectors like renewable energy, automotive, and electronics.
5. Streamlining permits and reducing barriers: The Act aims to streamline the permitting process for CRM projects within the European Union, shortening approval times to encourage investment in local mining, refining, and recycling facilities.
Source: European Commission (2024[29]).
The circular economy is critical for the Netherlands’s strategy to enhance trade resilience and reduce dependency on critical raw materials. Despite limited diversification opportunities, the Dutch government is actively seeking strategic bilateral partnerships for critical raw materials, for example with South Korea, which is welcome. The government is also working on “roadmaps” to enhance the circularity of critical raw materials in prioritised value chains, such as the production of electrolysers, windmills, solar-PV and military ships. However, these efforts should be complemented with further reducing the need to use critical raw materials. With 27% of material recycled and reintroduced into the economy, the Netherlands is a frontrunner within the European Union (Figure 4.11). This position points to the country’s potential to continue its shift towards a circular economy. Not only will such a shift be beneficial in terms of environmental considerations, but also insure against supply risks particularly for geographically concentrated critical raw materials.
The National Circular Economy Programme (NCEP), in place since 2016, aims to halve the use of primary resources by 2030 and achieve full circularity by 2050. This ambitious agenda emphasises smarter product design, extending product lifecycles through repair and reuse and minimise demand for new materials. As part of broader European ambitions, the upcoming EU Digital Product Passport (DPP), which begins mandatory implementation for various product categories between 2026 and 2030 (Ministry of Infrastructure and Water Management, 2023[30]), will further strengthen the Netherlands’ efforts in incentivising eco-design practices.
% of material recycled and fed back into the economy, 2022
Note: EU is a weighted average of EU member countries.
Source: Eurostat (database).
Despite strengthening policies in the updated National Circular Economy Programme (2023-2030), the Netherlands is not yet on track to meet the 2030 target (PBL, 2023[31]). The updated programme includes a mix of standard-setting, price-fixing and incentives aiming to minimise the environmental footprint and improve the supply security of materials (Ministry of Infrastructure and Water Management, 2023[30]). However, the recycling and reuse of critical raw materials is insufficient (OECD, 2024[32]). The government should introduce stronger incentives to encourage businesses to adopt sustainable practices and increase the reuse of critical raw materials. For example, within the Extended Producer Responsibility (EPR), which relies on the polluter-pays principle, and thereby encourages manufacturers to assume responsibility for the environmental impacts of their products throughout the whole product lifecycle, producers could face variable fees depending on recyclability, toxicity, and material content (OECD, 2020[33]). By adjusting the EPR fee based on how circular a product is, a price incentive for companies is created to design better, longer-lasting, and more recyclable products, while also helping level the playing field for circular solutions. The government could also consider integrating eco-design principles into public procurement, as it is for example done in Sweden (Box 4.5). Finally, regulations should be conducive to circular initiatives and activities (PBL, 2023[31]). For example, the government could mandate manufacturers to provide detailed product information that facilitates repairs and extends product lifespans, also for product categories not yet covered by the EU Digital Product Passport. Furthermore, the government could consider gradually introducing requirements for products to contain a certain percentage of recycled materials, while ensuring alignment with WTO trade rules particularly with respect to imports. These measures may also incur costs for businesses, including upfront investments, operational expenses, workforce re- and upskilling, and compliance with administrative requirements. Therefore, these factors should be taken into account when prioritising and phasing in potential actions.
Sweden has incentivised the adoption of eco-design principles through a combination of policy measures, financial incentives, and industry collaboration.
Key Measures:
Eco-design Regulations and Circular Economy Policies: Sweden has aligned its policies with the EU’s Eco-design Directive, which sets minimum environmental requirements for products. The country has also gone beyond EU requirements by promoting a circular economy and sustainable consumption models.
Tax Reductions and Financial Incentives:
Sweden introduced tax breaks on repairs for consumer goods, including electronics and household appliances. This incentivizes both manufacturers to design longer-lasting products and consumers to repair rather than replace.
A lower VAT rate (12% instead of 25%) on repair services has helped extend product lifespans and foster a market for eco-friendly services.
Extended Producer Responsibility (EPR) Schemes: Sweden has strong EPR programs that require manufacturers to take responsibility for the lifecycle of their products. This has pushed companies to design products with recyclability and reusability in mind.
Public Procurement and Industry Engagement: The Swedish government has integrated eco-design principles into public procurement, ensuring that products purchased by the state meet strict environmental criteria. This creates demand for sustainable products and encourages private companies to follow suit.
Research and Innovation Support: Through funding programs such as those from Vinnova (Sweden’s innovation agency), businesses receive support for developing sustainable design solutions.
To meet the 2030 and 2050 circular economy targets, the government should adopt a cross-sectoral policy approach that integrates the energy, industrial and circular transitions given their strong interlinkages. For instance, the circular transition supports the energy and industrial transition by minimising raw material use and integrating recycling into industrial processes. To stimulate investment and research, a clear strategy with priorities, policies, and timeline compatible with targets for the circular transition should be implemented. Within this strategy, it should also be ensured that sufficient structural funding for the circular transition is made available to meet envisioned targets based on a cost benefit analysis. As the transition to a circular economy can impede on trade competitiveness, such a strategy should be aligned with the policy framework at the EU level.
Dutch industries are recognised for their commitment to sustainability and could leverage that advantage to export advanced circular technologies or products, generating new export opportunities, for example in recycling systems, sustainable materials and eco-design technologies.
The government’s mission-driven “Top Sectors” programme and Innovation Policy already support Research and Development (R&D) in circular technologies, including, amongst others, recycling and waste valorisation (e.g. breaking down complex materials), circular manufacturing to extend the life of products, and developing alternatives to fossil-based materials, such as bioplastics. The Netherlands has also made significant advances through its Green Deals, which aims to address non-financial circular economy barriers. It provides a platform for the government to directly communicate and engage with stakeholders, and support innovation domestically by providing support to test circular ideas with help from the government in pinpointing solutions to regulatory and administrative hurdles. Since its start in 2011, the Green Deal programme has given about 240 green initiatives the space to grow (Rijksdienst voor Ondernemend Nederland, 2024[34]). While this approach was found to add value to innovation with respect to multiparty agreements and cooperative sharing to achieve a circular economy, the government could do more in terms of scaling-up. Additionally, the government should consider expanding on these efforts to also include programmes focussing on export promotion as global demand for sustainable goods is growing. Building on some existing private initiatives, integrating circularity more broadly into trade missions can further open business opportunities for Dutch exporters to new markets and promote Dutch expertise globally. Sweden for example, integrates its ambition to export its knowledge and solutions in waste-to-energy technologies to other countries it its export strategy (Box 4.6).
Established in 2016, Smart City Sweden is a state-founded export platform that initiates cooperation between Sweden and other countries within smart and sustainable city solutions, including waste-to-energy (WtE) technologies. It serves as a hub for promoting innovation, fostering international collaboration, and supporting Swedish companies in exporting their technologies globally.
Key Contributions:
Demonstration Projects: Smart City Sweden highlights successful WtE projects, such as facilities turning waste into district heating, to inspire international adoption.
Knowledge Sharing: The platform organises workshops and training sessions to share Sweden's technical expertise and policy frameworks with global partners.
Facilitating Partnerships: By connecting Swedish technology providers with international stakeholders, Smart City Sweden helps implement WtE solutions in other countries.
Through initiatives like Smart City Sweden, WtE technologies not only help manage waste sustainably but also contribute to global energy transitions by showcasing scalable and effective solutions.
Source: Smart City Sweden, https://smartcitysweden.com/about/
4.3.4. Reducing dependencies from fossil fuels
Reducing fossil fuel dependency is not only critical for the Netherlands to meet its climate goals, and improve energy security, but also to maintain its trade competitiveness. Net energy imports, mainly oil and gas account for 88% of the country’s total energy supply (IEA, 2025[35]). While the Netherlands has made significant progress in diversifying its energy supply, further steps are needed. Owing to its energy-intensive industries, the Netherlands remains heavily reliant on fossil fuels (OECD, 2023[36]). As discussed in Chapter 2, transitioning away from fossil fuels will require greater investments in renewable energy generation and the electricity grid. Stepping up renewable energy production could not only reduce the need to import fossil fuel energy, but also create new export opportunities as potential demand for clean energy is high in neighbouring countries.
The Netherlands’ energy intensive industries, such as chemicals, steel and refining, play a vital role in the economy. The top five greenhouse gas (GhG) emitting manufacturing industries in the Netherlands account for 5% of the value added in the economy and 15% of the value added from trade (Table 4.1). High energy costs and EU regulations, such as the European Emissions Trading System (ETS), have created price asymmetries between Dutch producers and their non-EU competitors. A key concern not only in the Netherlands, but also in the European Union has been carbon leakage, where strict EU‑CO2‑emission limitations are circumvented by moving production to non- EU countries with weaker environmental regulation (Teusch et al., 2024[37]).
To balance climate policies with trade competitiveness, the Netherlands has been a strong advocate for the Carbon Border Adjustment Mechanism (CBAM), implemented at the EU level to address carbon leakage. CBAM applies a carbon price on imports of certain goods, equalising costs with EU producers and discouraging offshoring to countries with weaker regulations (see Box 4.7). Studies suggest that CBAM will effectively reduce leakage (Dechezleprêtre et al., 2025[38]) and may increase the Netherlands’ production and exports of CBAM products, particularly in intra-EU trade (Olijslagers et al., 2024[39]). However, the impact will vary across sectors (Box 4.8), as energy intensity of production varies within the European Union. Carbon emission pricing is set to increase over the longer term under the EU ETS. Furthermore, the Netherlands has implemented a carbon levy on industrial emissions that sets out a price trajectory until 2030, such that emitters pay the differential to the floor price if the EU ETS prices fall under a certain level (OECD, 2023[36]; 2021[40]). In the absence of successfully reducing emissions, this will lead to shifts in the trade balance, with emission-intensive industries, such as chemicals and chemical products, becoming less competitive. Remaining price competitive within the European Union and globally will therefore require continued investments in decarbonisation and renewable energy.
2020
Note: Only the five largest GhG emitting manufacturing sectors are shown.
Source: OECD Trade in Value Added (TiVA) 2023 edition (database).
The EU’s Carbon Border Adjustment mechanism (CBAM) is a key part of the European Green Deal, designed to tackle carbon leakage and promote global climate action. Carbon leakage occurs when companies move production to countries with less stringent climate policies, undermining efforts to reduce emissions. CBAM addresses this by imposing a carbon price on imported goods initially only from carbon intensive industries, such as steel, aluminium, cement, and fertilizers, ensuring these imports face the same carbon costs as products made within the EU under its Emissions Trading System (ETS).
How CBAM works:
Importers of carbon intensive goods into the EU must purchase CBAM certificates to cover the embedded emissions in these products.
The cost of the certificate mirrors the carbon price under the EU ETS, levelling the playing field for EU industries that already pay for their emissions.
If a producer has already paid a carbon price in their country of origin, the CBAM charge will be reduced accordingly, encouraging other nations to adopt similar climate measures.
Phased in introduction:
A transitional phase form October 2023 to 2026 will allow importers to report emissions without paying CBAM costs. Full implementation is expected in 2026. This gradual introduction of the CBAM is aligned with the phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS) to support the decarbonisation of EU industry.
Source: European Commission (2025[41])
Diversifying energy resources and stepping up renewable energy production could not only reduce the need to import fossil fuel energy and thereby increase energy security but also create new export opportunities. The Netherlands has made significant progress in renewable electricity production (Chapter 2). Although electricity trade is still modest compared to fossil fuels, the country became a net electricity exporter in 2023 (Statistics Netherlands, 2024[42]). While this highlights the potential for renewable electricity exports to play a larger role in the Dutch trade portfolio, it would require significant investment into the power grid as discussed in Chapter 2.
The Netherlands' strategic location, great offshore wind resources and an established position as an energy-trading hub provide the Netherlands with favourable conditions to becoming a large producer and importer of low-emission hydrogen (IEA, 2025[35]). This clean energy carrier could be key to meeting domestic demand, particularly in decarbonising hard-to-abate sectors like steel and chemical production, which are important to Dutch exports. While prices for clean hydrogen are still higher than for carbon intensive hydrogen, in the medium to longer term, the Netherlands also has substantial potential for hydrogen production linked to renewables, particularly through synergies between electrolysis and offshore wind development. (IEA, 2025[35]). In addition, hydrogen offers significant opportunities to further strengthen the Netherlands’ role as trading-hub. The Port of Rotterdam envisions a strong role within the hydrogen supply chain, supplying 4.6 megatons per annum (Mtpa) of hydrogen to Europe by 2030, out of which just 0.6 Mtpa is domestic and the remaining 4 Mtpa are transit trade (Port of Rotterdam, 2024[43]; 2022[44]). Hydrogen could become a significant export opportunity, also due to increasing demand in neighbouring countries. For instance, Germany’s Hydrogen Import Strategy anticipates that 50-70% of its hydrogen needs by 2030 will have to be imported, with this share likely to increase further thereafter. However, recent set-backs in hydrogen developments in neighbouring countries and uncertainty with respect to the Netherlands hydrogen strategy have held back investment such that prices are still comparatively higher than carbon intensive hydrogen (IEA, 2025[35]). As discussed in Chapter 2, the development of clear industrial decarbonisation strategies and introducing obligations for low-emission hydrogen in key industries can increase demand certainty and help unlock necessary investment into R&D and infrastructure, which could bring prices down in the longer term. As the expansion of hydrogen production facilities would consume a significant portion of the generated electricity, such a strategy should be accompanied and coordinated with a stable, long-term framework for offshore wind development.
Both the EU and the Netherlands aim for a net carbon-free economy by 2050, shifting energy use from oil and gas to renewable sources. This transition is expected to affect trade balances, both through relocation effects and leakage within the energy-intensive industries, and because the countries who are exporting oil and gas may differ from those countries who are exporting renewable energy. For the Netherlands, this shift could have a significant impact. Oil and gas account for 77% and 20% of energy imports, respectively, comprising 16% of total imports of goods and services. At the same time, the country still has a significant industrial base with a relatively large share of emission-intense production.
To better understand the impact of emission pricing on the Netherlands’ trade performance, a dynamic applied general equilibrium model (GREEN-R) designed to assess the economic and environmental impacts of climate policies, has been used to model different scenarios. The preliminary findings suggest that the energy transition will have profound effects on energy intensive sectors, affecting production in domestic industries leading to shifts in trade flows (Glocker, Sommer, van der Wal, 2025 forthcoming). Rising energy costs from carbon taxation under the EU-ETS, when compared to a no-policy-change scenario, indicate a worsening trade balance due to a decline in price competitiveness (Figure 4.12). However, the introduction of the EU Carbon Border Adjustment Mechanism (CBAM) partially offsets these negative effects.
A closer look at sectoral impacts reveals that the chemical industry, one of the most emission-intensive sectors in the Netherlands, is the primary driver of this shift. Since chemical production in other EU countries is generally less emission-intensive, some production is expected to relocate abroad, even with the EU CBAM in place. A large share of this negative effect on the trade balance is, however, balanced out by a lower dependence on fossil fuel imports. The improvement in the trade balance of fuels nearly matches the negative effect from the ETS sectors.
Source: Glocker, Sommer, van der Wal, 2025 forthcoming.
4.3.5. Supporting firms in diversifying trade relations
While strengthening supply chain resilience is crucial for reducing exposure to trade disruptions, further broadening trade relationships will also help. Expanding into new markets, while also removing remaining barriers in the EU internal market, can reduce dependency on a few suppliers, enhance market access and create new trade opportunities. A continued trade diversification strategy and efforts to support trade agreements at the EU level is therefore essential to complement on-going efforts in strengthening supply chain resilience.
The Netherlands has seen a strong diversification in trade relations over the past two decades. Not only has the number of trade partners across product groups more than doubled between 1995 and 2022, but also have dependencies of Dutch importers and exporters on specific partners declined (Figure 4.13, Panel A and B; Arriola et al. (2024[21])). The diversification in trade partners has been supported by the EU expansion and a range of policies aimed at reducing initial barriers to access new markets. The Netherlands Enterprise Agency has facilitated diversification by providing market research, organising trade missions, and offering logistical support to Dutch businesses exploring new markets, both within the EU and with non-EU economies. Between 2008 and 2022 there were 192 different trade missions with over 4 000 Dutch firms participating at least once (Statistics Netherlands, 2024[45]). An initial evaluation of these trade missions indicates that participation increased the likelihood that firms will do business in the host country by over 7%, and the likelihood that they will invest there by 2% (Statistics Netherlands, 2024[45]). In addition to these large-scale trade missions led by ministers, the Netherlands Enterprise Agency organises about 30 small-scale business development trade missions annually, as well as a comparable number of small-scale innovation missions that focus on innovation co-operation where about 10-15 companies participate. These developments are welcome. In addition to have further deepened trade relations within the EU single market, these efforts have also supported trade with emerging economies (Figure 4.13, Panel C and D). However, efforts to further encourage diversification with emerging markets, which offer significant growth potential could be strengthened.
Note: In Panels A and B, 1998-2000’, ‘2001-2003’, etc., denote the averages for the three-year periods 1998,1999 and 2000; 2001, 2002 and 2003. Panel B: This measure is obtained by calculating, first, for each HS6 product and, for exports (imports), each exporting (importing) country an index of concentration (HHI) across all importers (exporters) from (to) that country, and second by calculating the share of HS6 products with a HHI greater or equal than 0.4 on all products. Panels C and D: Data refer to selected emerging economies. EU is a simple average of OECD EU member countries.
Source: OECD calculations based on BACI data (2025 edition); OECD TiVA 2023 edition (database).
The government has highlighted its continued interest in entering relations with non-EU countries and is actively engaged in shaping EU trade policy (Government of the Netherlands, 2024[46]). This includes negotiations on trade agreements, for example with Mercosur (Argentina, Brazil, Paraguay, Uruguay, as well as associated members Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname), and Indo-Pacific economies and complements these EU level efforts by building strong trade relationships through national initiatives such as promoting Dutch businesses abroad and organising trade missions. The government’s active EU involvement as well as domestic trade initiatives are welcome, but it could further strengthen trade relationships within new trade agreements. While the government’s outlined focus is particular on Asian countries, for which interest by businesses is already high (Figure 4.14), the finalisation of the EU-Mercosur trade negotiations in late 2024 could provide new impetus for the Netherlands to further intensify trade relationships with the trade block in Latin America, which already is the sixth largest trade partner outside the European Union (European Commission, 2024[47]). Economic ties with Mexico could also be strengthened to leverage the recently updated EU-Mexico agreement that removes high tariffs on various EU exports to Mexico and ensures that EU companies receive treatment on par with Mexico's other preferential trade partners. The government should build on its successful trade programmes and further facilitate information flows and intensify the organisation of trade missions into these countries.
By destination, 2008-2022
Note: With at least 100 firms participating.
Source: CBS (2024), Trade Missions Help Firms to Get Ahead Internationally.
Government initiatives to reduce information costs to access new markets are complemented with financial support, such as loans, export credits and guarantees, and export financing through the Dutch trade and investment fund (DTIF) and the Dutch Good Growth Fund (DGGF). The latter also offers export credit insurance and financing for Dutch businesses exporting to emerging countries. Managed by Invest International, companies can apply for investments of up to EUR 15 million under specific conditions, such as a solid business plan and compliance with Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD, 2023[48]). In 2023, about 140 projects have benefited from the Dutch Good Growth and the Dutch trade and investment Fund with a committed portfolio of about EUR 240 million, up from about 90 projects supported with EUR 211 million in 2022 (Invest International, 2024[49]). These measures are welcome as they provide critical financial support for firms, especially smaller ones, to expand internationally.
The Netherlands has low barriers to trade, but there remains room to leverage new technology to reduce remaining trade frictions. As lower trade costs raise the number of possible suppliers and buyers, this would help businesses to diversify and increase the resilience of their supply chains. Given its strong digital infrastructure and skill base (European Commission, 2024[50]), the Netherlands is well placed to benefit from technologies such as Artificial Intelligence (AI). OECD work shows that advances in AI are more prominent in tradeable sectors (Ferencz, López González and Oliván García, 2022[51]), having the potential to rapidly transform global trade by streamlining operations and reducing administrative compliance costs.
4.4.1. Streamlining border procedures
The Netherlands has effective technical and legal border procedures for products, faring better than the average OECD and EU country. However, according to the OECD Trade Facilitation Index, the country lags behind best performers in areas such as internal and external border agency cooperation and appeal procedures (Figure 4.15), where it resolved less than the EU average of cases handled through SOLVIT in 2023 (European Commission, 2024[52]). The Netherlands should strengthen efforts in implementing and correctly applying EU laws, as well as aiming for a faster processing time for dealing with appeal procedures, for example by investigating the use of new technologies. Using AI for automated legal and compliance checks to help identifying missing documentation or procedural errors could reduce delays in appeal procedures. Improving communication and information exchange between border agencies could reduce processing times and further facilitate trade operations. More generally, the feasibility of using new technologies to reduce compliance costs while accelerating processing times should be evaluated, such as automated document processing, whereby an AI tool could scan and extract data from trade documents, cross-check it against regulatory databases, and flag inconsistencies for review (Ferencz, López González and Oliván García, 2022[51]). These efforts to reduce delays and compliance costs would particularly benefit smaller companies (López González and Sorescu, 2019[53]), helping SMEs internationalise further and enable them to diversify supply chains. Continuing its efforts to harmonise AI and trade regulations with EU standards will further facilitate cross-border cooperation and ensure ethical AI use.
OECD Trade Facilitation Indicators, from 0 to 2 (best performance), 2022
Note: EU is a simple average of OECD EU member countries.
Source: OECD Trade Facilitation Indicator (database).
4.4.2. Increasing logistical efficiency in key transport hubs
AI technologies are transforming logistics and transportation, two vital areas for the Netherlands as a global trade hub. By integrating AI, the Netherlands can enhance supply chain resilience, optimise transportation routes, and anticipate risks like port congestion or weather disruptions using real-time monitoring and predictive analytics. Additionally, predictive maintenance systems can improve reliability by identifying and addressing potential equipment failures before they cause costly delays.
The Netherlands has made significant advances in using AI to streamline logistics in critical transport infrastructure. Through the National Growth Fund, substantial funding has been directed towards building digital infrastructure and supporting AI innovations. The port of Rotterdam is a leading example at the forefront of AI integration (see Box 4.9). It is welcome that the Dutch government has put forward initiatives like the AIC4NL, a merger of the Dutch AI coalition and the AI-Ned growth fund, which is fostering collaboration between businesses, academia, and government to develop AI applications, also for trade. As the National Growth Fund has been phased out (see Chapter 1), the government should review and expand funding opportunities to ensure that key logistic infrastructure and custom procedures continue to benefit from developments in AI applications.
The Port of Rotterdam, Europe’s largest seaport, is at the forefront of integrating Artificial Intelligence (AI) to enhance efficiency, sustainability, and innovation in its operations.
Key AI applications that are being developed:
Digital Twin Development: The port is constructing a digital replica of its infrastructure, enabling real-time monitoring and predictive maintenance. This digital twin facilitates the efficient management of port activities and supports the integration of autonomous logistics.
Smart infrastructure: By embedding sensors and IoT devices throughout the port, AI systems can analyse data to optimise traffic flow, predict equipment failures, and improve overall operational efficiency.
AI Port Center: A partnership between Delft University of Technology and Erasmus University Rotterdam focuses on AI research tailored to port environments. This collaboration aims to drive innovation and practical applications of AI within port’s operations.
Source:https://www.portofrotterdam.com/en/port-future/innovation/artificial-intelligence-port; https://www.portofrotterdam.com/en/port-future/smart-infrastructure; https://convergence.nl/ai-port-center/
4.4.3. Reducing vulnerabilities to cyberattacks that could harm trade and supply chains
As global trade becomes increasingly reliant on digital technologies, the threat of cyberattacks poses significant risks to supply chain security and trade operations. Cyberattacks can disrupt critical infrastructure, compromise sensitive data and cause significant financial and reputational damage to businesses. For the Netherlands, such disruptions could have widespread effects, not only for domestic firms, but also for its role as a global logistics and trade hub.
Larger enterprises are already investing heavily in cybersecurity systems, but smaller businesses remain particularly vulnerable due to limited awareness, constrained capacities and financial resources (OECD, 2021[54]; Statistics Netherlands, 2024[55]). Moreover, most SMEs only implement cybersecurity measures reactively, often after suffering an attack (OECD, 2021[56]). Updated security protocols are increasingly important as threats from emerging technologies, such as generative AI, evolve rapidly. The Digital Trust Center (DTC), established in 2018, provides businesses with reliable and independent information on digital vulnerabilities, practical advice and tools to assess their cyber resilience. In 2024, 32% of Dutch enterprises had an ICT security policy defined or reviewed within the last 12 month, above the EU average of 22%. However, they are behind businesses in peer countries like Finland (43% in 2022), Denmark (37% in 2022) or Sweden (37% in 2022) (Eurostat, 2024[57]). Small businesses, in particular, are falling behind, with 19% taking no action to address their digital security (Ministy of Economic Affaires and Climate Policies, 2023[58]).
To mitigate cybersecurity risks, the Netherlands must continue to strengthen existing frameworks. In 2022, the Netherlands adopted the Cybersecurity Strategy 2022-2028, allocating EUR 111 million to strengthen cybersecurity (Box 4.10). To achieve its objective of a digitally secure Netherlands that keeps pace with evolving cyber threats, the government has created one single national cybersecurity authority by merging the National Cybersecurity Centre, Digital Trust Centre and the Cyber Security Incident Response Team for Digital Service Providers. This is a positive development, but initiatives to further raise awareness among SMEs should be strengthened through targeted campaigns about cybersecurity risks and best mitigation practices, as well as accessible training for SMEs to build cyber literacy among employees. It is therefore welcome that the Dutch government announced to spend more on campaigns to increase the cyber resilience of citizens and SMEs, structurally reserving EUR 2 million annually from 2027 onwards for the campaigns (Ministry of Justice and Security, 2024[59]).
The Dutch government adopted the Netherlands Cybersecurity Strategy 2022-2028 in October 2022, with the objective to achieve a digitally secure Netherlands to capitalise safely on the economic and social opportunities presented by digitalisation and, at the same time, to safeguard the security and public values. The strategy formulates a series of aims on the basis of four pillars:
Pillar 1: Improving cyber resilience through preventive measures and rapid incident recovery for government entities, businesses, and civil society organisations;
Pillar 2: fostering cybersecurity knowledge and innovation;
Pillar 3: Combating cyber threats from state and criminal actors through enhanced threat intelligence and countermeasures;
Pillar 4: Advancing cybersecurity in education and the workforce development and cyber resilience of the public.
The Dutch government is therefore investing in strengthening and transforming the digital ecosystem so that no single organisation or individual can be the weakest link any more. The government’s efforts are based on the following five priorities:
1. Be more aware of cyber threats so that we know and understand them.
2. Ensure sufficient cyber expertise is available on the labour market so that we can meet the challenges we face.
3. Be aware of and understand risks and threats.
4. Legislation to ensure that frameworks are clear and verifiable.
5. Review of national cybersecurity system to ensure effective and efficient use of cyber capabilities.
Source: Ministry of Justice and Security (2022[60]).
To remain competitive in a rapidly evolving global economy, the Netherlands must not only strengthen its trade policies but also ensure that its domestic business environment fosters innovation, investment and productivity growth. As global supply chains are increasingly under pressure from geopolitical rifts and industries undergo digital and green transitions, trade competitiveness will increasingly depend on the ability of firms to adapt, innovate and scale. While the Netherlands benefits from a highly skilled workforce, strong digital infrastructure and robust startup ecosystem, challenges remain in areas such as business dynamism, SMEs financing and investment in high-growth sectors. Addressing these structural barriers is critical to maintain the Netherlands’ strong position in global trade.
Moreover, as international markets become more fragmented, many countries are shifting to industrial policies to prioritise economic security through increased support of domestic industries and strategic sectors (Box 4.11). While some Dutch companies may benefit from increased demand through supply chain linkages, these dynamics could also pose new competitiveness challenges, particularly when competing against subsidised foreign firms. The Netherlands is currently updating its industrial strategy and the Top Sector programme to enhance economic resilience amidst a changing geopolitical landscape. While countries may use support measures to further strategic targets, they carry the inherent risks that could potentially undermine economic resilience and result in substantial fiscal cost (Criscuolo et al., 2022[61]; Juhász, Lane and Rodrik, 2023[62]; Irwin, 2023[63]). Excessive reliance on protectionist measures or market distortions in particular risk undermining the openness and innovation that have long been central to the country’s success. A well-balanced industrial strategy should reinforce competitiveness through investments in productivity, innovation and business-friendly policies, while remaining committed to WTO rules (Box 4.12, below).
The European Union
The European Chips Act, effective since September 2023, aims to double the EU's global semiconductor market share to 20% by 2030. The Act seeks to mobilise over EUR 43 billion in public and private investments, with EUR 11 billion allocated for research and development through the "Chips for Europe" initiative. Additionally, the Act allows for state aid rule exemptions for key facilities to encourage semiconductor production within the European Union.
The Net-Zero Industry Act (NZIA) and the Critical Raw Materials Act (CRM) were proposed in March 2023. The NZIA seeks to scale up the manufacturing of green technologies in Europe (solar, wind, battery/storage and carbon capture and storage technologies) to 40% of the EU needs by 2030. The CRM aims to develop a European value chain of key inputs for the green and digital transitions. Measures include the acceleration of permits and administrative procedures, facilitating the co-ordination of private funding, increasing public subsidies, changing public procurement rules to include sustainability and resilience criteria, or the creation of regulatory sandboxes to support innovation. The proposals do not allocate new EU-level funding, but countries are allowed to provide more support to cleantech production or investment projects, and to provide matching aid, i.e., the amount of support the beneficiary could receive for an equivalent investment in an alternative location.
The United States
The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act passed in August 2022 aims to improve competitiveness, innovation, and national security in the semiconductor sector. The Act provides around USD 53 billion (0.2% of GDP) over five years for investment tax credits, R&D funding and development for education and skills. It introduces a 25% tax credit for building and equipping the plants initiated before 2027. Additionally, it boosts federal R&D funding across multiple agencies, authorizing around USD 174 billion (0.7% of 2022 GDP) through fiscal year 2027.
The Inflation Reduction Act (IRA) includes several measures to support climate mitigation, such as production and investment tax credits for clean energy manufacturing facilities. Projects that meet specific wage and apprenticeship criteria, as well as those using certain domestically produced materials (including steel), are eligible for increased incentives. The IRA also offers tax credits of up to USD 7 500 for the purchase of new electric or hydrogen vehicles. Additional tax credits are available for carbon capture and sequestration, nuclear power production, energy efficiency improvements in private homes, and clean transportation and industrial fuels.
Source: Millot and Rawdanowicz (2024[64]); Criscuolo et al (2023[65]).
4.5.1. Balancing industrial policy without distorting trade
The Netherlands has had a comprehensive industrial policy since 2011 aimed at fostering sustainable economic growth, innovation, and competitiveness, which stands out for its strong government support for SMEs and young firms and its commitment to the green transition (Criscuolo et al., 2023[65]). In recent years, the Netherlands has shifted focus to promote strategic sectors, such as semiconductors, by co-investing in technology development, sector specific interventions for growth, and supporting collaboration with neighbouring EU countries. For instance, “Project Beethoven” is a government initiative to strengthen the overall business climate, with a particular focus on the semiconductor industry. This initiative includes investments of EUR 2.5 billion in technical education, and necessary infrastructure and housing in the Eindhoven region to accommodate the rapid regional growth caused by this sector (Government of the Netherlands, 2024[66]). Selecting companies and sectors by governments come with the risk of leading to market distortions, inefficient resource allocation, waste of public resources and capture by special interests (Millot and Rawdanowicz, 2024[64]). It therefore remains important that the government continues to maintain a non-distortive approach to industrial policy that fosters innovation and competition rather than excessive market intervention through competitive and transparent targeting that avoids favouring incumbents and discouraging new entrants (Box 4.12). To ensure the efficient use of public resources, a strong emphasis should be placed on evaluation and the regular reassessment of targeted policies.
Effective industrial policies aim to enhance the structural performance of the domestic business sector by addressing market failures, promoting innovation, and ensuring sustainable and inclusive growth. Best practices for industrial policy design and implementation include:
Clear objectives and strategic coordination – Policies should address well-defined challenges, ensuring alignment across government agencies and sectors.
Evidence-based design and evaluation – Decisions should rely on data and rigorous assessments, with regular reviews to adjust ineffective measures.
Balancing horizontal and targeted approaches – General business-friendly policies (e.g., R&D tax credits, competition policy) should be complemented by well-designed targeted support for strategic sectors, technologies, or regions.
Encouraging competition and innovation – Policies should avoid protecting incumbents, instead fostering market dynamism and new entrants.
Leveraging demand-side instruments – Public procurement, regulatory standards, and consumer incentives can accelerate industrial transformation.
Ensuring transparency and accountability – Competitive selection, clear benchmarks, and sunset clauses help prevent inefficiencies and policy capture.
International cooperation – Policies should align with trade rules, avoid excessive protectionism, and leverage global markets for innovation and scale.
By adhering to these best practices, industrial policies can support economic resilience, technological progress, and sustainable development while mitigating potential risks such as inefficiency, protectionism, and market distortions.
Source: Millot and Rawdanowicz (2024[64]), Criscuolo et al (2022[61])
Industrial policy should be carefully designed and implemented following best practices (Box 4.12), taking into account possible negative international implications. In practice, it can be very difficult to design industrial policies in a way that dissuades retaliation in the form of trade protectionism, ensures low costs and delivers tangible benefits (OECD, 2024[67]). The government stated its intention to support domestic industries, in particular to maintain a leader in specific knowledge intensive technological fields, but also with respect to national security considerations. Thus, dual-use technologies can be used for commercial, industrial, or scientific purposes but also have the potential to be adapted for defence, intelligence, or security-related uses. Following the United States, in 2023 the Dutch government introduced and subsequently tightened regulations that control the exports of products that are used in semiconductors. While these export restrictions may support the downstream semiconductor production within the European Union and fitting in within the wider EU Industrial Strategy (Box 4.11), it should be ensured that these restrictions are aligned with global trade rules.
The design of industrial policies needs to consider trade-offs in the domestic economy. Stimulating one sector, or one type of company may come at the expense of other business activities, especially given the current tight labour market. Maintaining and enhancing the domestic competition is also a key enabler for innovation and productivity (André and Gal, 2024[5]). SMEs with less than 50 employees are the backbone of the Dutch economy, accounting for 98% of all businesses and about half of all employment. While multinational enterprises and larger companies have a pivotal role in direct trade activities, SMEs account for a significant portion of suppliers within the broader export network (Freeman, van de Plaat and Wache, 2024[68]). Enhancing domestic competition requires a more vibrant business environment that is currently held back by administrative barriers, a rigid insolvency framework and financing constraints in critical development stages.
4.5.2. Supporting business entry and growth
A strong business climate is essential for fostering entrepreneurship, enabling business growth and supporting export performance. Business dynamism in the Netherlands has declined following the COVID‑19 pandemic with birth and death rates of businesses below the EU average (Figure 4.16, Panel A). Enterprise birth rates with zero employees are particularly high in international comparison (Figure 4.16, Panel B), and have been one of the key drivers of business dynamism over the past years. This development was likely influenced by a tax system incentivising employers to hire own account workers (Chapter 1, (OECD, 2023[36])). Consequently, the rates of firm entry, job reallocation, and young firms’ contribution to employment growth are lower than compared to the period before the global financial crisis (Freeman et al., 2024[69]). Moreover, market exit rates have declined during and in the aftermath of the COVID-19 pandemic due to policy support and a freeze of bankruptcies procedures. Measures to revive business dynamism such as lean regulation are therefore urgently needed.
Note: A birth (death) amounts to the creation (dissolution) of a combination of production factors with the restriction that no other enterprises are involved in the event. Births (Deaths) do not include entries (exits) into (from) the population due to mergers, break-ups, split-off or restructuring of a set of enterprises. It does not include entries (exits) into a sub-population resulting only from a change of activity. A birth occurs when an enterprise starts from scratch and actually starts activity. An enterprise creation can be considered an enterprise birth if new production factors, in particular new jobs, are created. If a dormant unit is reactivated within two years, this event is not considered a birth. An enterprise is included in the count of deaths only if it is not reactivated within two years. Size class of employees refer to 0+ employees.
Source: Eurostat (database).
The Netherlands has a regulatory framework that is in general conducive to competition and is among the top five performers in the overall OECD’s Product Market Regulation (PMR) indicators (Figure 4.17). However, the government could further simplify administrative requirements necessary to set up new businesses. The government is monitoring the cost of regulatory burden, which is welcome. To ensure that new regulations are designed to be efficient and administratively lean, the regulatory burden cost could be taken into account. Implementing simpler business registration processes, such as reducing unnecessary complexity of new regulation, i.e. in the form of permitting procedure, filling out forms, and reporting and notification requirements, while also ensuring that both information and compliance costs are low, would help in particular SMEs, who usually have less resources and capacities available than bigger enterprises.
Note: EU is a simple average of 25 EU member countries. In Panel B, LLCs=Limited Liability Companies and POEs are “Personally-owned Enterprises”. In some countries, personally-owned enterprises do not exist or are rarely used. In such instances, only the administrative requirements for limited liability companies are considered. For "Barriers to FDI", the values are derived from the OECD FDI Restrictiveness Index based on the methodology introduced in 2022.
Source: OECD Product Market Regulation (database).
Business entry can also be stimulated through an efficient insolvency framework that reduces the cost of eventual business failure. The Dutch government has made some progress in streamlining its insolvency framework, particularly with respect to restructuring tools (Figure 4.18; (André and Gal, 2024[5])). Since 2021, the Act on Court Confirmation of Extrajudicial Restructuring Plans WHOA allows companies to propose a restructuring plan that can be binding on all creditors if approved by the court, even if some creditors dissent. This act aims to provide a flexible and efficient way for companies to reorganise and avoid bankruptcy. By preventing avoidable bankruptcies and streamlining the exit of non-viable firms, overall business dynamism and aggregate productivity can increase by enabling a more efficient reallocation of resources, reducing failure costs, and encouraging entrepreneurial risk-taking (Demmou and Franco, 2021[70]). Still, the government should further strengthen the early warning system for struggling businesses to enabling them to detect financial distress before it becomes irreversible and allowing for timely intervention and restructuring, for example through training to firms to assess their financial position and financial and debt counselling to companies with financial difficulties. As innovative projects imply a higher risk of failure, a less rigid insolvency framework could particularly have a greater impact on productivity in intangible-intensive industries (André and Gal, 2024[5]).
OECD insolvency indicator main sub-components, 2022
Note: The scores for the three main sub-categories are scaled from zero to one, with lower scores indicating more favourable frameworks.
Source: André, C. and L. Demmou (2022), "Enhancing insolvency frameworks to support economic renewal", OECD Economics Department Working Papers, No. 1738, OECD Publishing, Paris, https://doi.org/10.1787/8ef45b50-en.
4.5.3. Boosting innovation and access to finance
The Dutch government aims to transition to a high value added, innovative economy to increase productivity and competitiveness (Government of the Netherlands, 2024[46]). Public support for R&D is above the OECD average, with 0.25% of GDP allocated through direct funding and tax support for R&D expenditures (Figure 4.19, Panel A). However, budget cuts to innovation programmes, including a EUR 5.5 billion reduction in the National Growth Fund and a EUR 1 billion decrease in education and research funding (see Chapter 1), have increased the pressure on private sector investment to finance innovation, which at 1.6% of GDP remains below the OECD average of 2% (Figure 4.19, Panel B). While the Dutch funding landscape is in general well developed, funding needs for innovative higher risk, higher investment enterprises call for continuous policy support.
Source: OECD R&D Tax Incentives (database).
The Dutch government supports businesses to invest in innovation primarily through broad tax credits, like the Research and Development Tax Credit (WBSO) and the Innovation Box. In addition, there are several smaller funds available, not only to incentivise innovation but also for supporting businesses to expand to new markets as described above. However, varying administrative requirements and timelines make accessing these funds complex, particularly for smaller firms with limited resources. As a result, large firms receive a greater share of direct R&D funding than in most OECD countries, while smaller firms benefit comparatively more from R&D tax support through the WBSO (Figure 4.20). As detailed in previous OECD work, while the tax incentives through the WBSO and the innovation box are technology neutral, they benefit technologies that are closer to the market by design (OECD, 2023[36]; 2021[40]). Thus, the WBSO helps improve liquidity in early innovation stages, whereas income-based tax incentives like the Innovation Box are less effective for early-stage enterprises that typically have low revenues but high R&D costs. To ensure that SMEs benefit more from public funding, the government should aim to reduce fragmentation in funds and investment packages to lower administrative burden for firms as already recommended in the previous Economic Survey (OECD, 2023[36]). Initiatives to improve co-operation between the different agencies involved in the execution of financial instruments, such as Invest-NL, Regional Development agencies and the Netherlands Enterprise Agency is a positive first step as it could help to reduce the administrative burden, particularly for smaller businesses, through improved information exchange.
R&D policy spending by policy type, % of Business R&D Expenditure (BERD), 2021 or latest
Note: International comparability may be limited, e.g. due to differences in SME definitions for business R&D and R&D tax relief reporting purposes. SMEs figures generally refer to enterprises with 1-249 employees (i.e. excluding firms with zero employees), unless specified otherwise. For Austria, Belgium and Norway, figures refer to small enterprises rather than SMEs.
Source: OECD (2023), OECD R&D Tax Incentives Database, 2022 edition.
Venture capital investments in the Netherlands have increased significantly compared to other European countries, yet access to funding remains particularly challenging in the seed stage (Figure 4.21). Only 19% of Dutch firms securing seed funding manage to raise more than EUR 10 million, a lower success rate than in Germany and Switzerland (Rijksfinancien, 2024[71]). Despite initiatives like the Seed Capital Scheme, which aims to strengthen the venture capital ecosystem and thereby indirectly supports early-stage companies (OECD, 2024[72]), financing bottlenecks have been identified for firms needing over EUR 50 million before commercialisation. This challenge is particularly acute in deep tech, where high R&D costs and uncertain market timelines deter private investors (Techleap, 2024[73]). Recognising this issue, the government has introduced a new tender in 2025 specifically targeting deep‑tech funds. Research by the OECD has shown that government-backed venture capital can effectively channel funding to underserved firms, especially when co-investing alongside private capital (Berger, Dechezleprêtre and Fadic, 2024[74]).This development is therefore welcome and the strengthening of Invest-NL by EUR 900 million for 2025-2027 is another step in addressing these gaps, with about EUR 250 million allocated to realise a blended finance instrument to mobilise private capital and stimulate high-risk investment (Government of the Netherlands, 2024[46]). Monitoring implementation and ensuring that Invest-NL has sufficient resources to provide tailored financing solutions for innovative companies will remain important. Moreover, the funding for Invest-NL replaces only a small fraction of budget cuts to innovation programmes, including a EUR 5.5 billion reduction in the National Growth Fund and a EUR 1 billion decrease in education and research funding. The government should therefore regularly evaluate whether funding programmes for innovative enterprises effectively address financing gaps across all stages of company growth.
Note: Buyouts, turnarounds and replacement capital are excluded from venture and growth capital.
Source: OECD (2024), Financing SMEs and Entrepreneurs 2024.
Unlocking institutional investment can further improve access to finance. The lack of strong capital markets in the Netherlands and more broadly in the European Union has been found to limit funds for high-risk, large-scale investments, leading to some of the most innovative companies to relocate abroad, particularly to the United States, for better financing options (Government of the Netherlands, 2024[46]). Underdeveloped capital markets reflect to some degree a lack of deeper pools of long-term capital provided by institutional investors. Dutch pension funds in particular could play a larger role in SME financing, as they manage substantial assets totalling EUR 1 568 billion by the end of 2024 (DNB, 2025[75]). Despite being among the largest pension investors in the European Union, both in absolute terms and relative to GDP (DNB, 2025[75]), Dutch pension funds allocate relatively little capital domestically. It is welcome that the Dutch government is committed to the development of a European Capital Markets Union (CMU) (Government of the Netherlands, 2025[76]), which could help address a lack of scale and allow SMEs to access a more diverse range of funding sources (Draghi, 2024[28]). In addition to continue developing the domestic capital market, actively advocating for a European Capital Markets Union at the EU level should be maintained. Reducing barriers to cross-border investment and investment in national capital markets could help shifting pension fund investment to Europe and to the Netherlands by reducing capital costs for firms, making capital markets more attractive for European firms who want to raise money, and offering pension funds some alternatives for equity investment to markets abroad.
A more diverse financing landscape needs transparent and easily accessible information for entrepreneurs. Already, the financing landscape for SMEs in the Netherlands has diversified with the emergence of alternative financing options over recent years. While most SMEs seeking financing under EUR 1 million continue to rely on traditional bank loans, there is a growing utilisation of non-bank funding sources, such as crowdfunding or leasing (OECD, 2024[72]). This diversification offers SMEs more choices, but also adds complexity in identifying the most suitable financing options, thereby increasing search costs. Recognising this gap, the Dutch government, in collaborating with public and private organisations and financiers, established a centralised financing hub. This initiative aims to simplify access to financing by offering a matching tool and support services for entrepreneurs, which has been advocated by the OECD and is welcome (OECD, 2024[77]). In addition, a government subsidised organisation for alternative finance providers, the “Stichting MKB Financiering (SMF)”, provides certifications for financial advisors that meet a set of criteria and are audited on a regular basis. This is welcomed, and it should be ensured that information on certified financial advisors is transparent and easily accessible to reduce search costs for entrepreneurs and allowing them to receive reliable financial support.
4.5.4. Supporting businesses to raise competitiveness by addressing labour market constraints and developing talent
Driving innovation, productivity, and overall competitiveness requires not only investment but also a workforce equipped with the skills to implement and adapt to new technologies and digital tools. Dutch businesses are well placed to leverage digitalisation and new technologies to enhance efficiencies and streamline operations. However, persistent labour shortages and skills mismatches, as discussed in the previous Economic Survey (OECD, 2023[36]) and Chapter 1, particularly in STEM fields pose challenges for businesses seeking to fully capitalise on these opportunities. Addressing these workforce constrains is critical to ensure that technological advancements translate into sustained productivity gains and long-term competitiveness.
Dutch businesses exhibit higher digital adoption rates than the OECD average, but significant disparities remain within the country. Smaller firms are lagging larger ones (Figure 4.22). Progress from initiatives like the “Accelerating Digitalisation of SMEs”, launched in 2018, to equip small businesses with the tools needed to succeed in global markets, has been held back by labour shortages in critical digital fields like artificial intelligence, data analytics and cybersecurity. Given that labour participation in the Netherlands is already among the highest within the OECD (Chapter 1, (OECD, 2023[36])), the government should focus on facilitating migration for shortage occupations, particularly in the digital sector to alleviate pressures in the short-term. As proposed in the last Economic Survey, the government could consider streamlining and accelerating existing processes of recognising and validating qualifications obtained abroad, as well as eliminating the labour market test for shortage occupations.
% of firms, 2024 or latest year available
Note: Small firms have 10-49 workers, medium-sized 50-249, large 250+; OECD refers to the average of OECD countries with available data.
Source: OECD ICT Access and Usage by Businesses (database).
Fast-changing skill demand calls for the development of a stronger culture of lifelong learning. While adults in the Netherlands have strong competencies in literacy, numeracy and problem solving compared to the OECD average (OECD, 2024[78]), the share of workers reporting insufficient computer and software skills for their job at 4% is above peer countries such as the United States, United Kingdom and France (Figure 4.23). The government must address digital skill shortages by developing targeted training programmes to bridge digital skill gaps and increase SMEs adoption of AI and digital tools are lacking scale. While some smaller scale adult learning programmes exist, such as the National Microchip Talent Program, that aims to train 30 000 extra workers for the tech and semiconductor sector by 2030, a stronger role for government support for lifelong learning programmes with a focus on digital skills is justified by the existence of externalities from investment in industry-specific skills. In addition, smaller businesses often face higher fixed costs contributing to a significant gap in lifelong learning investment between SMEs and larger companies (Statistics Netherlands, 2024[79]). The government should consider to provide stronger incentives for co-financing by employers by leveraging potential synergies with the Learning and Development Incentive Scheme for SMEs, whereby entrepreneurs receive financial incentives to support their employees’ development and to offer apprenticeships to outside workers and jobseekers, as discussed in the previous Economic Survey (OECD, 2023[36]).
The government has acknowledged the need for retraining and upskilling through lifelong learning. It is welcome that the Green and Digital Jobs Action Plan, which brings together employers and education exports to tackle shortages in occupations related to the green and digital transition, is continued while also exploring best practices in adult learning programmes. In 2022, an individualised training scheme (STAP) was implemented, similar to individual learning accounts that are currently implemented in Belgium or France (OECD, 2024[80]). While the STAP has performed better than previous schemes in the Netherlands in reaching individuals with secondary education and with positive perceived effects for participants (SEOR, 2024[81]; 2024[82]), the scheme was cancelled in 2023 as an austerity measure aimed at contributing to the government-wide budgetary constraints, after concerns about misuse and insufficient quality standards. As this scheme with a EUR 218 million annual budget, has not been replaced with an alternative, public spending on training in general continues to fall short of estimated requirements (OECD, 2023[36]). The recent announcement of a temporary training subsidy that is linked to socially crucial sectors is a welcomed first step (Government of the Netherlands, 2024[83]), but a more permanent solution for lifelong training is needed. Efforts to develop an adult training programme that not only incorporates quality controls but also prioritises sectors with most pressing labour needs, as extensively discussed in the previous Economic Survey (OECD, 2023[36]), should be continued. Further, the government should shift the composition of active labour market policies towards training initiatives for digital skills to ensure workforce adaptability.
Employed adults aged 25-65 who are not self-employed, 2023
Note: OECD average refers to 29 OECD member countries. Data for GBR refer to England and for BEL to the Flemish Region. Does not include adults who were only administered the doorstep interview due to a language barrier. Figure plots the share of respondents who answered, "Some of my skills are lower than what is required by my job and need to be further developed," to the question, "Overall, which of the following statements best describes your skills in relation to what is required to do your job?", and marked “Computer and software skills” in response to the question, “Which skills were you thinking of when you answered this question?”.
Source: OECD (2024), Do Adults Have the Skills They Need to Thrive in a Changing World?: Survey of Adult Skills 2023.
The increasing demand for high-skilled workers in technical fields calls for an increased focus on sciences, technology, engineering and mathematics (STEM) education. Compared to the OECD average of 27% of new students enrolled in tertiary education, relatively few Dutch students (21%) pursue degrees in STEM fields (OECD, 2024[84]). In the medium term, this will add further pressure to meet the growing demand for high-skilled workers in technical fields and risks impeding technological advances with adverse effects on trade competitiveness. As discussed in the previous Economic Survey (OECD, 2023[36]), Dutch universities are public and rely heavily on government financing, therefore cuts to their budgets of about EUR 235 million per year as announced in the 2024 September fiscal package, could have detrimental consequences on the offer of STEM places. In international comparison, the current core public funding allocation model is already detrimental to STEM programmes, as they are attributed a lower weight than under funding formulas in comparable OECD systems (OECD, 2024[85]). Increasing the supply of university STEM programmes should remain a government priority, with adequate funding to expand STEM program capacity and meet evolving skill demands while maintaining curriculum quality. As discussed in the previous Economic Survey (OECD, 2023[36]), raising the weight given to STEM students in the core funding formula could incentivise higher education establishments to increase enrolment.
Finally, basic skills are essential for all learning and professional development, serving as the cornerstone for obtaining basic qualifications. Though relatively strong by international standards, the 2022 OECD PISA results of Dutch pupils show a decline in foundational skills like math, science and reading since 2018 (OECD, 2023[86]). To ensure that the young are prepared to meet the skills for the future of work, educational curricula must be sufficiently flexible to adapt to changing skill needs and evolving technologies. For instance, the rise of generative AI models capable of handling both routine and cognitive tasks present new challenges that may require a significant rethinking of education systems, including tertiary education (OECD, 2023[87]). This may involve more focus on developing critical thinking and evidence-based research skills, enabling students to evaluate the quality and reliability of AI-generated content. The government has already taken first steps to update the curriculum in primary and secondary education with a new core objective of digital literacy. The government should continue to align national curricula with evolving skill demands and emerging technologies, and providing sufficient funding for teachers’ digital training to allow them to better prepare students for a rapidly changing technological landscape.
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