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The Netherlands' leading position as a knowledge nation is under threat from underinvestment

To maintain a leading knowledge nation and to continue to contribute to social well-begin at the same time, the Netherlands must continue to invest in research and innovation. This calls for efforts on the part of both the business community and the government. Investments in research and innovation have dwindled in recent years. An example is the European Council’s decision of July 2020 to reserve fewer funds in the long-term budget for 2021‑2027 for Horizon Europe than originally budgeted. This means that Dutch science will receive around €700 million less in research funds than expected. Investments need to be made in Dutch research and innovation right now

 

Themes:

Dutch R&D investments are low on the international scale

R&D investments generate returns

Fewer funds from Europe in the years ahead

Growth Fund offers no solution for shortage of structural funding

 

 

Dutch R&D investments are low on the international scale

 

In 2014, the European Union set itself the goal of R&D investments exceeding 3% of GDP by 2020. These include R&D investments by both the public and private sectors. At that time, the Netherlands set itself a lower target: 2.5% of GDP. In recent years, the Netherlands has consistently reported that it would invest around 2% of GDP in R&D and would by no means achieve the 2.5% target.
 
As a result of a new calculation method used by Statistics Netherlands (CBS) in 2019, it was established with retroactive effect that R&D investments only amounted to 2.16% of GDP in 2013 (Rathenau, 2020). The most recent figures (2018) show that R&D investments still represent just 2.16% of GDP. We are trailing far behind countries that we – in the world of science – would like to compare ourselves with. Moreover, we are falling even further behind. Germany has been following a stable growth pathway by investing 3-5% of additional funds each year. This proves that more public investments also result in more private investments. For this reason, Germany recently extended its growth pathway until 2030, aimed at pursuing further growth from the current 3.13% to 3.5% of German GDP.


 

 


The Netherlands is investing less in research and innovation than the average OECD country and may therefore incur a knowledge deficit relative to other countries, both in Europe and beyond. This will have far-reaching consequences for the Netherlands’ international competitive position. The Royal Netherlands Academy of Arts and Sciences (KNAW) issued a warning to that effect in its recent advisory report entitled De aantrekkelijkheid van Nederland als onderzoeksland (The appeal of the Netherlands as a research destination) (p. 34): 
 
‘After an initial increase earlier this century, R&D expenditure per researcher in the Netherlands dropped in 2010 and 2012. Sweden shows an even more pronounced drop from 2012 onwards. Although the situation is stable in the United Kingdom, R&D spending per researcher in the USA, Germany and China is on the rise (UNESCO 2017). If these trends continue, the Netherlands’ competitive position will be adversely affected.’ 

 

 

R&D investments generate returns

 

Numerous economic studies have found that R&D investments are worthwhile. In a study on the increased productivity in the Netherlands between 1975 and 2014, Soete (2017) reported higher returns as a result of public and private R&D. In turn, these investments attract additional international investments. In a more recent study Soete (2020) compares these effects for 17 countries. Countries such as the Netherlands and Norway derive considerable benefits from R&D investments. 
 
In its report Houd de basis gezond – prioriteiten voor extra investeringen in onderzoek en innovatie (Maintaining a healthy basis – priorities for additional investments in research and innovation), the Advisory Council for Science, Technology and Innovation (AWTI) already warned that the Netherlands would need to increase its R&D investments if it wishes to retain its leading research position in the future. According to the AWTI, government investments are key to motivating private-sector investments in R&D.


 

 

 

Fewer funds from Europe in the years ahead

In that light, it is bad news that in July 2020 the European Council decided to reserve fewer funds in the long-term budget for 2021-2027 for Horizon Europe than originally budgeted. This means that Dutch science will receive around €700 million less in research funding than expected. Nobel prize winner Feringa commented on this in Dutch newspaper De Volkskrant (21 September 2020) as follows:
 
‘What most people are unaware of is that of all European countries, the Netherlands acquires the most ERC funds per capita, said Feringa. ‘We receive far more than we contribute.’ The Netherlands has been receiving around 180 million euros annually in ERC grant funds since 2016. ‘And two-thirds of those funds are allocated to young researchers,’ he said. Ninety-five per cent of my PhD candidates opt for the business community. They work for the corporates of this world, such as Shell, Unilever and Akzo Nobel, where they develop innovations and lend shape to society and the economy of the future. Moreover, Feringa is concerned that European research will fall behind on the international stage. ‘We are living in a fiercely competitive world,’ he said. ‘We are at risk of losing out to the competition.’


  

Growth Fund offers no solution for shortage of structural funding

 

In 2020, the Dutch government presented its plans for a Growth Fund (Nationaal Groeifonds). In addition to innovation, the fund, which will comprise a total of 20 billion euros in the next five years, will focus on educational innovation and lifelong learning. Yet, this does not offer us a solution to the pressure to apply for funding, the matching pressure and the work pressure experienced by our employees. To that end, structural investments in the scientific basis are required. 

 

The Rutte II government is structurally investing an additional €400 million annually in R&D, including fundamental groundbreaking and applied research. Contrary to previous years, no unexpected cutbacks or targets were included in the 2021 national budget that was presented on Budget Day 2020. Stability is important, especially at a time in which lecturers are making every effort to ensure the continuity of education. Structural investments in universities are still badly needed in light of the high workload, the declining government funding per student and the need for investments in fundamental research.