Dutch Innovation at Risk: New Cabinet's Policies Threaten Entrepreneurial Progress
Netherlands, Monday, 30 September 2024.
The Netherlands’ rise to Europe’s third-best entrepreneurship ecosystem is jeopardized by potential policy shifts from the new cabinet. Despite gains in startups and venture capital, the country lags in R&D investment and faces challenges in sustaining innovation leadership.
A Decade of Growth Under Threat
Over the past decade, the Netherlands has ascended from the fifth to the third best entrepreneurship ecosystem in Europe, surpassing countries like Sweden and the United Kingdom [1]. This progress, however, is now under threat due to potential policy changes from the newly formed Schoof cabinet. The Dutch entrepreneurial landscape, which has seen a significant increase in the number of start-ups and scale-ups, is at risk of stagnation if the new policies do not support continued innovation and investment [1].
Venture Capital and R&D Investment Concerns
Despite the growth in venture capital availability, the Netherlands still trails behind countries such as Switzerland, Sweden, the United Kingdom, Israel, and Singapore [1]. Additionally, R&D investments have stagnated at 2.3% of the gross domestic product (GDP), placing the Netherlands in the middle tier of European countries [1]. Former Dutch R&D leaders like Philips, AKZO, DSM, Unilever, and Shell have either stagnated or relocated, leaving a void that new policies must address to prevent further decline [1].
New Policies from the Schoof Cabinet
The Schoof cabinet’s new government program emphasizes strategic collaborations and strengthening value chains to enhance the innovative earning capacity of Dutch companies [2]. The program outlines a mission-driven innovation policy focusing on healthcare, agriculture, energy transition, and defense [2]. The National Growth Fund will contribute €11.3 billion in public funds to bolster innovation, education, and human capital, aiming to keep the Netherlands at the forefront of global innovation [2].
Challenges in Housing and Talent Retention
High housing costs and inadequate housing supply pose significant challenges to retaining and attracting talent essential for innovation. ASML, Europe’s largest tech firm, has highlighted the struggles of housing its workforce due to surging rents in Brainport Eindhoven [4]. The Netherlands has not met its housing construction targets, adding to the difficulty of accommodating a growing workforce [4]. If these housing issues are not addressed, companies like ASML may consider directing future growth abroad [4].
The Role of Public and Private Partnerships
The newly signed Knowledge and Innovation Covenant (KIC) 2024-2027 aims to address these challenges by allocating €5.7 billion annually for innovation through public-private partnerships [5]. This initiative, supported by the Ministry of Economic Affairs and Climate Policy, focuses on mission-driven innovation in areas such as energy transition, circular economy, health & care, and digitalization [5]. By fostering collaboration between government, knowledge institutions, and the private sector, the KIC seeks to maintain the Netherlands’ competitive edge in innovation [5].
A Critical Moment for Dutch Innovation
As the Dutch government navigates these policy changes, the future of the country’s innovation ecosystem hangs in the balance. The potential for stagnation in R&D investments, coupled with challenges in housing and venture capital availability, requires decisive action from the new cabinet. The Netherlands’ ability to sustain its position as a leading entrepreneurial hub in Europe depends on the successful implementation of policies that support innovation, talent retention, and strategic investments.