1. Paulette Kurzer School of Government and Public Policy University of Arizona

4.  Institutional Complementarities o Higher the Complementarities, o The easier it has been to adjust to single currency, o With corresponding greater ability to cope with the global crisis

6.  Social concertation, i.e. the Polder Model  Provides flexibility, ability to reduce/control wage-price development, restructure social security  Promotes non-inflationary growth

7. 1. Complementarities….’accidental’ 2. Social concertation…. ‘coercive’ 3. Impact of the crisis…. ‘lucky’

8.  NL is able to address the four key conditions of single currency: price stability, fiscal austerity, financial discipline, macro economic equilibrium.  Due to the fact that it joined EMS/ERM in 1979 and pegged to DM in 1982.  Institutional complementarities pre existed EMU, and corresponded to Dutch preferences and priorities

9.  Revived in 1982 after its collapse in1970s  Wage restraints in return for job creation  In the1990s social exchanges and cooperation (unemployment had dropped)  After 2000, again, intense conflict and difficulties (based on social security reforms)  Forced pay freezes and pay stops 2003 2004 2005

10. OECD Economic Surveys, Netherlands 2008, p. 22

13.  Wage freezes of 2003-2005 in combination with labor market flexibility  Tight labor market, shortage of labor  Recession loosened tight labor market – hence good labor market performance as there was a shortage earlier.  German-China Factor

14.  Twenty-five percent of all Dutch exports are destined for the German market  exports are domestic produced goods and manufactured goods produced by companies of foreign origin ‘in transit’  Transit trade rose on average 11% between 2000-2008 domestically produced exports grew 2 percent during that period.

15.  Institutional complementarities predate founding of EMU,  State played a large role in imposing, insisting on social concertation  Role of the State also predates EMU  Lucked out as the labor market was tight before 2008  And important supplier to the Germany economy.

16.  Institutions provide advantages at certain points  Advantage may be a function of previous legacy and crises.  NL has coped with external vulnerability  US has been protected from similar kinds of exposures.