Structural investments in research and science will be amply recouped
Structural investments in research and science, as described in the proposal from the Knowledge Coalition, will be amply recouped. This is the finding from an independent analysis undertaken by RaboResearch, which has calculated the effects of the Knowledge Coalition's plans on its own initiative. The higher and structural investments proposed by the Knowledge Coalition will generate additional economic growth of 0.5 percentage points in the next decade. Average economic growth will increase from 1.5 to 2% as result. In the longer term, this means that every Dutch citizen will potentially be almost 8,000 euros better off on average.
At present, the Netherlands is trailing considerably behind other European frontrunners in terms of investments in knowledge and innovation. And that is detrimental to prosperity, according to the RaboResearch analysis. In December last year, entrepreneurs and researchers, united in the Knowledge Coalition, submitted a proposal to the government to increase public investments in research and innovation by 300 to 380 million euros annually. This is expected to lead to additional private investments and therefore is a good step towards achieving the total of 3% of GDP, as agreed in the EU. Marcel Levi, chair of the Knowledge Coalition and president of the Dutch Research Council (NWO): 'It's good news that this independent analysis now confirms that structurally investing in research and innovation is good for science, the economy and for the Netherlands as a whole. It sends a clear message to the parties engaged in coalition talks: let's go for the 3%.'
RaboResearch calculated the effects of the Knowledge Coalition's proposal on its own initiative. The main findings of the analysis are as follows:
- Public knowledge investments in the Netherlands are trailing behind those of other European countries. This is detrimental to economic welfare in the Netherlands.
- Research shows that there is a direct relationship between public knowledge investments, productivity and GDP.
- A package of public R&D investments, plus the necessary private R&D investments for sufficient absorption capacity, will increase economic growth by an average of 0.5 percentage points annually in the coming decade.
- In the long term, this will generate a higher level of economic welfare of 4,800 euros per Dutch citizen in real terms (in nominal terms: 7,800 euros).
- This effect will be maintained only if the higher investment level is permanent. Temporary investment packages (such as the National Growth Fund) increase economic welfare only temporarily.
- It is crucial that the government takes action now rather than waiting until growth stagnates as a result of an ageing population. It will take some time until we can actually reap the benefits of an investment package in public and private R&D.
Knowledge Coalition proposal
The Knowledge Coalition has submitted a proposal to the government to increase public investments in research and innovation by an additional 300 to 380 million euros each year for the next decade so that the amount will be structurally higher by over 1.5 billion euros at the end of the government's term of office. This stable growth path is necessary if the Netherlands is to remain a competitive knowledge economy in Europe. Countries such as Denmark and Germany have been investing substantially more than the Netherlands for years. The additional funds are initially intended for a stable, long-term increase in investments in the public knowledge base combined with an increase in investments in thematic research centring on societal challenges and new economic activities. These investments will enable the Netherlands to reach an investment level of 3% of GDP for research and innovation by 2030. Only then will the Netherlands be able to continue to keep pace with other European countries.