Research On Dutch Foreign Direct Investment

In 2012,the Netherlands was the largest source of foreign direct investment in the world.For small open economies,the Netherlands always scores high in the international rankings.The Netherlands is known as an excellent trading and investment country.Over the years,the Netherlands has been at the forefront of the world in terms of the value of inward and outward direct investment.The generally attractive investment environment in the Netherlands is an important factor.For example,Physical and digital infrastructure in the Netherlands,Highly skilled labor,Effective labor market,Investment in innovation and technology,Political and economic stability in the Netherlands also play an important role.For a company established in the Netherlands,the company can hold overseas assets to a large extent for two main reasons:(1)the development of actual economic activities,such as production or sales,(2)or the minimization of the group through the tax structure Taxation.The first reason is often carried out by conventional companies in the Netherlands;the second reason is often carried out by special financial institutions in the Netherlands to invest in other countries.The Netherlands is sometimes called a transit country.29%of the Dutch total foreign direct investment comes from Dutch regular companies,and 71%comes from special financial institutionsSpecial financial institutions are mailbox companies,also known as special purpose entities Special financial institutions are companies established in the Netherlands solely for tax reasons and with little or no economic activity.In 2015,the Netherlands had more than 14,000 special financial institutions.The main motivation for multinational companies to set up special financial institutions in the Netherlands is to pay as little tax as possible,which means tax avoidance.Low withholding taxes in the Netherlands,participation in tax exemptions,tax rulings,the availability of Dutch tax authorities,and the expertise and experience of the Dutch trust sector are the main reasons for special financial institutions to redirect investment through the NetherlandsThis thesis starts from two aspects to study the Dutch foreign direct investment(OFDI),Dutch conventional companies and special financial institutions.Starting from the Dutch real economy:In-depth analysis of foreign direct investment theory,providing theoretical basis for foreign direct investment research from micro and macro levels.Explore global ODI trends and prospects,the current status of Dutch ODI,and an in-depth study of the development of Dutch ODI over 300 years.The destinations of Dutch direct foreign investment mainly include the United States,the United Kingdom,Luxembourg,Switzerland and Germany.According to economic theory,the Netherlands'FDI in developing countries flows toward labor-intensive and low-tech production,while in developed countries it flows toward high-tech productionIn 2015,there were about 1.6 million companies in the entire Dutch business community,of which only 1.2%were large companies,and the rest were independent SMEs.In 2015,about 1%of Dutch companies will make foreign direct investment.Among them,large companies account for 20%,and SMEs account for 80%.These 14,000 Dutch companies have invested a total of 45,059 companies abroad.In terms of value and shareholding ratio,the investment scale of SMEs is usually smaller than that of large companies.SMEs hold an average of two companies with foreign direct investment,and large companies hold an average of eight companies.51%of large companies have invested in one of the EU-27 countries,and 67%of self-employed SMEs.18%of large companies have invested in a country in Asia and Oceania,and 11%of SMEs.For large companies,8%invest in a country in other parts of Europe,and 6%for SMEs.10%of large companies invest in a country in Latin America and the Caribbean,and 5%of SMEsMore than 70%of the Dutch foreign direct investment is done by special financial institutions.In 2015,Dutch regular companies invested 35,144 companies abroad,and special financial institutions invested 24,237 companies.When comparing the geographical distribution of investments of special financial institutions and Dutch conventional companies,they mainly invest in the EU region,but the EU region is far less important to special financial institutions than Dutch conventional companies.Special financial institutions pay more attention to investing in regions outside the European Union.For example,special financial institutions pay more attention to investing in Asia and Oceania.Special financial institutions also make relatively frequent investments in Latin America and the CaribbeanThe Netherlands is famous for its huge international treaty network.Particular emphasis is placed on three bilateral treaties;bilateral tax treaties(142),bilateral investment treaties(91)and bilateral trade treaties(581).A major reason for foreign companies to use special financial institutions to transfer investment is to use the Netherlands to conclude bilateral treaties with these destination countries.Among them,the effect of tax treaties is the largestWhen companies try to gradually conquer foreign markets,internationalization is an accompanying process.First,exports are 17 times more frequently used than investment channels Secondly,once the company has exported to the country,the opportunity to start investing will increase.Independent SMEs first have export experience before investing in specific countries Various tools in trade policy can affect investment and exports.For example,when the differences in regulations are greater,Dutch exporters choose to invest directly overseas rather than export With large export barriers,Dutch companies are more attractive than exports through investment Countries that have concluded treaties with the Netherlands have more exports than investments if there are no trade barriers.The same is true of investment treatiesFor Dutch exports and foreign direct investment,the characteristics of the destination country are crucial for choosing a specific target market.Generally,the farther the market is from the Netherlands,the greater the cultural difference between the Netherlands and the target market,and the less likely the Dutch investors or exporters will be active in the country.The EU-27 countries,North America and other parts of Asia(outside the Middle East)are relatively important destinations for investment projects.The size of the market is directly proportional to the number of Dutch companies that decide to conduct business in the country concerned,and the distance to the Netherlands is inversely proportional.The number of Dutch companies decreases faster as distance increases,and grows faster as the size of the target market increases.In addition to distance and scale,cultural proximity is also an important factor for entrepreneurs.The smaller the cultural differences with the Netherlands,the easier it is for entrepreneurs to invest.The development level of the target country,expressed in average income per capital,is directly proportional to the number of exporters and investoWhen rs.The island country is a relatively unpopular destination for Dutch exporters and investors.The average import tariff has a negative impact on the number of Dutch entrants.The higher the applicable import tariffs in the target country,the less the countrv's interest in Dutch exporters.The number of new investors in countries with high import tariffs is much lower than in countries with low tariffsThe current Coronavirus Crisis is even more severe than the financial crisis of 2008?2009 After the lockup of the country,the loss of work and income of the family,as well as lower corporate investment and international investment,may prolong the recovery path.After 2021,global growth may also be affected.In the last financial crisis,it took the Netherlands about 1?3 years to recover the economy.This time it was hard hit and it may take longer to recover.The decision-making process of foreign direct investment is very complicated.Usually,all investment factors are considered comprehensively to make the best decision.