Multinational Enterprises from the Netherlands

Multinational Enterprises from the Netherlands

Multinational Enterprises from the Netherlands

Multinational Enterprises from the Netherlands

Excerpt

The Netherlands is among the largest international direct investors in the world, in both absolute and relative terms. This has to do with several specifically Dutch factors, which include national traits (such as thrift and diligence), the openness of the Dutch economy, the absence of important raw materials, and the limited size of the home market. More recently, direct investment has also been boosted by the far-reaching liberalisation and deregulation of the markets, on the one hand, and unprecedented technological developments, on the other. In particular, the development of information technology, coupled with that of telecommunications, has presented numerous sectors in the global economy with major opportunities for expansion and growth.

The development of international direct investment may be considered a healthy and important phenomenon for the Netherlands, in both micro-and macro economic terms. Important because in a country such as the Netherlands with an open economy, there are but few players who have nothing to do with cross-border activities. Healthy because direct investment constitutes a healthy form of export, involving the transfer of both capital and know-how.

In the macro-context it is worth noting that the Netherlands has had major surpluses on the current account of its balance of payments for several decades now. As, by definition, these surpluses constitute investment abroad, one could argue that such exports of capital are better off as direct investment than when they take the form of passive savings and portfolio investments such as bank deposits and bonds. After all, direct investment entails real and vital links with the home economy. One could say that it is a sort of extension of one’s economy across the border. Obviously the Netherlands with its relatively small home market stands to gain substantially from such a situation. Here it should be pointed out that over the years the Netherlands has been able to capitalise materially on its strong currency and low interest rates. The financial ‘fuel’ has been not just relatively cheap, but relatively durable as well, because the assets to be taken over were usually denominated in weaker currencies.

However, in an open economy such as that of the Netherlands, while great

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