the Dutch miracle: institutions, networks and trust

Between 1982 and 2000, the Netherlands experienced a remarkable economie recovery. Labour participation rose from a European low of 52 percent to the European average of 65 percent. Unemployment decreased from a high of 14 percent to a present-day low of 2% percent, while government finances and social security were reorganised. This paper aims to demonstrate how the Dutch culture of consensus, reflected in the Dutch institutional consultation structure, was one of the main driving forces of this recovery. The trust enhancing effects of the institutional framework, in which government, unions, employer organisations, centra1 bank and advisory bodies meet each other fiequently in forma1 and informal atmospheres, produced an environment of mutual trust and co-operation that was capable of effectively dealing with the problems. Two decades of wage moderation and increased labour market flexibility have led to economie prosperity without significant social unrest. It is an example of an institutional fiamework that transforms trust between persons and organisations at the micro leve1 to positive macroeconomic effects.