Innovative Netherlands underinvests: ‘They will decline’

The Netherlands performs well in innovation and digitalization but is falling behind when it comes to investment, according to a ranking by Leadfeeder. According to Cees van Beers, an economist and professor at Delft University of Technology (TU Delft), this could put the Netherlands’ position as an innovative economy under pressure in the long term. “If we don’t make a switch, I think the Netherlands will fall significantly in this ranking.”

The Netherlands ranks third in the European business climate ranking. The country scores highly in digitalization, AI adoption and innovation, but ranks only 25th out of the 29 countries surveyed when it comes to investment.

Practical constraints are holding back investment

According to Van Beers, the problem is not simply a lack of willingness to invest. The Netherlands is facing practical constraints that make new investments more difficult, the professor says. One important factor is the nitrogen issue. Limited room for nitrogen emissions has brought some construction and expansion projects to a standstill. This affects not only agriculture but also companies looking to expand.

The Netherlands’ limited available space is another problem. “We are dealing with a major space constraint,” says Van Beers. “This leads to higher costs for land use and can also make the Netherlands less attractive to foreign investors.”

On top of this, the electricity grid is becoming increasingly congested due to rising demand, partly driven by data centers. For energy-intensive companies in particular, a lack of grid capacity can be a direct barrier. “As a company, you have to get in line,” says Van Beers. “That puts a brake on investment.”

Strengths

Van Beers also sees several strengths. The Dutch economy benefits from a highly educated population, high labor force participation and a strong degree of digitalization. The Netherlands also performs well in innovation and patents. The country ranks fifth in Europe for patent applications per million inhabitants.

At the same time, Van Beers says the lack of investment is partly being masked for now because the economy continues to grow in other ways. Consumer spending and government expenditure are keeping the economy afloat, but he believes they are insufficient to sustain long-term growth.

A patent, too, does not automatically translate into economic growth. “There are patented inventions that never become innovations because they fail commercially.” Entrepreneurs, commercial activities and investment are needed to bring technology to market.

Creating better conditions

According to Van Beers, the solution is not simply to invest more in technology. The Netherlands must primarily create the conditions that allow investments to actually take place. This problem is not limited to the Netherlands, either. Other European countries are also investing too little in new technology and infrastructure, according to Van Beers.

“We need to make a switch, because as long as we don’t solve these problems, further investment remains largely locked up.”

According to Van Beers, the situation is urgent. He also points to the report by former ASML CEO Peter Wennink, which states that the Netherlands would need to invest tens of billions of euros more by 2035. “Enormous amounts of money are needed to keep the Netherlands competitive,” he says. “For now, you don’t see that happening.”

A major challenge

In short, the Netherlands has a strong foundation for innovation, but that position cannot be taken for granted. Without sufficient investment, the country risks losing ground over time to other European countries and, in particular, non-European countries, Van Beers warns.

According to him, the Netherlands therefore faces a major challenge: creating the conditions that will allow the country to continue making the most of its innovative strength in the future.