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. It reached a record high of 52118.09 USD in 2008 and a record low of 16188.54 USD in 1961. 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, reaching an all time high of 1.70 percent in the first quarter of 1999 and a record low 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 has a developed economy and has been playing a special role in the European economy for many centuries. According to the World Bank and the International Monetary Fund, in 2012 the Netherlands was the 18th largest economy of the world, when the country has only about 17 million inhabitants.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%), food and live animals (8.6%), pharmaceuticals and electronics. 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.