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The contribution of trade policy to the openness of the Dutch economy

Author

Listed:
  • Harold Creusen

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Arjan Lejour

    () (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

The last four decades, Dutch exports and imports grew annually about 7.5%, while re-exports rocketed in the last two decades. Using a gravity approach this paper finds that the increase in trade is largely caused by income developments. Trade policy, consisting of reductions in import tariffs and other trade barriers and the creation of the EU internal market, also has a significant impact on trade growth, although much smaller. Without any liberalisation of trade policy since 1970 the ratio of trade (excluding re-exports) to GDP would have been about 8%- points lower. By estimating the trade enhancing-effect of trade policy on GDP we conclude that trade policy has contributed 6% to 8% to the growth of national income in Netherlands since the 1970s. Foreign Direct Investments (FDI) experienced a massive but erratic growth, mostly in the last two decades. Income developments could explain half of that growth; deregulations of national capital markets explain only a small part of FDI growth.

Suggested Citation

  • Harold Creusen & Arjan Lejour, 2009. "The contribution of trade policy to the openness of the Dutch economy," CPB Document 194, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:docmnt:194
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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