Public and private investment in R&D closely related

6 December 2018

When government invests more in R&D, so does the private sector. That is the conclusion of the Academy in its report Wederzijdse versterking [Mutual reinforcement], presented today to the Minister of Education, Culture and Science and the State Secretary for Economic Affairs and Climate Policy. There is a risk of competition from abroad, however. When public investment in R&D rises in other countries, it attracts Dutch private sector R&D.

Following a motion submitted to the Dutch House of Representatives by MP Jan Paternotte and others, the Minister of Education, Culture and Science asked the Academy to investigate whether the government investing more in R&D resulted in businesses having fewer incentives to do so themselves. That is not the case; in fact the opposite is true, according to the Academy’s analysis.

The picture is less optimistic with respect to investment abroad, however. Although foreign investment in R&D in the Netherlands is increasing, Dutch businesses are also investing a growing amount in R&D abroad. The ‘balance of foreign R&D’ is therefore increasing. In 2016, the Dutch private sector spent 1.5 billion euros more abroad than in the Netherlands. While Dutch public investment lags behind the targets, foreign government investment is proving to be increasingly appealing to Dutch private R&D. If the Netherlands hopes to attract and retain foreign investment in R&D, it is important for the national research policy to offer private businesses and public knowledge institutions long-term prospects, concludes the Academy. Regional centres such as Science Parks and research & innovation campuses will be increasingly important in that context.

The report with a summary in English, Wederzijdse versterking. Hoe publieke en private investeringen in onderzoek en ontwikkeling samenhangen, was written by a committee headed by Luc Soete, professor of International Economic Relations at Maastricht University.