The structural problem of the province South Holland

Erasmus School of Economics

The province South Holland has grown much less rapidly than other provinces in recent years. In the ten years before the corona crisis, the province grew only 8%, while the entire Dutch economy grew almost twice as fast. According to Frank van Oort, Professor of Urban and Regional Economics at Erasmus School of Economics, South Holland is facing a structural problem: "The region was very successful for a very long time, but as a result many companies are at the top of their life cycle or have passed it".

A structural problem

After North Holland, South Holland is economically the most important province. Over one in five euros earned in the Netherlands comes from here. So, what exactly has gone wrong? According to Frank van Oort, it is a structural problem, he explains in an article from Elsevier. Many companies are said to be at the top of their life cycle or have already passed it. "Think of horticulture, the chemical industry and the transport sector. That's a dangerous point. Look at the auto industry in Detroit that has failed to diversify or invest in new technology. Half the population has moved away from there".

Polycentric character

A good example of this is Holland's largest company, Shell. Shell has been a successful oil company for more than a hundred years but has to radically change course now because of the energy transition. And other large companies are also finding themselves in similar positions. Van Oort points to the polycentric character of South Holland. "We assume that an urban area with three million inhabitants will grow economically faster than other regions because there is a large exchange of knowledge and a lot of suitable labor". But labor mobility can stagger considerably when connecting roads and trains are congested and the housing market is overheated.

Growth agenda

Expectations are that some 216,000 new residents will arrive in the next ten years, far more than in other provinces. The Economic Board of South Holland will therefore present a growth agenda, which will mainly focus on better infrastructure and new technology. According to Van Oort, the plans will result in 1 percentage point more growth per year and 120,000 new jobs, but some of these jobs will replace those that disappear in the old industry.

More information

The full article from Elsevier, 30 January 2021, can be downloaded above (in Dutch). 

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