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Is Polder-Type Governance Good For You? Laissez-Faire Intervention, Wage Restraint, And Dutch Steel

28 Pages Posted: 15 Oct 2000  

Hans Schenk

Utrecht University - Tjalling C. Koopmans Research Institute

Date Written: May 2000

Abstract

This paper searches for the origins of the relatively successful performance of Hoogovens, the only sizeable steel firm in the Netherlands. It is suggested that Hoogovens has at critical moments benefited substantially from both strategic and financial support, but was basically left to decide its own policies. Luckily, it mostly opted for 'right' policies so that the industry's decline hit less hard in the Netherlands than elsewhere thus making it less necessary to develop emergency programmes. More specifically, Hoogovens chose to diversify into the aluminium market at a relatively early stage, and it broke up its merger with Germany's Hoesch. However, Hoogovens also benefited from the Polder Model's emphasis on wage restraint as much of the firm's output is exported. Moreover, corporatist welfare arrangements allowed Hoogovens to shed labour without causing extraordinary unrest. It is concluded that the success of 'laissez-faire intervention' heavily depends on the qualities of the supported firm's management. Polder-type governance in terms of wages and labour has beneficial effects in the short run, may but retard innovation.

Keywords: Dutch Miracle, Industrial Policy, Steel Industry

JEL Classification: M, M10, L2, L52

Suggested Citation

Schenk, Hans, Is Polder-Type Governance Good For You? Laissez-Faire Intervention, Wage Restraint, And Dutch Steel (May 2000). ERIM Report Series Reference No. ERS-2000-28-ORG. Available at SSRN: https://ssrn.com/abstract=242409

Hans Schenk (Contact Author)

Utrecht University - Tjalling C. Koopmans Research Institute

Adam Smith Building
Kriekenpitplein 21-22
Utrecht, 3584 EC
Netherlands

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