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Dutch trade alongside value chains focuses mainly on Europe

DNBulletin

Published: 23 July 2020

Een groot schip op water

Standard export figures conceal economic dependencies

Today, production processes are highly fragmented internationally. As a result, Dutch exports not only consist of Dutch added value, but also of foreign added value. For example, the value exported by a Dutch tyre manufacturer is not equal to the value added by the Dutch economy. That is because tyre production requires the input of imported rubber. Moreover, Dutch exports are not 100% consumed in the country of destination; part of them is transported further to other countries. Standard export figures show the value of a country's exports abroad, but do not provide information on how much the Dutch economy earns from this or where the end user of this Dutch value is located. The latter is important to gain an understanding of the interconnectedness with other economies. 

Strong interconnectedness between European economies

European countries trade mainly with each other, with regional value chains playing an important role. On average, 45% of the value a European country adds to its exports of goods and services ends up in another EU country. This means that European economies are strongly interconnected, and this certainly applies to the Netherlands. Figure 1 shows that 51% of Dutch value added in exports ends in the EU, while, for example, less than 40% of British value added in exports ends in Europe. By comparison, the US economy – which is similar in size to that of the European Union – is the second largest sales market for the Netherlands and good for 10% of Dutch value in exports in terms of demand. About 4% of the Dutch added value ends in China.  

Figure 1. Percentage of value added in exports to the EU, by country 

Figures exports

Source: DNB calculation based on the OECD's Trade in Value Added (TiVA) database (2015)

Europe is important for the Netherlands, not only as a sales market but also as a supply market. For example, the Netherlands imports intermediate products from abroad, which are then processed in the Netherlands and then exported. 44% of the foreign value used for our exports comes from Europe, while 3.8% and 3.5 % come from China and Japan, respectively. The Dutch value chain trade is therefore mainly focused on Europe. 

European cooperation is important to the Netherlands

As a small and open economy, the Netherlands largely depends on economic developments within Europe. Although the coronavirus pandemic urges us to rethink international trade, it is important to guard against nationalist and protectionist tendencies in response to the crisis. The interdependence of European countries underlines the importance of cooperation, for example through a coordinated European policy response to the coronavirus crisis.

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