Claim: The Netherlands has three island territories.

The Netherlands , -LRB- -LSB- ˈnɛðərləndz -RSB- Nederland -LSB- ˈneːdərˌlɑnt -RSB- ; Nederlân -RRB- also known informally as Holland , is the main constituent country of the Kingdom of the Netherlands . It is a densely populated country located in Western Europe with three island territories in the Caribbean.designated Bonaire , Sint Eustatius and Saba within ISO ISO 3166-1 . The European part of the Netherlands borders Germany to the east , Belgium to the south , and the North Sea to the northwest , sharing maritime borders with Belgium , the United Kingdom , and Germany .   The four largest cities in the Netherlands are Amsterdam , Rotterdam , The Hague and Utrecht -LRB- collectively known as G4 -RRB- . Amsterdam is the country 's capital , while The Hague holds the Dutch seat of parliament and government . The port of Rotterdam is the world 's largest port outside East-Asia , and the largest port in Europe . The name Holland is used informally to refer to the whole of the country of the Netherlands.Formally ` Holland ' refers only to two of the country 's twelve provinces : North Holland and South Holland .   `` Netherlands '' literally means `` lower countries '' , influenced by its low land and flat geography , with only about 50 % of its land exceeding one metre above sea level . Most of the areas below sea level are artificial . Since the late 16th century , large areas -LRB- polders -RRB- have been reclaimed from the sea and lakes , amounting to nearly 17 % of the country 's current land mass . With a population density of 412 people per km2 -- 507 -LRB- January 2017 -RRB- if water is excluded -- the Netherlands is classified as a very densely populated country . Only Bangladesh , South Korea , and Taiwan have both a larger population and higher population density . Nevertheless , the Netherlands is the world 's second-largest exporter of food and agricultural products , after the United States . This is partly due to the fertility of the soil and the mild climate . The Netherlands was the third country in the world to have an elected parliament , and since 1848 it has been governed as a parliamentary democracy and a constitutional monarchy , organised as a unitary state . The Netherlands has a long history of social tolerance and is generally regarded as a liberal country , having legalised abortion , prostitution and euthanasia , while maintaining a progressive drugs policy . In 2001 , it became the world 's first country to legalise same-sex marriage .   The Netherlands is a founding member of the EU , Eurozone , G-10 , NATO , OECD and WTO ; as well as being a part of the Schengen Area and the trilateral Benelux Union . The country is host to the Organisation for the Prohibition of Chemical Weapons and five international courts : the Permanent Court of Arbitration , the International Court of Justice , the International Criminal Tribunal for the Former Yugoslavia , the International Criminal Court and the Special Tribunal for Lebanon . The first four are situated in The Hague , as is the EU 's criminal intelligence agency Europol and judicial co-operation agency Eurojust . This has led to the city being dubbed `` the world 's legal capital . '' The country also ranks second highest in the world 's 2016 Press Freedom Index , as published by Reporters Without Borders .   The Netherlands has a market-based mixed economy , ranking 17th of 177 countries according to the Index of Economic Freedom . It had the thirteenth-highest per capita income in the world in 2013 according to the International Monetary Fund . In 2013 , the United Nations World Happiness Report ranked the Netherlands as the seventh-happiest country in the world , reflecting its high quality of life . The Netherlands also ranks joint third highest in the Inequality-adjusted Human Development Index , along with Australia .