Dutch high tech sector is by far the largest private investor in R&D
The Dutch high-tech sector plays a key role in private R&D investment. Yet the Netherlands lags internationally, and an ambitious catch-up is needed to strengthen its innovation position.
Published on December 6, 2024
Philips becomes Xiver © Philips
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With ASML and Philips leading the way, the Dutch hightech sector remains the most significant private investor in research and development in the Netherlands. This is evident from the top 30 compiled by VNO-NCW.
Total private R&D spending as a percentage of GDP lags behind European and global leaders such as Korea, Japan, and the US. With a combined public and private investment of 2.08%, the Netherlands remains below the EU average of 2.25% and far from the Lisbon target of 3%. An annual increase of €9.8 billion in R&D spending is needed to achieve this, especially from the private sector. Strengthening existing R&D-intensive companies and stimulating new ventures is crucial for the national economy and the Netherlands' innovative position within the EU.
Service regions flourish, industrial regions stagnate: Holland's economic divide
The economic differences between regions in the Netherlands are greater than ever. Amsterdam, with its strong focus on ICT and specialized business services, is leading the way.
Netherlands lags in R&D spending
The figures are alarming. With private R&D investment at 1.44% of GDP in 2023, down from 1.49% in 2022, the Netherlands lags far behind international competitors. Korea invests 4.14%, the United States 2.83%, and China spends 1.98% on private R&D. This gap becomes even more glaring when looking at total R&D investment. The Netherlands's combined public and private investments of 2.08% by 2023 lag significantly behind the European target of 3%. To catch up, an investment of €9.8 billion per year is needed, which must come mainly from the private sector.
ASML is the lone frontrunner
In the Dutch R&D landscape, ASML stands alone. As a chip machine manufacturer, the company is an exception to the rule of limited R&D investment. Last year, it spent over €2.8 bln on R&D within the country. The 29 largest investors after the Brabant frontrunner came to a combined total of €3.6 bln.
This illustrates a worrying trend: the Netherlands relies heavily on a handful of large technology companies for its innovative strength. This dependence on a few players makes the position of Dutch innovation vulnerable. The lack of a broad base of R&D-intensive companies limits the growth opportunities of the Dutch knowledge economy.
International comparison: a growing gap
The situation in the Netherlands reflects a broader European problem. American companies under 50 outperform their European counterparts by a factor of 70 in market value. This gap illustrates the fundamental difference in innovation culture and willingness to invest between Europe and the US. Europe's leadership has failed to prioritize tech ecosystems and foster entrepreneurship. This has far-reaching implications for Europe's digital sovereignty and ability to compete in the global economy.
The Netherlands must pursue a two-pronged strategy to reach the ambitious Lisbon target of 3%. On the one hand, existing R&D-intensive companies must be supported in their growth. On the other hand, attracting and building new innovative companies is crucial. This requires not only financial incentives but also a fundamental change in the Dutch innovation culture. Without this transformation, the Netherlands risks losing its long-term competitive position and prosperity.