LWEO

chapter 1

chapter 1

The Netherlands and the world

Traditionally, the Netherlands has been focused strongly on foreign countries. As the Netherlands is a small country, it depends on foreign countries to obtain various products. Still, there are products which the Netherlands can produce itself and which come from abroad nevertheless. This is to do with the costs involved. After all, it is cleverer to import products that are made more cheaply in other countries from those countries and to concentrate as a country on products that we can produce at a lower price ourselves. This is called international division of labour. It means that every country focuses on making those products for which they have a competitive advantage. A number of factors are involved in this, such as:
• natural condition;
• wage costs;
• infrastructure;
• historical circumstances.
The Countries of the European Union are the chief trading partners of the Netherlands.

glossary

Glossary Society chapter 1

added value
The value that an enterprise adds to the purchased raw and auxiliary materials. This corresponds with the value of what the enterprise produces itself.
Economic and Monetary Union (EMU)
The EMU is intended to organise a monetary union in the European Union. The introduction of the euro is an element of this. In 1999 the EMU was realised.
European Union (EU)
Interest grouping in the area of economics of 28 countries (in 2013). Central feature: free movement of persons, goods, services and capital.
Eurozone
The group of countries in which the euro is the currency.
exchange rate
The exchange rate is the price of a currency expressed in another currency. For example: in 2012 the exchange rate of the euro fluctuated around €1 = $1.30.
export
The selling of goods and services to other countries.
foreign exchange or foreign currency
Foreign currencies and international means of payment
international division of labour
The phenomenon that (enterprises of) countries focus on producing goods and services that they are relatively good at or where the conditions for producing are favourable
import
The buying of goods and services abroad.
labour productivity
The production per person per time unit (for instance per hour or per working year).
re-export
Goods that are imported into the Netherlands and are then exported again to a third country.
wage costs per product
The total wage costs divided by the total number of products.

exercises

Exercises (Word)