Management of Industrial Change in a Small Country: The Netherlands

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Abstract
The awareness of the structural rather than cyclical nature of economic problems caused a fundamental rethinking of the institutions and instruments of industrial policy in most OECD countries. However, studies have concentrated on a limited number of large countries, with only marginal use being made of the experience of the smaller OECD countries. The need for comparative material becomes relevant since the large economies are increasingly facing the same structural problems as the smaller ones. This article analyses the experience of the Netherlands in comparison with other small European economies. The Netherlands economy is highly intertwined with the other economies of the European Community, particularly Germany. Multinationals (many home-based in the case of the Netherlands) dominate certain sectors of the economy and exports, but smaller companies provide the bulk of employment. The loss of employment since 1970 has mostly resulted from the restructuring of large firms. Government subsidies grew considerably, and proliferated in form, in the 1970s and most went to industries experiencing structural problems. Large firms have tended to benefit most. Criticisms have been made of rescue operations, the risky nature of development credits, the obstacles to the use of schemes by small firms and the cost and ineffectiveness of the investment subsidy account. Because of declining domestic investment, public subsidies accounted for 82 per cent of all private investment by 1982. In the 1980s there has been a move away from tripartite arrangements for discussing and administering industrial subsidies to commissions of ‘independent’ experts, and the degree of organisation in labour unions in the Netherlands, already low, has declined considerably in recent years. The prevalence of centre-right governments in recent years has made it easier to reduce support for individual firms, though large grants for modernisation are made to large firms. The Netherlands appears to be one of the small open countries in which the basic linkages in the model proposed by Cameron have been broken.