Total Investment in Research and Innovation (TWIN) 2017-2023

The Netherlands spent € 14.7 billion on research and development (R&D) in 2017. Almost a third of this expenditure consists of direct government funding. In addition, government funds non-R&D innovation and uses tax measures to stimulate R&D and innovation.

This Facts & Figures on Total Investment in Research and Innovation (‘TWIN’) 2017- 2023 provides an overview of trends in government support for R&D and innovation over the 2017-2023 period, based on the 2019 National Budget. In the years ahead, direct government expenditure on R&D will amount to € 5.5 billion and expenditure on non-R&D innovation to € 0.35 billion (in 2019), with tax measures coming to a total € 1.34 billion. This will bring total government support for R&D and innovation to € 7.2 billion.

We also discuss provincial and EU spending on knowledge and innovation, amounting to a total of approximately €0.9 billion annually. Our analysis of government funding in these categories leads us to draw the following main conclusions:

Read the main conclusions by clicking the tab.

Please cite as:
Vennekens, A., L. Koens and J. de Jonge (2019). Total Investment in Research and Innovation 2017-2023. The Hague, Rathenau Instituut.

We draw the following five main conclusions:

1. Direct government expenditure on R&D is increasing, but lags behind the projected rise in gross domestic product.
   
   Direct government expenditure on R&D rose from €5.0 billion in 2017 to €5.6 billion in 20181 and is forecast to remain at around €5.5 billion over the medium term. The increase between 2017 and 2023 comes to 11 per cent, whereas the previous TWIN publication2 projected an increase of 2.6 per cent. The higher percentage can be attributed mainly to the extra investment in R&D provided for in the Dutch Government’s 2017 Coalition Agreement, which we take into account in this TWIN publication for the first time.
   
   Despite this increase, we expect direct government spending on R&D as a percentage of gross domestic product (GDP) to fall after 2018, from 0.67 per cent in 2017 to 0.65 per cent in 2023. This is because the budgeted government spending on R&D is not growing as fast as the economy, according to forecasts by the Netherlands Bureau for Economic Policy Analysis (CPB).
    
2. To achieve the 2.5 per cent GDP spending target by 2020, extra investments will be required.
   
   Between 2014 and 2017, government, the business enterprise sector and other investors together spent 2.0 per cent of GDP on R&D. This puts total Dutch R&D expenditure below the averages of the OECD, EU-15 and EU-28 country groups. Direct government R&D expenditure is in line with the average for the EU-28 (the entire EU), but lower than a number of reference countries for the Netherlands, such as Germany, Switzerland and the Scandinavian countries.
   
   To achieve the 2.5 per cent GDP target for R&D by 2020, both the public and the business enterprise sectors need to invest more. If the ratio between public and private R&D expenditure remains the same, government would have to invest an additional € 1.3 billion per year on top of the annual € 500 million already budgeted.
    
3. For the first time since 2010, research-specific programme funding for applied research organisations (the ‘TO2 institutes’) has increased, thanks to the investments provided for under the Coalition Agreement.
   
   After years of decline, the investments provided for under the Coalition Agreement have led to an increase in programme funding for the ‘TO2 institutes’ or applied research organisations, up 16 per cent between 2017 and 2023. TNO’s programme funding shows the sharpest increase.
   
   Other policy-driven research expenditure is also increasing, mainly owing to additional funding from the Ministry of Economic Affairs and Climate Policy. However, the size of the expenditure (€ 875 million in 2019) is nowhere near the € 1.1 billion spent in 2010.
    
4. The Netherlands relies on a large proportion of tax-related support for R&D, comparatively speaking.
   
   Compared with other OECD countries, a large proportion of government support for R&D consists of tax measures (0.17 per cent of GDP). Only Belgium, France and Ireland have a higher percentage of tax-related support for R&D.
   
   In 2019, government tax-related support for R&D and innovation stands at € 1.4 billion. The Dutch Research and Development (Promotion) Act (WBSO), meant to stimulate R&D, accounts for most of this amount. After a slight dip in 2018, the WBSO tax benefit will increase from € 1.2 billion to € 1.3 billion in 2023. The remaining € 139 million is linked to non-R&D innovation schemes, i.e. the Environmental Investment Rebate (MIA) and the Indiscriminate Depreciation of Environmental Investments (VAMIL).
    
5. The EU can be expected to play an even greater role in R&D funding.
   
   In addition to the national government, the European Union plays an important role in funding R&D and innovation. Researchers affiliated with Dutch institutions have so far received more than € 3 billion in funding from the EU’s Horizon 2020 Framework Programme, in the range of € 600 to 700 million per year. The value of EU funding has increased from 9 per cent of total public R&D funding under the previous, 7th Framework Programme (FP7, 2007-2013) to 11 per cent for Horizon 2020 (forecast).
   
   For the next Framework Programme (2021-2027), the European Commission has proposed a total budget that exceeds the Horizon 2020 budget by more than 20 per cent. If the Netherlands remains as successful as it has been, revenue from the next Framework Programme could increase to € 800 million per year.

Total investment in research and innovation 2016-2022

Total investment in research and innovation 2015-2021

Total investment in research and innovation 2014-2020

Total investment in research and innovation 2013-2019

Total investment in research and innovation 2012-2018