Investment needs to be more prominent on the political agenda in the Netherlands. In a new report, Rabobank warns of a potential loss of 90 billion euros if the Netherlands continues to cut investment funds. Investing in R&D and education is crucial for productivity and economic growth.
Why you need to know this:
It is vital to understand why investment should be central to the political agenda in the Netherlands. Rabobank’s research explains why.
Investing in the future
Recently, more and more alarm bells are being rung about the quality of the Dutch business and establishment climate. In recent years, Dutch politicians have focused on the short term, especially on the purchasing power of citizens. The danger lies in neglecting essential long-term investments that form the basis for a stable and growing economy. This trend could lead to a worse competitive position in the global market.
Rabobank has made it clear in recent research that without the necessary investments in Research & Development (R&D) and education, the Netherlands misses out on substantial economic growth. Falling behind in these areas directly affects labour productivity and hence the country’s future prosperity.
National growth fund
The National Growth Fund has been under pressure for some time. However, the figures speak volumes: if no action is taken, abolishing investment funds could cause the Dutch economy a loss of €90 billion by 2040.
Action needed
Rabobank calls for a higher level of ambition from politicians. Investing in knowledge is not only important for the current economic situation, but is also crucial for the Netherlands’ future knowledge economy. Involving the business community in these investments ensures a better fit with the future needs of the economy.
Shaping funds
While the current temporary funds are a good initiative in themselves, they have important drawbacks: they are temporary and the available funds are not always spent on projects that fit the original purpose. This is why Rabobank firstly advocates structural funds. After all, permanently higher productivity and prosperity require permanently higher investments. This can be implemented in various ways, for example through a structural fund.
Rabobank in the report: “This does deserve different governance than the National Growth Fund. There are plenty of international examples we can learn from, such as the Norwegian Global Pension fund, the French Caisse des dépôts et consignations and Singapore’s Temasek. But even a non-Western country like China has a fund that makes large long-term investments that private parties see as too risky. Unlike current funds, these foreign funds do not provide grants, but participate – risk-bearing – themselves. Other common denominator of such funds is that, although the government owns them, the board is at a distance and thus makes investments independently within the set frameworks. Also, these funds can (partly) use the proceeds of risky investments to make new investments.”
An alternative to a structural fund is to legislate structural investments in R&D, but also, for example, for education spending, stimulation of private R&D and possibly even entrepreneurship. Spending could then go through the regular budget. However, it is important to strongly involve the business community in particular, so that investments do match the (future) needs of the economy.
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