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Report
23 April 2018

Total Investment in Research and Innovation (TWIN) 2016-2022

Facts and figures
This report presents statistics on the national government’s direct financial and indirect tax-related support for Research & Development (R&D) and innovation in the 2016-2022 period. It also discusses investments in R&D and innovation by regional and European sources.

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Summary

Total Investment in Research and Innovation 2016-2022 (in Dutch: TWIN) surveys the Dutch national government’s financial and tax-related support for R&D and innovation based on budgeted R&D and innovation appropriations and forecasts. The figures presented in this edition of TWIN are based on the 2018 budgets of various Ministries, in accordance with the OECD’s Frascati Manual. They do not take into account the budgetary measures announced in the Dutch Government’s Coalition Agreement for 2017-2021. We discuss the effects of the Coalition Agreement separately, in section 5.

The present report is based largely on the Ministries’ budgets for 2018 and covers the 2016-2022 period. The figures for 2016 are actual outlays and those for 2017 concern provisional expenditure for that year in so far as known when the budgets for 2018 were published (Budget Day, September 2017). The figures for 2018 are taken from the budget proposal and those for 2019-2022 are multi-year budget forecasts.

This report covers three categories of government expenditure:

  • Direct R&D expenditure, meant to expand the knowledge base and develop new applications of the existing knowledge;
  • Direct expenditure on non-R&D innovation, meant to promote innovation but with no R&D component;
  • Indirect support for R&D and innovation, specifically tax incentives.

In addition, we also consider international and regional funding of research and innovation.

The main findings of this report are:

  1. In the 2016-2022 period, the national government will spend approximately € 6.5 billion a year on R&D and innovation. More than three quarters of this amount will consist of direct R&D expenditure, with some € 5.1 billion spent as of 2018. At € 1.2 billion, tax-related support for R&D represents 18 percent of all government funding of R&D and innovation in 2018.
  2. Based on the 2018 budget, direct R&D expenditure will increase between 2016 and 2022 by 2.6 percent, largely owing to increases at three ministries (Education, Culture and Science; Economic Affairs; Social Affairs and Employment). Expenditure will decline at the ministries of Health, Welfare and Sport; Infrastructure and Environment; Security and Justice. Institutions that focus mainly on basic research will see an increase in (primarily institutional) government funding for R&D. Funding for institutes of applied research (‘TO2 institutes’) will decline.
  3. Average revenue from the EU’s Horizon 2020 Framework Programme comes to almost € 650 million per annum until 2016 and may increase further. Regional funding of research and innovation through the European Regional Development Fund (ERDF) comes to about € 100 million per annum. Regional funding of research and innovation amounted to € 190 million in 2016 and is expected to remain at about the same level between 2017 and 2020.
  4. R&D is funded not only by government but also by the business enterprise sector, other national sources and sources abroad. In terms of gross domestic product, total expenditure on R&D in the Netherlands increased slightly between 2011 and 2016 from 1.9 percent of GDP to 2.03 percent. This increase is mainly due to a rise in R&D funding from foreign sources.
  5. Direct government support for R&D will decline as a percentage of GDP starting in 2018, based on the 2018 Budget and the investment measures announced in the 2017 Coalition Agreement. Given the current economic growth forecast, the Netherlands will need to make an additional total investment of € 5.8 billion compared with 2016, if it is to comply with international agreements regarding R&D intensity (i.e. 2.5 percent of GDP by 2020). This will require extra funding, most of it to be provided by the business enterprise sector, but some by government. If the existing ratio between public and private funding of R&D is maintained (1:1.5), government will be obliged to provide a larger share of the additional investment than if the ratio were closer to the international average (1:2). The necessary investment also depends on whether R&D funding from other national and foreign sources increases.

Please cite as:
Vennekens, A. and J. de Jonge (2018). Total Investment in Research and Innovation (TWIN) 2016-2022. The Hague: Rathenau Instituut.

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