The Netherlands has played a special role in the European economy for many centuries. Since the 16th century, shipping, fishing, trade, and banking have been leading sectors of the Dutch economy, and trade with the country’s colonial empire was important in the 19th and the first half of the 20th centuries. Since the independence of Indonesia in the late 1940s, the Dutch economy has been redirected from colonial trade to that with European nations; a diversified manufacturing base was created as employment in agriculture fell; and the country became a major energy exporter as large deposits of natural gas were discovered. In all these changes the national government played a major role, particularly by its economic planning. The government’s influence is great even though most firms are privately owned, because it distributes nearly half the Dutch national income. Also important in the economic growth of The Netherlands are the activities of a number of large private firms.

Since World War II The Netherlands has become a highly industrialized nation occupying a central position in the economic life of western Europe. Although agriculture accounts for a small percentage of the national income and labour force, it remains a highly specialized contributor to Dutch exports. Because of the scarcity of mineral resources—with the important exception of natural gas—the country is dependent on large imports of basic materials. The Netherlands has a market economy, but the state is a major participant in such corporations as The Netherlands Railways, the Dutch State Mines, The Royal Netherlands Blast Furnaces and Steel Works, KLM Royal Dutch Airlines, and The Netherlands Natural Gas Company. The state thus has a direct, continuous influence on the management of some sectors of the economy and especially on investment policy. The government also employs a substantial percentage of the total labour force.

The Netherlands is a prosperous and open economy depending heavily on foreign trade. The economy is noted for stable industrial relations, moderate inflation, a sizable current account surplus, and an important role as a European transportation hub. Industrial activity is predominantly in food processing, chemicals, petroleum refining, and electrical machinery. A highly mechanized agricultural sector employs no more than 4% of the labor force but provides large surpluses for the food-processing industry and for exports. The Dutch rank third worldwide in value of agricultural exports, behind the US and France. The Dutch economy has expanded by 3% or more in each of the last four years and real GDP growth is likely to be about 3.6% in 2001. The government in 2001 will implement its most comprehensive tax reform since World War II, designed to reduce high income tax levels and redirect the fiscal burden onto consumption. The Dutch were among the first 11 EU countries establishing the euro currency zone on 1 January 1999.