The Netherlands is a small country with a long and interesting history. Over the centuries, the Netherlands has developed into a rich and wealthy country. This made me wonder why the Netherlands is so rich and how the Netherlands became so wealthy.
The reason behind the high GDP of the Netherlands is their ingenious innovations and investments that supported and boosted their economy. Plus, the Rotterdam seaport makes the Netherlands a center of trade which greatly positively impacts the country’s economy.
This brief answer may not quench your curiosity about the secret behind Netherlands riches. Therefore, I highly suggest you read on till the end to get the whole picture.
Not only is the Netherlands wealthy as a nation, but the Dutch population is one of the richest in the world. To be exact, the Netherlands is the 14th richest country in the world.
The GDP per capita of the Netherlands as of 2020 is $59.229 (€55.604) (World Bank 2021). When you divide the “gross domestic product (GDP)” by the number of inhabitants per country, this is the number you get.
Top 14 richest countries in the world (according to the World Bank, 2021):
|Rank||Country||GDP in USD|
|#8||United Arab Emirates||$69.958|
The average annual salary of the Dutch population is around $38.900 (€36.500) (CPB 2021). It can increase or decrease based on an individual’s age or type of work. (These figures are before tax deduction)
The average monthly salary is, therefore, around $3.200 (€3.000). Still, there are, of course, significant differences in monthly salary depending on what type of work someone is doing. (These figures are before tax deduction)
The standard of living is high in the Netherlands because it is a wealthy nation. This also ensures that matters such as healthcare and infrastructure in the Netherlands are properly arranged.
But also in the Netherlands, some people have to live on minimal income and even depend on, for example, the food bank or other authorities.
You might be wondering how the Dutch, with their small country, became one of the world’s wealthiest countries. Let’s take a look at some of the possible reasons.
The Netherlands is a small country but a huge country regarding trade and export of products.
The Dutch have been doing this for centuries. The Dutch East India Company was even the largest trading company in the world and the first multinational company ever seen.
The port of Rotterdam is one of the most important trading places in the Netherlands. It makes the Netherlands a vital trading center worldwide.
It brings in millions of euros in revenue each year, making it very important for the Dutch economy.
The Netherlands earns the most money from exporting products such as machinery, chemicals, tomatoes, cucumbers, apples, pears, tulips, Gouda cheese, and many more.
This income is important and strengthens the economy of the Netherlands.
The Dutch are also famous for exporting cocoa and popular beverage brands. Amsterdam, the capital of the Netherlands, even has the largest cocoa export port in the entire world.
The Netherlands is the center of the world’s most economically stable region. It is surrounded by rich and powerful nations such as Germany and Belgium that depend on the Rotterdam port.
Other countries like Luxembourg, Denmark, and France also invest in the trade and finances of the Netherlands because of the seaport.
Not only do the imports and exports of the Netherlands depend on this port, but the trade of many other European countries depends on it.
For example, most of the raw materials that support the German industry come through the port of Rotterdam.
The port of Rotterdam is very important for the Dutch economy:
The Dutch locals and their neighbors may joke about the flatness of the Netherlands. But each and every square meter of the flat fertile earth of the Netherlands is put to great use.
Because of this, the Netherlands is a giant in the field of agriculture.
Right after the USA, the Netherlands is the second on the list of largest exporters of agricultural products in the world.
The Dutch earned 111.5 billion dollars (104.7 billion euros) in 2021 (CBS & Wageningen University) in revenue by exporting agricultural goods.
It is the number one exporter of agricultural products in Europe.
The humid climate and fertile flat land of the Netherlands make it perfect for agriculture. The Dutch farmers have also been doing it for many centuries and have become really good at it.
This is why the exported fruit and vegetables from the Netherlands are very popular in other countries around the world.
(Click here to read our article about “why the Netherlands exports so much food”).
The Dutch industry is very well developed, even though the Netherlands itself has few sources to use.
There are no mines in the Netherlands from which raw materials can be extracted, for example, for the metal industry.
The majority of the raw materials used in the Dutch industries are imported. But what makes the industrial sector of the Netherlands so great is that the Dutch have a lot of knowledge about how to make things.
The Dutch produce everything that they need. The Netherlands imports raw materials at affordable rates and turns them into exports of high-quality goods produced in their well-developed industries.
With companies like Philips, the Netherlands is home to tech and electronic industry giants. But also, some of the biggest chemical-industry companies like AkzoNobel are housed in the Netherlands.
These big companies bring in a lot of money to the Dutch economy and create many job opportunities for people in the Netherlands. All of this contributes enormously to the prosperity of the Netherlands in general.
The Dutch reap the benefits and will keep on reaping the benefits of their smart investments.
The nation has large investments in the sectors of medicine, technology, education, green energy, novel agricultural tools, and products.
The Dutch investments in what really matters are the driving force of its economy. Their smart investments will also keep the Netherlands ahead of other nations in the future.
Eindhoven, a Dutch city, is part of the area which is considered one of the most promising and innovative places in Europe. No wonder the well-known Dutch technology company Philips also comes from Eindhoven.
Moreover, the success of the education, health, and other industrial sectors that make the Dutch economy so stable results from smart investments.
As a result, the Netherlands remains at the top in terms of knowledge. It, therefore, manages to bring a lot of trade and money to the Netherlands. Which, of course, creates more employment.
From an early age, the spirit of entrepreneurship is instilled in the Dutch. The Netherlands is so rich because of the entrepreneurial spirit of the Dutch people.
Few of the best universities in the world are found in the Netherlands. The world-class well-rounded education offered by the Netherlands produces highly skilled individuals.
The educational institutions of the Netherlands focus on producing creative pupils who can think out of the box. That is why there are so many start-ups here, with smart new ideas to conquer the world.
Most Dutch start-ups conduct business on the internet. Like this, the Netherlands creates highly skilled and entrepreneurial spirit-driven individuals who collectively move the economy forward.
The Netherlands is a tourist haven, and your Euro Trip will be incomplete without visiting it. It is 20th on the list of most visited places in the world (based on data from the United Nations World Tourism Organisation and the World Travel & Tourism Council).
Amsterdam, the capital city, is one of the most visited destination cities in Europe.
Moreover, the rich history, unique architecture, various tourist spots, and laid-back nature of the locals attract tourists to Amsterdam from all over the world.
Each year during spring and summer, the capital is teeming with tourists. In 2021 alone, around 20 million foreign tourists visited the Netherlands. In addition, 20 million Dutch people went on holiday in their own country (NBTC).
In 2019, the Dutch tourism industry generated no less than 39 billion dollars (32 billion euros), and there were 813,000 Dutch people employed in this sector (CBS).
However, the recent pandemic has significantly impacted this sector and has yet to recover. In 2020 the industry generated only 15.5 billion dollars (14.5 billion euros).
The tourism industry alone contributes 3.5% of the total economy of the Netherlands. Hence, although the tourism industry is a small sector in the economy of the Netherlands, its contribution cannot be overlooked and is getting bigger each year.
In 2019 the Dutch tourism industry generated 32 billion euros:
What makes the immigration policy of the Netherlands so clever is that it accepts mostly highly-skilled immigrants who drive the Dutch economy.
Getting a working visa for the Netherlands is super easy for any highly skilled worker. The simple procedure of getting a working visa is the Dutch way of welcoming and building a skilled workforce of immigrants.
Innovative immigrants not only contribute to the Dutch economy but also make it more competitive. Skilled immigrants with local innovators move the Dutch economy forward.
To many people, it might seem like all Dutch people are extremely wealthy. And this is true, though only to a certain extent.
On average, a Dutch person earns about $39.000 (€37.463) each year. Compared to the worldwide yearly average wage of $18.000 (€17.291), as calculated by the world bank, this is quite high.
However, this is not the entire truth.
As salaries differ in different parts of the world, so do costs. And the prices for most products are quite high in the Netherlands.
An average bread in the Netherlands costs an average of nearly two dollars, for example. However, a similar loaf in India would only cost the equivalent of fifty cents. Even German bread is forty cents cheaper (Numebo).
Living standards are often used to measure wealth as well.
In order to measure the buying power, economists developed a model called “PPP.” This takes into account both the average yearly incomes of people and the average prices.
This is the most common way a country’s GDP is expressed, enabling easy and effective comparison between countries. And the Netherlands has the 14th highest GDP, making it one of the richest countries in the world.
So in comparison to other countries, people are a lot richer in the Netherlands.
But, although the living standards are in fact extremely high in the Netherlands, the numbers should always be put in perspective to the higher prices the Dutch have to pay for their everyday expenses.
Just like in any nation, there is poverty in the Netherlands. However, poverty has a completely different meaning for the Dutch.
There are very few people starving because they cannot afford food. Most people can find a home or suitable shelter regardless of their income. Most people can afford medical care when they need it.
This is all because of the Dutch welfare state.
If you cannot find a job, for example, there are laws in place that will protect you. You would receive a very low income from the government, with which you could make ends meet.
Specialized government agencies can even help you with your job search or help you with solving your financial problems.
It is mandatory to cooperate with these projects in order to get your allowance.
If someone has a condition that hinders them from working, the government gives them an allowance, and the insurance system helps them pay for necessary healthcare.
But even though this all sounds great, this system does have its flaws.
The allowances are extremely low. In order to pay for all expenses, it is necessary to make every single penny count.
This is already a difficult situation, but if you also consider the rapidly rising rent prices and the rapid inflation currently plaguing the Netherlands, it becomes increasingly clear that the situation of the people relying on these allowances is really dire.
So poverty does exist in the Netherlands, although it probably looks different from what you would imagine. People still struggle, but luckily really life-threatening situations are rare.
The wealthy economy of the Netherlands is the result of the contribution of the Dutch people throughout the centuries. The Dutch people’s resilient and entrepreneurial spirit is why the Netherlands is so wealthy.
I hope you found the answer to “why is the Netherlands so rich?” in this article. As mentioned, there are still people in the Netherlands who depend on the food bank and other authorities.
Let’s hope that this will eventually no longer be necessary due to the emerging economy.