The future of trade and services - Club of Amsterdam by yurtgc548


									    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)

• 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         85%


    62%                                            13%



Afrika                                                        Azië &

                                        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
• Network buiding: reputation and trust
  (part of “goodwill”)
• Information costs (e.g. marketing)
                          vrije Universiteit   amsterdam
  Who works in the transaction

Brokers, salesmen, purchasers, auditors
 administrators, lawyers, transporters,
 financial advisers, ICT-professionals,
      organizers, staff managers,

                         vrije Universiteit   amsterdam

 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
• Maintain orchestrating function
• Value creation: design and marketing
                           vrije Universiteit   amsterdam
              Role of services
• Specific knowledge on coordination in production
• 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
• Financial intermediation, legal advise, design,
• 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
• 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
• 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

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