Innovation requires clarity, not more subsidies

When you ask entrepreneurs what stands in the way of innovation, many people expect them to say “too little subsidy.” But in reality, something else plays a much bigger role: a lack of clarity from the government.

An interesting comparison is how our neighboring countries approach this. We can learn a great deal from them.

Marco Coolen, photo © Bart van Overbeeke

Denmark: a textbook example of long-term vision

Take Denmark, for example. There, companies know exactly where they stand. Since 2010, Denmark has systematically allocated 1% of its GDP for publicly funded R&D, not just for one year or during election campaigns, but consistently.

Thanks to this predictability, Denmark has become a world leader in wind energy. Companies invested heavily because they knew that policy would not change at the first political breeze.

Belgium: regional specialization as a strength

Belgium takes a slightly different approach. It excels in regional specialization. Biotech is big in Flanders, aerospace in Wallonia. Strong clusters, supported by a stable and attractive tax climate.

Here too, success is not so much a matter of more subsidies, but of targeted policy and predictability. Companies know where the opportunities lie and dare to make long-term investments.

Total expenditure on R&D as a percentage of GDP for a selection of countries. Source: Eurostat.

Germany: focus on technology and clear agreements

And then there is Germany. Our eastern neighbors have been consciously choosing technology for decades. The agreements between the federal government and the states are long-term and clear. This gives companies and knowledge institutions the confidence to think big and plan far ahead.

In Germany, too, there is no constant shifting of funds and regulations, but a stable course that entrepreneurs can rely on.

What is the difference with the Netherlands?

If you look purely at government investment in R&D, the Netherlands is not doing badly at all compared to our neighbors. The big difference lies in the private sector: Belgian, Danish, and German companies invest much more of their own money in innovation than we do.

Why? Because they have confidence. Confidence that the policy will not change every year. Confidence that investments will pay off in the long term. Confidence that the government will keep its promises.

What can we learn from this?

Innovation does not require one-off subsidies, ad hoc capital injections or constant policy changes. What entrepreneurs really need is clarity and predictability.

Constantly tweaking the controls, experimenting with temporary incentives or creating yet another subsidy is counterproductive.

Innovation policy is like good wine: it only gets better with time.

Stability

If you really want to stimulate innovation as a government, don't set up yet another new fund. Instead, ensure a stable course. Make clear choices, commit to them for years, and give entrepreneurs the space to invest with confidence.

Then innovation will follow naturally. And who knows, the Netherlands may soon be as firmly established on the world map as Denmark, Belgium, and Germany.