Have we become too dependent on other countries?

Algemeen Dagblad
Erasmus School of Economics

Almost all our products are produced abroad. We only produce very little ourselves. And the corona crisis has made this dependency even clearer. Have we become too dependent on other countries? Should we perhaps produce more ourselves? According to Frank van Oort, Professor of Urban & Regional Economics at Erasmus School of Economics, this is not as easily said than done.

Clear dependency

In Rotterdam, the dependence on foreign countries is becoming increasingly clear as well. ‘The Netherlands has become a real service economy over the years: many people work in the service sector. We are still trading, but the products that come in go out immediately as well. Rotterdam, for example, is a real transit port. You do not earn much from that. The best thing would be if value could be added to the products that arrive here. That does not happen very often now,' says van Oort.

Why has the Netherlands become so dependent on other countries? The answer is very simple: money. ‘It is just much cheaper to have our products produced abroad than here. A part of globalisation is that you keep production at its cheapest. Producing goods in low-wage countries like China and importing them to the port of Rotterdam also keeps prices low,' says Van Oort. 

Increased domestic production?

Van Oort, however, says it may indeed be time for a change. But there are still many doubts. Would we even be able to produce more ourselves? ‘I'm afraid that it is easier said than done. We do produce more locally, such as bread and cheese. But not yet on such a large scale that the entire city can be provided food. The question is also whether this would be possible in the short term. I think that the dependency is then rather shifting from the Far East to closer areas, such as Europe. But perhaps we could also produce more ourselves.’

Domestic production would, however, not be without a price. ‘To begin with, we would have to pay more for everything. And even then we are not there yet: do we even have the ability to make everything ourselves? For example, Eindhoven is home to an entire high-tech industry, and we are the leaders in this field. But we are no longer specialised in many other areas', says van Oort. ‘Take shipbuilding, for example. We are now producing everything in China. In order to regain that position, we have to start training people.’

'We are working on it' 

‘We are working on it, by the way’, says van Oort. ‘In The Hague, Delft and Rotterdam, among other places, there are field labs that work on innovation and specific technical solutions. For example, 3D printing of ship propellers in Rotterdam. And in Utrecht, medical implants are being printed in this way. It's all still small now, but if you would be able to scale this up you would be much less dependent on foreign countries. And it would create a lot of jobs, of course.’

Professor
More information

The full article from Algemeen Dagblad, 3 October 2020, can be found here (in Dutch).