Dutch R&D investments continue to lag behind

The Netherlands invests 2.3% of gross domestic product (GDP) in research and development (research & development / R&D). This amounts to an annual investment of 22 billion euros. This puts our country far behind other countries.

This is according to figures shared by TNO. Both our eastern and southern neighbours invest significantly more in R&D. The Germans, for instance, put 3.1% of GDP into R&D every year, while in Belgium the figure is 3.5%. Leading the way worldwide is South Korea, which invests 4.9% of GDP in R&D on an annual basis.

One example is Veldhoven-based chip machine manufacturer ASML, which invested a total of 3 billion euros in R&D by 2022. This puts the company in 64th position globally in terms of R&D investments. TNO draws a comparison with Apple, which ranks fourth. The US tech company invested 24 billion euros in R&D in the same year. This is more than the whole of the Netherlands put together.

Netherlands lags behind other European countries; our country does not reach the EU standard of 3%. Besides Germany and Belgium, Danes, Finns and Austrians also invest more in R&D. Another country lagging behind is France.

Based on an analysis, TNO reports that the lagging R&D investment is partly explained by relatively limited private spending on R&D. "To arrive at the 3% target, 1% is accounted for by the government and 2% by private parties," TNO reports.

One explanation for the underlying private investments may be the deterioration of the Dutch business and investment climate, especially for manufacturing, according to TNO. The reasons for this include increased regulatory pressure, relatively high energy costs and congestion on the electricity grid, roads, housing market and labour market, among others.

If we look at the parties that invest the most in R&D, ASML leads with over 3 billion euros. NXP Semiconductors follows with over 2 billion euros. Philips rounds off the top three with 1.83 billion euros of R&D investment. This puts ASML, NXP and Philips in 64th, 111th and 124th positions respectively in the global ranking.

Other players in the top five are Ahold and TomTom. Ahold invested a total of €370 million in R&D in 2022, which puts the company at 519th position in the global ranking. TomTom follows with €344.43 million, good for 547th position.

Netherlands invests a lot in fundamental research. This is often aimed at new knowledge, with no specific applications or use of the knowledge in sight. This involves research to acquire new knowledge about underlying foundations of phenomena and observable facts.

Instead, many other countries focus investments mainly on valorisation and applied research around concrete products and services. These include Japan, the United States and South Korea. This involves research to acquire new knowledge focused on specific practical goal or objective. The Netherlands invests proportionately a lot in academic research. However, according to TNO, our country does not sufficiently succeed in bringing knowledge to the market.

To reach the EU standard of 3%, the Netherlands needs to invest an additional €6.7 billion in R&D on an annual basis.

Globally, the top five include mainly US players. The top five look as follows:

Volkswagen is the highest-ranking European organisation, ranking sixth with €18.9 billion in R&D investments. The Swiss pharmaceutical company Roche follows in ninth position with 14.3 billion euros, while the also Swiss pharmaceutical company Novartis follows me3t 8.5 billion euros. Other European players in the top 25 are:

A factsheet containing further information on the TNO study is available here.

Author: Wouter Hoeffnagel