1) Introduction The Netherlands, also known as Holland. But its official name is Kingdom of the Netherlands. It is a country in Western Europe and bordered by the North Sea in north and west, by Germany in east and Belgium in the south. The Netherlands` five largest cities are Amsterdam, Rotterdam, The Hague, Utrecht and Eindhoven. The capital city of the Netherlands is Amsterdam, which generated from a small fishing village in the late 12th century. It is situated in the western part of the country. The Netherlands, the sixth-largest economy in the European Union. The total population of Netherlands was calculated 17.08 million people on January 1st 2017. On January 1st 2016 the population was 16.98 million. And it shows that in the comparison from the last year it increased 0.6 percent. In 1960 Netherlands had a population of 11.4 million people. The population of Netherlands represents 0.24 percent of the world’s total population and it means that one person in every 418 people on the planet is an inhabitant of Netherlands. 2018 forecast shows that the Netherlands population will reach 17.1799 million. The Gross Domestic Product (GDP) in the Netherlands was 770.85 billion US dollars in 2016 and it is 1.24 percent of the world economy. During 1960-2016 GDP in the Netherlands averaged 339.48 USD Billion. In 2008 it reached a peak point of 936.23 USD Billion and in 1960 it had minimum point of 12.28 USD Billion. According to Trading Economics global macro models and analysts expectations GDP in the Netherlands will reach 780.00 USDBillion by the end of this quarter. The Netherlands GDP is expected to be approximately 875.00 USD Billion in 2020. The Gross Domestic Product per capita in the Netherlands was 52111.47 US dollars in 2016. During 1960-2016 GDP per capita in the Netherlands averaged 35187.12 USD. In 2008 it reached a peak point of 52118.09 USD and in 1961 it had minimum point of 16188.54 USD. On quarter in the third three months of 2017 Dutch economy developed 0.4 percent matching preliminary estimate. Since the second quarter of 2016, exports and private consumption growth slowed and it was the weakest growth rate. At the same time, investment rose faster and government spending stay stable. GDP Growth Rate in the Netherlands averaged 0.55 percent from 1988 until 2017, reached its peak point of 1.70 percent in the first quarter of 1999 and had minimum point of -3.20 percent in the first quarter of 2009. According to Statistics Netherlands (CBS), the GDP growth was 2.1percent in 2016. According to the latest prognosis by the Netherlands Bureau of Policy Analysis (CPB), the GDP growth forecasted to be 2.1% in 2017. The Netherlands is the fifth-largest economy in the Euro Zone and important transportation hub in Europe. The Dutch economy depends heavily on foreign trade. Exports accounting for 83 percent of GDP and imports for 72 percent. 2) Bilateral exports of the Netherlands with three largest trade partners. The Comparative Advantage of the Netherlands. The Netherlands’ developed economy has been playing a special role in the European economy for many centuries. In 2012, the Netherlands was the 18th largest economy of the world according to the World Bank and the International Monetary Fund. Netherlands Exports The Netherlands is the third largest exporter in the Euro Area. The main exports of the country are: machinery and transport equipment (28%), mineral fuels (23%), food (11%), refined petroleum (7.9%), pharmaceuticals (5%), computers (3.3%), telephones (3.1%), cars (0.9%) and etc. More than 60 percent of exports are sent to European Union countries. The main export trading partners of the Netherlands are: Germany at around 24%, next door neighbor Belgium with about 12%, France about 9%, United Kingdom 8%, United States, Italy and Japan. In 2017 exports from the Netherlands was EUR 39.72 billion. During 1960-2017 exports in the Netherlands averaged 12797.18 EUR Million, reached a record high of 43478.80 EUR Million in March of 2017 and a record low of 494.60 EUR Million in January of 1960. Netherlands Imports The Netherlands main imports are: fuel (29%), machinery (26%), electronic equipment (12%), food and live animals (8.6%), pharmaceutical products (3.3), organic chemicals (2.7%) and etc. The main import trading partners of the Netherlands are: Germany about 17%, Belgium 10%, China 8.5%, United Kingdom 6.9%, United States 6.6%, Russia and Italy. In October 2017 imports to the Netherlands was EUR 34.56 billion. Imports in the Netherlands averaged 11709.29 EUR Million from 1960 until 2017, reached a record high of 37241 EUR Million in March of 2017 and a record low of 584.90 EUR Million in August of 1960. Gravity Model We already know that Germany, Belgium and the United Kingdom are the Netherland’s largest export trading partners. And now we are going to determine why these countries are the largest export trading partners of the Netherlands. We can identify it through Gravity model`s formula: Tij = A * Yi * Yj/Dij where A is a constant term, Tij is the value of trade between country i and country j, Yi is country i’s GDP, Yi is country j’s GDP, and Dij is the distance between the two countries. That is, the value of trade between any two countries is proportional, other things equal, to the product of the two countries’ GDPs, and diminishes with the distance between the two countries. As we know there are several factors which effect the trade between 2 countries. One of them is distance which determines the volume of trade between 2 countries and the 2nd main reason is GDP of country. If the distance between 2 countries is close, there will be more trade between them than other countries because of less transportation costs. Another reason is close countries in most cases have good relations in terms of national security and these countries can have common market agreements like NAFTA. Closeness lowers trade barriers. Between the richer countries happens more trade. This is because the richer countries tend to have the more refined and diverse tastes in exports. And also, higher rate of GDP can make progressive trade between 2 countries. All three trade partners of the Netherlands as we see from Table, has borders with Netherlands. Germany and Belgium have land border, but United Kingdom has sea border. As I mentioned in the table the distance of United Kingdom is bigger than other 2 countries. In spite of higher rate of GDP can make progressive trade between the Netherlands and UK but more distance between them make their trade expensive, because of new cost – which called transportation costs. The other biggest trade partner of the Netherlands is Belgium. In spite of GDP of Belgium is less than other 2 countries Netherlands has land border with Belgium and Belgium is closer than other 2 countries. From this cause Netherlands can easily trade with Belgium. Germany also land border with Netherlands and at the same time as you see from the table GDP of the Germany is higher than other 2 countries. And that’s why Germany is the Netherlands’ most significant trading partner, followed by Belgium and the United Kingdom. Comparative Advantage The top export destinations of Netherlands are Germany $ 99.3 billion, Belgium $ 45.89 billion, United Kingdom $ 40.02 billion, France $ 36.08 billion, United States $ 19.24 billion. Netherlands is exporting to its trade partners refined petroleum 7.9%, computers 3.3%, telephones 3.1%, packaged medicaments 3.1%, medical instruments 2%, office machine parts 1.6%, orthopedic appliances 1.5%, tractors 1.2%, industrials printers 1.1%, integrated circuits 9.9%, cut flowers 0.95%, cars 0.9%, other live plants 0.9% and etc. Now I am going to analyse in which industries Netherlands has comparative advantage. I can determine it using Revealed Comparative Advantage (RCA). The revealed comparative advantage is an index which economists used in international economics for measure the relative advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. It is based on the Ricardian comparative advantage concept. The RCA index was formulated by Ballasa as: RCA = (Eij / Eit) / (Enj / Ent) E – exports, I – country index, n – set of countries, j – commodity index, t – set of commodities When RCA is bigger than 1 (RCA > 1) country has a revealed comparative advantage, when RCA is smaller than 1 (RCA < 1) country has a revealed comparative disadvantage. From the table we see that Netherlands' comparative advantages are refined petroleum, computers, telephones, medical instruments, office machine parts, tractors, industrial printers, cut flowers, other live plants, chocolate,cheese, sowing seeds, delivery trucks, bicycles, pig meat, concentrated milk, butter, pigs, eggs and etc. 3) Trade policy instruments of the Netherlands. The regulation of the Netherlands' trade policy based on imports and exports. Statistical results show us that exports in the Netherlands were EUR 39.72 billion and imports were EUR 34.56 billion in October 2017. According to these numbers we can say that Netherlands is more export-intensive than import-intensive. In January of 1960 Netherlands exports were 494.60 EUR million and imports were 584.90 EUR million. The results show that in that year country was more import-intensive than export-intensive. The Netherlands always had an open economy and the level of trade with other countries is very important. According to the Netherlands Bureau for Economic Policy Analysis, the Netherlands earns 33% of its income from the export of goods and services. In 2015, the value of exports was 81.8% of the Netherlands' GDP. Since 1959 natural gas resources was discovered by the Netherlands. The sale of natural gas brought high revenues for the Netherlands for many years and add hundreds of billions of euros to the government's budget. The Netherlands is the world's second largest exporter of food and agricultural products after the US. About 79% exports of the Netherlands remain within Europe, especially Western Europe. In 2015, 17.2% of all imports into the Netherlands originated in Germany. The Netherlands purchased mainly chemical products and machinery from Germany. More than 90% of cars imported into the Netherlands came from Europe, particularly Belgium, France and Germany. China (9.1% of total imports of goods) and Belgium (9.8%) were respectively second and third Dutch import partner.