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fact sheet
20 May 2021

Government funding of R&D

Photo: Peter Hilz/Hollandse Hoogte
Governments are important financiers of R&D. In the Netherlands, government finances about a third of total R&D expenditure. This fact sheet provides insight into Dutch government spending on Research & Development (R&D) and innovation. It also places these publications in an international perspective. We also look at regional and European expenditure.

In short

  • Absolute government R&D expenditure rises from 4.7 billion in 2012 to 6.2 billion in 2021
  • The ministries of Higher Education, Culture and Science and Economic Affairs together fund 82% of R&D expenditures
  • R&D expenditure of the Dutch government is slightly above the average of the EU-19

The fact sheet is divided into five sections. We look at:

  1. national government expenditure on R&D;
  2. national government expenditure on innovation;
  3. national government expenditure in international perspective;
  4. regional expenditure;
  5. European expenditure.
     
Why do governments fund R&D?
How does government fund R&D and innovation?


1. Developments in government expenditure on R&D

The government finances R&D directly (through basic or project financing) or indirectly (in the form of tax support).

The following graph shows from 2000 the two forms of government support for R&D - both direct financing and fiscal support. Direct investments are presented as a percentage of gross domestic product (gdp) to place them in the context of the economy.


      Government expenditures and percentage GDP

Overheidsuitgaven en percentage bbp
Source: Rathenau Instituut (TWIN)
Notes: The numbers are based on the various budgets of the departments. It concerns the budgets for R&D of the national government: the budgets of the provinces are not included in this. The fiscal part only concerns the WBSO / RDA, which is aimed at R&D (MIA / VAMIL are only aimed at innovation and are not included here).

In the graph above, we see government direct R&D expenditure (in euros) increasing annually up to 2011. There was a decline in 2012. Subsequently, the total amount of government support in the long-term budget shows a slightly increasing trend until 2017. From 2017 to 2018, R&D expenditure rose sharply due to the extra investments from the 2017 Coalition Agreement. The increases from 2021 are mainly due to the National Growth Fund.

The following table looks at the development of R&D expenditure per department in the period 2019-2025. An innovation-relevant component can be distinguished within R&D expenditure, which we will return to later in this fact sheet. In accordance with international agreements, the expenditure is based on the figures of the 2021 budget.


Government R&D budgets by ministry, in millions of euros and as percentage of      GDP

2019 2020 2021 2022 2023 2024 2025
Realization Preliminary Budget Long-Term Estimate
Education. Culture and Science 4118.3 4201.9 4251.3 4276.3 4300.6 4320.8 4332.6
Economic Affairs and Climate Policy 740.3 900.9 892 948.6 934.4 906 876.1
Health. Welfare and Sport 332 344 485.7 358.4 359.2 335.1 297.9
Agriculture. Nature and Food Quality 212.4 231.6 217.9 209.2 207.8 208.3 208.2
Infrastructure and Water Management 71.7 75.4 62.7 60.9 60 59 55.9
Defence 69.4 76 76 76.1 76.1 76.1 76.1
Foreign Affairs 39.3 52 43.3 41.2 40.7 40.2 40.2
Justice and Security 22.4 22.7 22.7 23 23 23 22.9
Social Affairs and Employment 9.9 12.8 20.8 20.3 13.3 9.1 9.2
Interior and Kingdom Relations 9.3 10.6 10.8 10.9 9.7 9.7 9.7
General Affairs 0.7 0.6 0.6 0.6 0.6 0.6 0.6
National Growth Fund 0 0 165.9 332.4 499.1 665.7 665.7
Total 5625.6 5928.5 6249.7 6357.8 6524.3 6653.5 6595
Total in percentage of GDP 0.69 0.74 0.75 0.74 0.75 0.75 0.74

The table shows that the Ministry of Education, Culture and Science and the Ministry of Economic Affairs and Climate Policy are by far the two largest financiers of R&D, together responsible for 82 percent of the expenditure in 2021. rom 2021, resources from the National Growth Fund will also form part of the R&D funding. These ensure that R&D expenditure increases. Within the OCW expenditure, the university's first funding stream accounts for the largest part. The R&D expenditure increases over the years. As a percentage of GDP, R&D expenditure increases and remains reasonably stable from 2020. In 2019, the Dutch government will spend 0.69 percent of GDP on R&D, in 2025 this will be 0.74 percent.
 

2. Innovation and innovation-related expenditure

Since 2014, figures on government spending on innovation have been gathered alongside government spending on R&D. The collection of data on innovation expenditure is in its infancy, however.

The difference between R&D and innovation

The following table shows the different forms of government support for R&D and innovation for the period 2019-2025. In 2021, 73% of the total government contribution to R&D and innovation will consist of direct expenditure on R&D. 18% consists of indirect tax aid for R&D and innovation. Direct innovation expenditure is 9%.


Direct and indirect financial support for R&D and innovation, in millions of euros

2019 2020 2021 2022 2023 2024 2025
Realisation Provisional Budget Multi-annual estimates
R&D expenditure 5625.6 5928.5 6249.7 6357.8 6524.3 6653.5 6595.0
of which innovation relevant 1159.2 1327.2 1416.3 1550.9 1619.3 1671.5 1641.6
Expenditures on non-R&D innovation 376.1 752.9 744.9 871.2 1057.6 1184.5 1155.1
Fiscal support for R&D and innovation 1344.0 1436.0 1582.0 1487.0 1425.0 1425.0 1425.0
of which only for innovation 156.0 149.0 139.0 139.0 139.0 139.0 139.0
Total expenditure for R&D and innovation 7345.7 8117.3 8576.7 8716.0 9006.9 9263.0 9175.1


3. International comparison of government funding of R&D

How does R&D spending in the Netherlands compare with that in other countries? The figure below compares government spending on R&D (as a proportion of GDP) in a number of European countries. The statistics refer to 2019. The figure shows that the Netherlands is in the middle of the countries in the figure. The Netherlands does, however, have a position just above that of the average for the EU-19 and EU-27 countries.

For a good comparison, fiscal support should also be included in direct R&D expenditure. Most countries have such schemes; only a few do not (Germany, Switzerland and Sweden). If these figures are combined, the Netherlands are still in the middle (2018 figures, see data publication Government support for R&D, in % of GDP). As percentage of GDP, the size of government support through tax incentives varies from 0 to 0.29%; in the Netherlands it is 0.14% (2018).
 

4. Regional

Activities related to knowledge and innovation also take place at regional level, though few figures have been gathered on this. However, a survey of funding for knowledge development and innovation at regional level was carried out for the 2013-2019 edition of TWIN. This funding comprises European resources, provincial resources and matched funding from central government. Regional development agencies, management authorities and other regional organisations are also involved. Regional resources for knowledge and innovation have been estimated at € 250 million for 2019. It is expected that this level will at least be maintained in the near future.
 

5. Europe

The European Union also contributes to the funding of R&D in the Netherlands. Since 1984 this has mainly been in the form of funding under the Framework Programmes, which has grown steadily. Dutch institutions, both public and private, acquired a relatively large amount of funding from the last (Seventh) Framework Programme, amounting to one-and-a-half times the Dutch contribution to the programme. The share of European public funding in total public R&D funding in the Netherlands has grown from 9% during the 7th Framework programme to 12% (estimation) for Horizon2020. The average annual income from this source between 2014 and 2019 was €700 million. Financial resources from the EU-Framework Programmes are expected to increase over time. 
 

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