Describe the international political economy of the Netherlands and also its roots. How does the political system affect their economy? What is the history behind their economy from the 16th...

Describe the international political economy of the Netherlands and also its roots. How does the political system affect their economy? What is the history behind their economy from the 16th century until present day? Please be both descriptive and very in-depth about your answer. 

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kipling2448 | (Level 3) Educator Emeritus

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As with the rest of Europe, the relationship between economic development of the Netherlands and its political system has been protracted and complicated.  The modern history of the Netherlands begins with the Eighty Years’ War (1568-1648), during which the Dutch fought for independence from Spain. That war for independence converged with the break-out of the Thirty Years War (1618-1648), the end of which established the modern system of nation-states that survives to this day.  One of the most important components of both of these conflicts, of course, was the religious divide resulting from the Protestant Reformation dating to the early 16th Century (specifically, 1517), and the Dutch break from Spain facilitated its orientation towards the Protestantism of Germany and away from the Catholicism of Spain. 

With its new-found independence from Spain, and against the backdrop of the industrial revolution, the modern Dutch economy would begin to take shape based more upon geographic factors than political ones.  The Netherlands, of course, is a maritime nation, bordering the North Sea and bisected by the Rhine River, one of the most geopolitically and economically important rivers in Europe the end of which is at that aforementioned maritime border.  The confluence of geographic factors and the industrial revolution enabled the Netherlands to emerge as a major shipbuilding nation, which facilitated its exploration and international trade and the development of its empire.  What became known as the “Dutch Golden Age,” then was characterized by these major economic developments, reaching their zenith during the 1660s.  With the construction of its fleet, the Netherlands’ global reach was greatly expanded, enabling the colonization of territories in South America, the Caribbean and, most importantly, the Far East.  The establishment of the Dutch East India Company and colonization and exploitation of the Indonesian islands helped the Netherlands to emerge as a major oil producer and trader.

While the Dutch came a long way during the 17th Century, however, it would experience a period of decline during the following century. Internal conflicts pitting the monarchist Orangists against the pro-democracy Patriots weakened the nation at the same time France was becoming more assertive with respect to northwestern Europe, which comprised Belgium, Luxembourg and the Netherlands.  The late 18th and early-19th saw declining Dutch influence and growing French assertiveness with respect to that region.  By 1810, the Netherlands had been reduced to a veritable province of France.  France, however, was undergoing its own period of instability and turmoil and soon lost its grip on those newly-conquered territories.  The decline of France allowed for the full restoration of the House of Orange, and the consolidation of Belgium, Luxembourg and the Netherlands under the United Kingdom of the Netherlands.  In 1830, however, the Belgians revolted against this arrangement, and by 1831 had regained its independence, with Luxembourg similarly able to go its own way.  The three independent countries that exist today, then, were finally formed in the wake of the Belgian Revolution.

The political evolution of the Netherlands would reach its defining point with the signing of the 1848 Constitution, which established a parliamentary democracy while retaining the monarchy in a mainly ceremonial role.  The Dutch economy would continue to be centered on trade, shipping and shipbuilding, and the development of its oil industry, which would, in time, be oriented primarily towards the North Sea.  The next seminal event in Dutch political and economic history would be World War II.  The May 1940 German invasion and subsequent occupation of the Netherlands, including the brutal bombing of the major port city of Rotterdam, severely weakened the country and the loss of its Far East territories to the Imperial Japanese cemented its decline as a colonial and world power.  The Japanese defeat in World War II did not mean the return of Indonesia to Dutch control, although the Netherlands continued to hold the major island of Suriname until 1975, as Indonesia declared its independence upon liberation from the Japanese.

The relationship of political systems to economic development in the Netherlands, then, is of far less consequence than the role of geography in its economy.  Rotterdam remains one of the continent’s largest and most important ports, with hundreds of billions of dollars’ worth of goods transiting the port every year.  The creation of Royal Dutch Shell, known in countries like the United States simply as Shell, at the start of the 20th Century was a sign of that country’s burgeoning petrochemical sector, and the replacement of Indonesian oil reserves with those in the North Sea enabled it to remain a major oil producing power.  All of this is more a product of geography than of politics, international or domestic. 

There is no question that free market capitalism enabled the greatest and most enduring rates of economic growth in world history.  In some instances, however, and the Netherlands is a case in point, one could argue that its fact as a liberal democracy had less to do with its economic history than its geography as a maritime nation hosting one end of the most economically-important river in western Europe while exploiting oil reserves off its shore. 

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