The rise of the BRIC countries and its impact on the Dutch economy

In an earlier study, we already looked at the impact of the emergence of China and India on the Dutch economy. Only five years ago, we found that the share of China in total Dutch trade had more than doubled between 2000 and 2005. The speed at which change is taking place and the changes within the production sector call for a new assessment. The need for information is illustrated even further by the highly turbulent developments during the financial crisis, particularly in relation to trade. To provide a more general overview, we include Russia and Brazil in our analysis, while we occasionally present figures for a selection of other developing economies. Moreover, this analysis extends the previous studies by analyzing trade in goods and services and trade at the firm level, and by focusing more explicitly on foreign direct investments. Chapter 2 presents the stylized facts of the BRIC countries and the Netherlands, followed by a characterization of the economic developments in the BRIC countries since the 1980s. We present a decomposition of their economic growth and assess the importance of these factors for future growth. Chapter 3 discusses the development of goods and services trade and FDI between the BRIC countries and the Netherlands. This section compares and analyzes developments across several dimensions: international trade of goods and services at the macro level and product group level and foreign direct investment. The strong exporting sectors of these countries are compared and also the technological and human capital content of their products. Chapter 4 analyses trade and foreign investment decisions of Dutch firms. The aim is to understand the development of trade and FDI at a deeper level and to spot possible barriers with respect to bilateral trade and investment. Chapter 5 focuses on the macroeconomic impact of the emerging BRIC countries. We assess the impact on employment, value added and the price level in the Netherlands. Chapter 6 will summarize and conclude. Furthermore, it will discuss the broader policy implications of the findings of the previous chapters.