The future of trade and services
The Netherlands as a trading nation
Frank den Butter (VU/ ex-WRR)
Club of Amsterdam, February 23, 2005, PWC, Amsterdam
vrije Universiteit amsterdam
Enhanced welfare (more growth)
through
• Increase in labour participation
• Higher productivity
vrije Universiteit amsterdam
Productivity growth?:
• Better products: product
innovation; high tech (let’s make
things better)
• Less transaction costs:
innovation in orchasrating and
trade function (let’s trade things better)
vrije Universiteit amsterdam
Let us exploit our strength as a
trading nation
• The Netherlands has for over 4
centuries been a trading nation. That’s
where our economic power is. Let us
use and extend that power in a
globalising world where ict brings about
rapid change: be innovative in trade and
acquire and use knowledge in order to
reduce transaction costs!
vrije Universiteit amsterdam
Welfare = Division of labour
• Division of labour is restricted by co-ordination
costs = transaction costs;
• Innovations which reduce transaction
costs : more division of labour and welfare:
more “trade”;
• Trade: exchange of property rights;
• Both within companies (multinationals, hierarchy)
and between companies (MSB, market);
• Efficient split-up of production chain: outsourcing,
offshoring, global sourcing; services
vrije Universiteit amsterdam
Trade flows in 2001
Europa
Amerika
85%
6%
62%
Nederland
22%
2%
3%
Afrika
13%
7%
Azië &
Oceanië
vrije Universiteit amsterdam
Which transaction costs?
•
•
•
•
Costs of transport (incl. logistics)
Taxes, tariffs, import quota
Administrative burden; “red tape”
Costs of negotiating, monitoring,
bonding of contracts, legal
infrastructure
• Network buiding: reputation and trust
(part of “goodwill”)
• Information costs (e.g. marketing)
vrije Universiteit amsterdam
Who works in the transaction
sector?
Brokers, salesmen, purchasers, auditors
administrators, lawyers, transporters,
financial advisers, ICT-professionals,
organizers, staff managers,
entrepreneurs
vrije Universiteit amsterdam
Question:
What part of your working time
do you spend on the transaction
function (co-ordination)?
vrije Universiteit amsterdam
Which knowledge is needed in
future for trade and services?
• Organizing production: invest in trust
with clients, suppliers and
subcontractors; networks
• Financial innovations, uniform
standards
• Maintain orchestrating function
• Value creation: design and marketing
vrije Universiteit amsterdam
Role of services
• Specific knowledge on coordination in production
chain
• Knowledge of cultural diversity and of how to reduce
informal trade barriers
• Provision of standards and quality guarantees, e.g
with respect to information on internet (portal
function)
• Financial intermediation, legal advise, design,
marketing
• Knowledge intensive parts of production (R&D)
• Trade function is not restricted to service sector
vrije Universiteit amsterdam
Amsterdam Trade University
• International knowledge institute for trade following the
Amsterdam tradition
• Combines available knowledge and existing courses (virtual
institute)
• Education program: summer courses, master classes, post
graduate and master courses, both for Dutch students and
highpo’s of trading partners
• Good alumni policy: use of cultural tradition
• Research program: network function of ATU in research
conducted by experts in companies on their own research
questions
• Data base and network function for sharing of knowledge
vrije Universiteit amsterdam
Rembrandt’s “staalmeesters” symbolizes the tradition of trade
and reduction of transaction costs in the Netherlands by
setting quality standards
vrije Universiteit amsterdam