Science, Technology and Innovation in the Netherlands Policies, facts and figures Science, Technology and Innovation in the Netherlands Policies, facts and figures Edited by Jan van Steen (Ministry of Education, Culture and Science) Piet Donselaar and Iskander Schrijvers (Ministry of Economic Affairs) The Hague, June 2004 Colophon This is a joint publication of the Ministry of Economic Affairs and the Ministry of Education, Culture and Science on the occasion of the Dutch EU Presidency from 1 July to 31 December 2004 June 2004 Additional copies may be ordered at the website www.ez.nl The publication is available as a pdf document at the websites www.ez.nl and www.minocw.nl Ministry of Economic Affairs Ministry of Education, Culture and Science Directorate-General for Innovation Research and Science Policy Department Bezuidenhoutseweg 30 Rijnstraat 50 P.O. Box 20101 P.O. Box 16375 2500 EC The Hague 2500 BJ The Hague e-mail: ezinfo@postbus51.nl e-mail: info@minocw.nl Internet: www.ez.nl Internet: www.minocw.nl Publication number: 04I27 The European challenge We have set ourselves a challenging target by setting out the Lisbon and Barcelona objectives. We shall continue to invest in education, research and innovation. Our aims are to reach the objective of being the most competitive knowledge society and to create the right climate for sustainable growth. The approaching midterm review of the Lisbon process offers an opportune moment for us to reflect on the further development of the European Research Area with our colleague member states. The evaluation of the new instruments of the 6th Framework Programme and the discussion on the future of European research and technology policy will play an important role in this debate. Against this background, we have invested in a strategy to achieve the Lisbon and Barcelona targets in the Netherlands. Development of the knowledge economy has been given top priority in our country, resulting in the creation of an Innovation Platform and an increased budget for science, education and innovation. During the Dutch EU Presidency in the second half of 2004, we have the additional responsibility to realise progress on the European research and innovation agenda. In this period, we wish to contribute to the debate on the European Research and Innovation Area and on the first outline of the 7th Framework Programme. We shall also pay special attention to the promotion of excellence in research, the envisaged creation of the European Research Council, the promotion of public-private partnerships and European Technology Platforms, the position of SMEs and enhanced co-operation concerning research infrastructures. We shall also work to increase the number of researchers as well as their quality and mobility. Since we are all facing the same European challenge, we would like to give you a ‘glimpse behind the scenes’ in the Netherlands. Therefore we are pleased to present this publication to you, explaining Dutch policies on science, technology and innovation, supported by key facts and figures. Laurens Jan Brinkhorst Maria J.A. van der Hoeven Minister of Economic Affairs Minister of Education, Culture and Science 3 4 Contents Executive summary 7 1 Introduction 11 2 The Dutch system of science, technology and innovation 13 2.1 Science and technology and the dynamic innovation system 13 2.2 The structure at governmental level 14 2.3 The funding of R&D 16 2.4 Advisory bodies on science and technology 17 2.5 R&D performing organisations 17 3 Policies on science, technology and innovation 27 3.1 The Dutch commitment 27 3.2 National science policy 28 3.3 National technology and innovation policy 30 3.4 International science, technology and innovation policy 31 4 Investments in R& D and innovation 35 4.1 Policy issues 35 4.2 Facts and figures 40 5 Human resources 49 5.1 Policy issues 49 5.2 Facts and figures 54 6 Public-private interaction and knowledge use 59 6.1 Policy issues 59 6.2 Facts and figures 69 7 Scientific and technological performance 77 7.1 Policy issues 77 7.2 Facts and figures 84 8 Innovation performance 93 8.1 Policy issues 93 8.2 Facts and figures 98 Annex: Country codes 107 5 6 Executive summary Science, technology and innovation are regarded to be the main impetus for the social and economic development of societies. The knowledge society exerts an increasingly pressing demand on our ability to generate new knowledge and promote its use. The way knowledge is diffused and applied is increasingly becoming a matter for strategic planning and policy concern. It is the role of government to develop a well-defined strategy for the knowledge society and economy. This publication describes the main elements of Dutch government policies on science, technology and innovation. It also describes the principal actors in the Dutch system of science, technology and innovation. Specific policy themes are illustrated with good practices and facts and figures. The Dutch system of science, technology and innovation The analytical framework of the dynamic innovation system identifies the main actors relevant for the production, dissemination and use of scientific knowledge, and their interaction: universities, research institutes, intermediary organisations and business enterprises. A central part of this innovation system is the Dutch system of science and technology, which is a complex network of funding and performing organisations and intermediary and advisory bodies. As in other countries, business enterprises and government are the main sources of R&D funding in the Netherlands. Business enterprises funded 52 percent of total R&D in the Netherlands in 2001. Government funds amounted to 36 percent. A third major source of R&D funding are funds from abroad. These foreign funds increased quite strongly in the nineties and amounted to 11 percent of total R&D in 2001. The business enterprise sector is the main performer of R&D in the Netherlands with 58 percent of total R&D in 2001. Universities perform second with 27 percent, followed by research institutes with 15 percent. Seven large firms undertake roughly 50 percent of total business R&D in the Netherlands. Philips is the largest R&D spender in the Dutch business sector with a share of roughly 20 percent in total business R&D expenditure. The public science and research community in the Netherlands encompasses 14 universities, the Royal Netherlands Academy of Arts and Sciences and its 18 institutes, the Netherlands Organisation for Scientific Research and its 9 institutes, 5 Large Technological Institutes, 4 Leading Technological Institutes, the Netherlands Organisation for Applied Research and its 14 institutes, the agricultural research institutes of the DLO Foundation, a number of state-owned research and advisory centres and several other institutes in the fields of health and the social sciences. Science, technology and innovation policies: main aspects In the context of European developments and the European Research and Innovation Area, the 7 Netherlands has ambitions of its own: to raise the Dutch knowledge economy to a leading position in Europe and to change the current mediocre position in innovation into a top position. The start of a new Cabinet in May 2003 gave an important impetus to science and technology policy in the Netherlands. The new Cabinet decided to establish an Innovation Platform, headed by the Prime Minister, with members from government, business enterprises and knowledge institutes. The task of the Innovation Platform is to propose strategic plans to reinforce the Dutch knowledge economy and to boost innovation by stimulating business enterprises and organisations in the public knowledge infrastructure to work closely together. Besides the installation of the Innovation Platform, the Cabinet decided to allocate € 800 million of extra funding to education, research and innovation. € 185 Million of this extra funding was allocated to priorities in the field of research and innovation and € 100 million was set aside to intensify the fiscal R&D incentive for private R&D. In the autumn of 2003 two policy documents were published to set out the main lines of science, technology and innovation policy. In October 2003 the Ministry of Economic Affairs published the Innovation Letter, entitled ‘Action for Innovation: tackling the Lisbon ambition’ . In November 2003 the Science Budget 2004, entitled ‘Focus on excellence and greater value’ , was published by the Ministry of Education, Culture and Science. The main elements of the Science Budget 2004 are: - stimulating focus and mass in research in order to concentrate research funds on national priorities, which are genomics, ICT and nanotechnology. Some areas that are of special importance to the Netherlands from a societal point of view, such as traffic management, water control and the vitality of major cities, can also be supported; - rewarding excellent research groups, which should be based on simple, non-bureaucratic procedures, such as track records of individual researchers; - promoting the utilisation of research results by strengthening the societal role of universities and stimulating a university patent policy; - attention for human resources in science and technology, with a particular focus on the impending shortage of knowledge workers, especially in science and engineering; - raising public awareness on science and technology, in which science centres, museums as well as schools, universities and industries play a vital role and aimed at pooling the current regional initiatives. The main elements of the Innovation Letter are: - strengthening the climate for innovation, which includes intensifying the fiscal incentive for R&D, the introduction of a new (project-based) scheme for R&D collaboration and policy directed at tackling the impending shortage of knowledge workers; - encouraging more companies to be innovative by improving the climate for high-tech start-ups, by better exploiting the potential of SMEs through policy actions aimed at the dissemination 8 of knowledge to SMEs, and by attracting knowledge-intensive business activity to the Netherlands; - taking advantage of opportunities for innovation by opting for focus and mass in strategic areas, which is aimed at strengthening the knowledge base and stimulating public-private co operation in key technology areas such as ICT and life sciences. The policies on science, technology and innovation also have an international dimension. These policies are focused on R&D collaboration in the European Framework Programmes, the further development of the European Research and Innovation Area, international technological collaboration within the EUREKA network and bilateral R&D co-operation with a number of countries. Policy themes Five policy themes are considered in more detail in the publication. These themes are: investments in R&D and innovation, human resources, public-private interaction, scientific and technological performance, and innovation performance. The categorisation of themes follows the current European agenda for research and innovation. All these issues stand high on the European agenda. Theme 1: Investments in R& D and innovation The Netherlands has high ambitions regarding investments in R&D and innovation, but the current situation is still far from achieving goals which have been set. Although public R&D expenditure is relatively high, private R&D and innovation expenditure is relatively low. Therefore policy actions are directed towards increasing investment in R&D and innovation. On top of the € 185 million extra funding for priorities in the field of R&D and innovation, the tax incentive for private R&D is intensified with € 100 million. Other measures include the introduction of a new (project-based) scheme for stimulating R&D collaboration and streamlining initiatives for the stimulation of high- tech start-ups in one programme, named TechnoPartner. Furthermore, policy will focus more strongly on attracting knowledge-intensive activity from abroad. Theme 2: Human resources Although the Netherlands has a relatively large share of human resources in science and technology (HRST) , impending shortages could frustrate the realisation of the Barcelona ambition. The Netherlands has to deal with the ageing of university personnel, the under-representation of women in scientific functions in all sectors and relatively few people opting for studies in science and engineering. A white paper on human resources in science and engineering (the so-called Delta plan) was published at the end of 2003, which introduced a number of actions, set out under four headlines: attractive education at all levels, attractive jobs, attractive choices, and attractive settlement for foreigners in the Netherlands. 9 Different subsidy schemes were introduced to stimulate a career in research: an innovation research incentives scheme for different groups of researchers, a scheme for women in science, and a scheme for supporting students from ethnic minority groups to write a research proposal, rewarding the best. Theme 3: Public-private interaction and knowledge use There are many mechanisms for public-private interaction, ranging from formal (such as co-operation in R&D, contract research, spin-offs and co-publications) to informal (such as professional networks and mobility of people) . The functioning of these mechanisms may be stimulated by means of financial incentives, institutional arrangements, valorisation of results from public research, and public-private mobility of researchers. A good practice example of a financial incentive is the funding of projects by the Technology Foundation STW, based on quality and utility criteria, and promoted by the installation of users’ committees for each individual project. A good practice example of an institutional arrangement is the establishment of Leading Technological Institutes in the fields of nutrition, metals, polymers and telematics. Activities for the valorisation of research results are incorporated in the TechnoPartner Action Programme. Policy to stimulate public-private mobility of researchers is currently being prepared. Theme 4: Scientific and technological performance The Netherlands is a country with high quality scientific research (high impact scores) and good scores on patents (particularly in the field of ICT) . The quality of scientific research will be further increased by the introduction of a new system of research quality assessment and by strengthening the relationship between university funding and research performance. Technological performance will be stimulated by bringing together the activities of companies and knowledge institutes in the public knowledge infrastructure on key points within a number of strategic innovation areas. Four key technologies have been chosen as areas in which the Netherlands has high potential to attain an excellent position: ICT, life sciences, nanotechnology and catalysis. Theme 5: Innovation performance There are several strengths and weaknesses in the Dutch innovation system, but the innovative capacity of the Dutch business sector is reasonable, in general terms. However, compared to other European countries, the Netherlands is losing momentum. Furthermore, the Netherlands scores low on innovation output, as measured by the share of new or improved products in the turnover of enterprises. More public-private interaction is an important policy aim to enhance the transformation of (basic) scientific and technological knowledge into innovation output. More specific policy lines to increase the innovation output of enterprises, partly related to the aspect of public-private interaction, are: improving the climate for innovative entrepreneurship and improving the dissemination of knowledge to SMEs. 10 1 Introduction Science, technology and innovation are regarded to be the main impetus for the social and economic development of societies. Without the generation, diffusion and use of knowledge, economic growth is hardly possible and there will be no healthy social structure, no ecological balance and no cultural vitality. The knowledge society exerts an increasingly pressing demand on our ability to generate new knowledge and promote its use. The way knowledge is diffused and applied is increasingly becoming a matter of strategic planning and policy concern. It is the role of government to develop a well-defined strategy for the knowledge society and economy. This publication sets out the elements of this strategy. The approach chosen is to sketch a general picture of the recent developments in science, technology and innovation policy in the Netherlands, and to discuss in more detail a number of its policy themes. The themes are illustrated by a number of relevant – internationally comparable – indicators, as far as possible for all 25 EU countries. Policy issues are described in terms of concrete actions and practices. The categorisation of themes follows the current European agenda for research and innovation, examples of which are investments in R&D and innovation, human resources and public-private interaction. All these issues stand high on the European agenda. Furthermore, this document describes the actors that play an essential role in the Dutch knowledge economy, such as the universities, the research institutes, the business enterprises and the government itself. The structure of the document is as follows. Chapter 2 describes the system of science, technology and innovation in the Netherlands and the actors involved. Chapter 3 gives an overview of the policies on science, technology and innovation, nationally and within the international context. Chapters 4 to 8 describe the Dutch position on investments in R&D and innovation (Chapter 4) , on human resources (Chapter 5) , on public-private interaction (Chapter 6) , on scientific and technological performance (Chapter 7) and on innovation performance (Chapter 8) , illuminated with good practices and facts and figures. 11 12 2 The Dutch system of science, technology and innovation 2.1 Science and technology and the dynamic innovation system The science & technology (S&T) system focuses on the funding and production of knowledge by business enterprises, universities and research institutes. Although the production of new knowledge has a value of its own, new knowledge generated by these organisations is also basic input for innovation in enterprises. The dynamic innovation system (DIS) , which includes the S&T system and is illustrated in Figure 2.1, is an analytical framework for identifying the factors that are relevant for the transformation of new knowledge into innovation. Figure 2.1 Dynamic innovation system ...... ..................... ............................. .............. ............. .............. .............. .......... ............... .......... ............ .............. ..................... ........... .................. ........ .................... ............................ ........... ....... ............. ............... ...... ................. .................. ....... ................... .......................................................................................... Source: Technopolis / Ministry of Economic Affairs. The general idea behind the dynamic innovation system is that innovation is an interactive process in which various actors play a role: knowledge institutes, business enterprises, customers, intermediary organisations and the government. The strength of the innovation system depends 13 on the exchange, interaction and collaboration between the various elements of the system. While science and technology are key factors in the dynamic innovation system, innovation involves more than simply the development of knowledge. Therefore the contribution of S&T to innovation depends on the extent to which it is embedded in a well-functioning innovation system. The innovation system is used in the Netherlands as a framework for the foundation and formulation of various aspects of science, technology and innovation policy. 2.2 The structure at governmental level The Netherlands has created a S&T system with co-ordination mechanisms at two levels: a) the Cabinet and b) the ministries. Specific committees are responsible for science, technology and innovation at both levels: at Cabinet level the Council on Science, Technology and Information Policy (RWTI) , and at interdepartmental level the Committee on Science, Technology and Information Policy (CWTI) . The RWTI prepares the decisions to be taken by the plenary Cabinet. Core members of the RWTI are the Minister of Education, Culture and Science, the Minister of Economic Affairs, the Minister of Government Reform and Kingdom Relations and the Minister of Finance. The RWTI is headed by the Prime Minister. The CWTI consists of high-level civil servants of all ministries. Before decisions are taken by the RWTI, the CWTI decides about which proposals to present to the RWTI. Figure 2.2 S& T system at governmental level .............................. ...................................... .......................... ........................... ....... ............................................... ...... ................................................. ...... .................. 14 Within the Dutch government the Minister of Education, Culture and Science co-ordinates science policy. Science policy has a four-year cycle, consisting of a Science Budget, which is published every four years, and status reports in the years in between. In the Science Budget the Minister of Education, Culture and Science presents his/her view on the state of the science system in general and puts forward his/her plans for the coming years. The annual status reports describe the progress that has been made with respect to the policy plans. The most recent report is the Science Budget 2004, which was published in November 2003. The Minister of Education, Culture and Science has a responsibility for the governance of the public universities and several (research) organisations that play an important role in science policy. 1 The main ones being NWO (Netherlands Organisation for Scientific Research) , TNO (Netherlands Organisation for Applied Research) , the KNAW (Royal Netherlands Academy of Arts and Sciences) and the KB (Royal Library) . The Minister of Economic Affairs is responsible for the co-ordination of technology and innovation policy. Together with the Minister of Education, Culture and Science, the Minister of Economic Affairs also has a responsibility for the international part of Dutch science and technology policy (including EU subject matters) . Other ministers have their own mission-related science and research policy for specific areas of interest, such as health, environment, defence, transport and public works. In October 2003 the Ministry of Economic Affairs published the Innovation Letter, which set out a policy agenda for technology and innovation policy for the near future. Also in 2003, a white paper on human resources in science and engineering (‘Deltaplan bèta/techniek’) was published as a joint effort of the Ministry of Education, Culture and Science, the Ministry of Economic Affairs and the Ministry of Social Affairs and Employment. In September 2003 the Innovation Platform was installed as part of the implementation of the Coalition Agreement. The aim of the Innovation Platform is to propose strategic plans to reinforce the Dutch knowledge economy, based upon an integral perception of the Dutch knowledge economy and the role of its actors. On the one hand, it functions as a booster for innovation by stimulating business enterprises and organisations in the knowledge structure to work together 1 The Minister of Agriculture, Nature Management and Food Quality is responsible for the Agricultural University Wageningen and the DLO agricultural research institutes (the Wageningen University and Research Centre) . 15 and achieve concrete results. On the other, it functions as a partner with the Cabinet for the development of policies to stimulate the production and transfer of knowledge and to stimulate innovation in the Netherlands. The Innovation Platform is intended to function as an ‘icebreaker’ and to give path-breaking advice. The Platform consists of 18 members, most of which were selected from the business community and knowledge institutes. These members were asked to participate on the basis of their extensive professional experience with generating constructive and creative ideas in the field of innovation. The government is represented in the Innovation Platform by the Prime Minister, who chairs the Platform, and by both the Minister of Economic Affairs and the Minister of Education, Culture and Science. 2.3 The funding of R& D As in other countries, business enterprises and the government are the main sources of R&D funding in the Netherlands. They are responsible for about 90 percent of the total R&D. However, the share of funds from abroad increased in the nineties from 2 percent to more than 10 percent in 2001. Compared to other countries, the share of Dutch government funding is still relatively high, although in terms of a percentage of GDP government funding has decreased since 1990. On the other hand, the share of business enterprise funding is relatively low. Some of the government funding is allocated through intermediary organisations: NWO and KNAW allocate funds for the Ministry of Education, Culture and Science; SenterNovem operates as an agency of the Ministry of Economic Affairs. Table 2.1 R& D by source of funding (percentage distribution, 2001) Government Business enterprises Other national sources Abroad -Ministry of Education, Culture and Science -Ministry of Economic Affairs -Ministry of Agriculture, Nature Management and Food Quality -Ministry of Transport, Public works and Water Management -others -large multinationals -other enterprises -private non-profit organisations (PNP) -own funds universities -EU -foreign enterprises 36% 52% 1% 11% 16 2.4 Advisory bodies on science and technology There are several advisory bodies that counsel the government on science and technology policy: - The Advisory Council for Science and Technology Policy (AWT) has a general advisory role. The Council was originally set up by an Act dated 2 November 1990 and was reinstated by an Act dated 30 January 1997. It is the Council’s task to advise government and parliament on the science and technology policy to be pursued both nationally and internationally, and on the information policy in the fields of science and technology. The core of its advisory task is focused on the knowledge and innovation process and its development. The recommendations made by the Council may also relate to matters that affect or result from research and science practice and technology development. The members have various backgrounds (university, industry etc.) . Members take seat in the Council on the basis of their personal merits. - Sector councils advise the ministers concerned on specific policy areas. Their foresight exercises and analyses are used as input for the activities of the ministries concerned: input to the programming and co-ordination of research and to the organisation of the knowledge infrastructure in their relevant sector. They can also contribute to policymaking and obtaining support for a specific policy. Sector councils are primarily oriented to the field of ‘their’ ministries, but the products of the sector councils should also be used by the research council NWO, TNO, universities and others for programming their research. At present there are four sector councils in the Netherlands; in the field of development assistance research, health research, research on nature and the environment, and agricultural research. Two sector councils are currently being set up (public administration, justice and safety; education) . To stimulate the co-operation between the various sector councils there is a small platform organisation called the ‘Consultative Committee of Sector Councils’ (COS) , dealing with topics of common interest. The ministries involved fund the different sector councils and have the final responsibility for them. - One of the tasks of the Royal Netherlands Academy of Arts and Sciences (KNAW) is to advise government on matters of science and technology, especially in the field of basic research (code of conduct, quality assurance, research schools) . This organisation is described more extensively in the next section. 2.5 R& D performing organisations The public science and research community comprises 14 public universities, KNAW and its 18 institutes, NWO and its 9 institutes, 5 Large Technological Institutes (GTIs) , 4 Leading Technological Institutes (LTIs) , TNO and its 14 institutes, the DLO agricultural research institutes, a number of state-owned research and advisory centres and several other institutes in the fields of health and the social sciences. 17 Table 2.2 R& D by performing organisations (percentage distribution, 2001) Higher Education Research institutes Business enterprises Universities - 9 general - 3 technical - 1 agricultural Academic hospitals Allied institutes - TNO/GTIs - para-university - agricultural - ministerial - others - large multinationals - other enterprises 27% 15% 58% Universities Universities have a threefold mission: to perform research, to teach and to transfer knowledge to society. As far as research activities are concerned, universities conduct most of the basic research (fundamental and strategic) that is carried out in the Netherlands, but they also perform mission-oriented and applied research. University research covers all academic disciplines, though not every discipline is covered at all universities (for a distribution of the university research capacity across discipines, see Figure 2.3) . Of the 14 public universities, three are geared to technology and one to agriculture (9 universities are general universities and one is the Open University) . Universities have a high level of autonomy. The government is not directly involved in the management of universities. Members of the university council are appointed by the Minister of Education, Culture and Science. Figure 2.3 University research capacity by discipline (percentage distribution, 2001) ......... . . . .......... . ........... ... ..... . ....... . . . ...... . ...... . ..... . Source: Association of Universities in the Netherlands (VSNU) . 18 As in many other countries, universities in the Netherlands have, apart from funding from contract research, a dual financial support system: direct funding from government and grants from the research council NWO. This means there are three types of funding: - First stream funding (approximately 60 percent) consists of basic or core resources provided to universities as a block grant or lump sum by government (Ministry of Education, Culture and Science2) for education and research combined. - Second stream funding (approximately 10 percent) consists of resources made available to universities by the research council NWO in the form of grants and by the KNAW in the form of Academy researchers and professors. NWO selects individual researchers, research projects and programmes for funding via a competitive process, on the basis of peer review. - Third stream funding (approximately 30 percent) consists of additional funds from public and private national and international sources, made available as contracts. Contract partners range from government departments, industry, charity funds to international funding organisations such as the EU (Framework Programmes) . Netherlands Organisation for Scientific Research (NWO) NWO’s mission is to promote and raise the quality and innovative content of fundamental scientific research at Dutch universities and research institutes and to stimulate the dissemination and use of research results. NWO encompasses all scientific fields. NWO’s most important tasks are to provide grants for top level research and research equipment and to co-ordinate research programmes. Besides these tasks, NWO administers nine institutes in the fields of astronomy, mathematics, computer science, physics, history, sea research, law, criminality and space research. One of the pillars of the activities of NWO is open competition between researchers. This part of NWO’s budget is allocated to programmes, projects and individuals. Researchers with tenure at Dutch universities and research institutes recognised by NWO may apply. For certain programmes a wider or narrower range of persons may apply. NWO offers different types of subsidies: - programme subsidies; - subsidies for individual researchers. The most important one is the so-called Innovational Research Incentives Scheme (Vernieuwingsimpuls) oriented to new PhDs, post-docs and senior researchers. This scheme started in 2000 in co-operation with the universities, the KNAW and the Ministry of Education, Culture and Science. For more information, see Chapter 5. Other individually oriented programmes are SPINOZA (a Dutch version of the Nobel prize) and programmes specifically oriented to women (MEERVOUD and Aspasia); - publication grants; 2 For the Agricultural University Wageningen this is the Ministry of Agriculture, Nature Management and Food Quality. 19 - investments in instruments and facilities; - travel grants and international co-operation. NWO is also committed to bridging science and society through co-operation with ministries, other intermediate organisations and business enterprises, and to communication and knowledge transfer. NWO has shown a strong growth in its budget since 1970, from about € 30 million to more than € 400 million in 2002. The Ministry of Education, Culture and Science contributes for about 80 percent to this budget (including earmarked budgets) . The Ministry of Economic Affairs contributes for about 4 percent to the NWO budget, by allocating funds to the Technology Foundation STW (which is part of NWO) . Royal Netherlands Academy of Arts and Sciences (KNAW) The mission of the Royal Netherlands Academy of Arts and Sciences is to stimulate scientific research. To be more specific, the Academy’s functions and activities can be summarised as follows: - advising the government on matters related to scientific research; for this reason the Academy has several councils and committees with members and non-members of the Academy. Solicited and unsolicited advice is given to government, parliament, universities and research institutes, funding agencies and international organisations; - judging the quality of scientific research by peer review, by awarding academy fellowships, and through the accreditation committee for research schools in the Netherlands; - providing a forum for the scientific community and promoting international scientific cooperation through international contacts, congresses, funds and endowments; - acting as an umbrella organisation for 18 institutes engaged in basic and strategic research, scientific information services and (biological) collection management. The Academy is responsible for a number of leading institutes that perform basic research in the life sciences, humanities and scientific information. Some of the institutes also have a scientific service function by setting up and managing biological and documentary collections, providing information and creating other facilities for research. In 2002 the KNAW had a budget of approximately € 100 million. The Ministry of Education, Culture and Science contributed 77 percent of this budget. Netherlands Organisation for Applied Research (TNO) TNO is an independent contract research organisation whose expertise and research is geared towards making a substantial contribution to the competitive strength of companies and organisations, to the economy, and to the quality of society as a whole. As a large contract research 20 organisation, TNO provides a link within the innovation chain between basic research as a source of knowledge, and practical application as the commercially exploitable usage of knowledge. TNO conducts a wide range of R&D and other activities in 14 specialised TNO institutes. These activities comprise: - the development of knowledge; - the utilisation of knowledge for clients in industry and government; - technology transfer, especially to small and medium-sized enterprises (SMEs) ; - acting as the principal laboratory for the Ministry of Defence and other ministries; - the commercialisation of knowledge in co-operation with companies. For the purpose of structuring extensive, long-term research programmes for innovative knowledge development, TNO makes several agreements with the Dutch government which are financed on the basis of targeted funding. In some thirty centres TNO co-operates with nine Dutch universities. TNO’s activities focus on six core business areas: quality of life, defence and public safety, advanced products, processes and systems, the natural and the man-made environment, and ICT and Services. TNO also develops various commercial and market-geared activities through TNO Management B.V. , a subsidiary whose consolidated turnover amounted to almost € 55 million in 2001. In addition, TNO applied for 56 patents in 2001. The revenues for patents and licences amounted to € 3.6 million. The turnover of TNO in 2002 amounted to € 470 million for R&D and other activities. TNO receives a basic grant from the Ministry of Education, Culture and Science as well as targeted grants from several other ministries. These grants are used for long-term research programmes. Contracts form a considerable part of TNO’s budget: 65 percent in 2002. The Large Technological Institutes (GTIs) The group of Large Technological Institutes consists of five organisations conducting applied research and related activities, such as advising industry and government in specific fields: - Energy Research Centre of the Netherlands (ECN) performs research in the field of nuclear and other forms of energy, energy and the environment and materials. ECN is the Netherlands’ largest research centre in the field of energy. - GeoDelft conducts research into highway and hydraulic engineering and soil (including pollution) . - The Maritime Research Institute Netherlands (MARIN) conducts research into shipbuilding, offshore technology and ocean engineering. 21 - The National Aerospace Laboratory (NLR) conducts research into aerospace engineering for both civil and military purposes. - WL | Delft Hydraulics focuses on ports, the coast, rivers, shipping, water management and the environment. The GTIs have two main functions: (1) they act as a centre for technological knowledge to fulfil the knowledge needs of government and business enterprises and (2) they develop technology and make it available to government and business enterprises (centre for technological development) . The total turnover of these GTIs was € 245 million in 2002. The two accountable ministries, Economic Affairs and Transport, Public Works and Water Management, together with the Ministry of Education, Culture and Science, allocate basic grants to the institutes, which also obtain funds from targeted grants and, in particular, contract research. Leading Technological Institutes (LTIs) The so-called Leading Technological Institutes (LTIs) were conceived in 1997 as – virtual – organisations in which companies and knowledge institutes participate (public-private partnerships) . There are four institutes which operate in the separate fields of nutrition, metals, polymers and telematics. These LTIs aim at stimulating R&D co-operation between public and private partners in areas of importance for the economy and society. The public organisation TNO is involved in all LTIs. The LTIs were evaluated in 2002 (mid-term evaluation) . The outcome was: LTIs are a successful model for public-private co-operation and will be continued for another four years. Agricultural research institutes (DLO) The DLO agricultural research institutes used to be part of the Ministry of Agriculture, Nature Management and Food Quality. In the second half of the nineties the institutes became independent from the ministry (the DLO Foundation) and merged with the Wageningen University into a centre for knowledge and research, the Wageningen University and Research Centre (WURC) . The DLO Foundation and the university are separate entities, but work together in expertise groups in (five) different areas. There are ten institutes within the DLO Foundation, with a total budget of € 350 million in 2002. State-owned research centres A number of institutes operate under a ministerial umbrella, although the number of these centres is decreasing. Some of them are directly connected, such as the Research and Documentation Centre of the Ministry of Justice (WODC) . Some are ministerial agencies, such as the Royal Netherlands Meteorological Institute (KNMI) of the Ministry of Transport, Public Works and Water Management. 22 The research institute sector is responsible for 15 percent of the total amount of R&D expenditure in the Netherlands. Figure 2.4 shows the distribution between the different kinds of institutes in percentages of the sector’s total R&D expenditure. Figure 2.4 R& D expenditure in the research institute sector by type of institute (percentage distribution, 2001) ......... . .. . . . .... . Source: CBS (Statistics Netherlands) and estimates of the Ministry of Education, Culture and Science. Business enterprises The business enterprise sector spent 58 percent of total R&D expenditure in the Netherlands in 2001. The manufacturing sector is by far the largest R&D investor with a share of 76 percent in total business R&D expenditure in the Netherlands. The services sector had a share of almost 20 percent in total business R&D expenditure in 2001, while the remaining sectors (agriculture, hunting, forestry and fishing; mining and quarrying; electricity, gas and water supply; construction) managed a share close to 5 percent. In manufacturing, 42 percent of the R&D expenditure was made in the electrical and optical equipment industry. Other industries in the manufacturing sector with a relatively large share in the total R&D expenditure are machinery and equipment (15 percent) , pharmaceuticals (11 percent) , (basic) chemicals (9 percent) and food products, beverages and tobacco (7 percent) . In the services sector, the industries in which the most R&D takes place are computer and related activities (30 percent) , research and development (20 percent) and the wholesale trade (17 percent) . 23 A large part of R&D in the Dutch business community is carried out by a limited number of large multinationals. Seven large firms undertake roughly 50 percent of the total private R&D in the Netherlands. 3 These seven firms, the so-called Big Seven, are Philips (electronics) , Akzo Nobel (chemicals/pharmaceuticals) , Shell (oil & gas) , ASML (integrated circuits equipment) , DSM (chemicals) , Unilever (food, personal care) and Océ (copiers). 4 Philips is the largest R&D spender in the Netherlands. According to estimates drawn up by the CPB Netherlands Bureau for Economic Policy Analysis (R&D hit list) , Philips spent € 1,050 million on R&D in the Netherlands in the year 2002, which is roughly 20 percent of the total R&D expenditure of all the enterprises in the Netherlands. Akzo Nobel holds second position with a total amount of € 465 million, whereas Shell is third with € 298 million spent on R&D in the Netherlands. The large share of the Big Seven in private R&D expenditure makes the private R&D intensity in the Netherlands strongly dependent on the development of R&D expenditure in these companies. Over the years, however, the share of the Big Seven in the total business R&D expenditure has declined. In the mid-1980s the share of the Big Seven was more than 60 percent. 5 The share of SMEs, on the other hand, has increased in recent years, as is shown in Figure 2.5. Furthermore, the number of small companies (10-49 employees) active in the field of R&D has increased strongly since the mid-1990s, as can be seen from Figure 2.6. In the other size categories (50-200 employees and 200 or more employees) the number of firms that perform R&D increased slightly. 3 V.A. Gilsing and H.P.G. Erken (2003) , Trends in Corporate R&D, Ministry of Economic Affairs, Policy Studies, no. 2003-I-201a, The Hague. 4 For more information on R&D intensive companies in the Netherlands, see: M.F. Cornet and M. Rensman (2001) , The location of R&D in the Netherlands. Trends, determinants and policies, CPB Netherlands Bureau for Economic Policy Analysis, CPB Document, no. 14, The Hague. 5 CPB Netherlands Bureau for Economic Policy Analysis (2002) , De pijlers onder de kenniseconomie. Opties voor institutionele vernieuwing, The Hague. 24 Figure 2.5 Share of SMEs in the total R& D expenditure by business enterprises (% ) ... . ... . ... . ... . ... . ... . .... . ........ . ..... . ........ . Source: CBS (Statistics Netherlands) , StatLine database. Figure 2.6 Number of enterprises with R& D expenditure in three size categories . . .. .. .. .. .. .. .... .. .. . . . . . . . ... .... .... .... .... ........................ .... . ........ . .. . . . ... . ........ . ..... . ........ . Source: CBS (Statistics Netherlands) , StatLine database. 25 26 3 Policies on science, technology and innovation 3.1 The Dutch commitment Whereas Europe has the ambition to become the world’s most competitive and dynamic knowledge economy (European Council in Lisbon, 2000) , the Netherlands also has an ambition of its own: to raise the Dutch knowledge economy to a leading position in Europe. In order to reach this ambition it is necessary to have an excellent knowledge infrastructure, in which universities, research institutes and business enterprises function as excellent performers of research and development. However, excellent scientific and technological performance does not automatically lead to high-class innovation performance. Therefore policy also has to be directed at the innovation capacity and innovation performance of enterprises in the Netherlands. The Dutch ambition for innovation is to change the current mediocre position of the Netherlands into a top position in the (near) future. In the 2003 Coalition Agreement the current government firmly committed itself to the knowledge- based economy. 6 The partners in the new government, which took office in May 2003, acknowledged the status and problems of the economy of the Netherlands, and addressed them in the coalition agreement. Education, research and innovation have been identified as important pillars for policy aimed at stimulating the Dutch economy. - Firstly, it was decided to set up an Innovation Platform with members from government, business enterprises and knowledge institutes; this was installed in September 2003 (see Section 2.2) . The task of the Innovation Platform is to draw up plans and develop a vision in order to give impetus to innovation as the driving force for productivity growth and economic development in the Netherlands. The installation of the Innovation Platform will also stimulate businesses and knowledge institutions to initiate a vision on how to strengthen the innovative capacity of the Dutch economy. - Secondly, in a period of retrenchment in public spending the government has allocated extra funds to education, research and innovation. The budget was intensified with € 800 million, of which € 185 million is destined for four priority areas in the field of research and innovation: knowledge workers (including science and technology) , high-tech start-ups, focus and mass in research, and collaboration between companies and knowledge institutes. The Innovation 6 Meedoen, meer werk, minder regels (Participation, employment, deregulation) , Coalition Agreement for the CDA/VVD/D66 government, 16 May 2003. 27 Platform will advise on how to use the resources from this available budget destined for research and innovation. In addition, € 100 million was set aside to intensify the ‘Promotion of Research and Development Act’ (WBSO) , which is a fiscal R&D incentive for private R&D. After the installation of the current Cabinet (Cabinet Balkenende II) in May 2003 two main policy documents were published: the Science Budget 2004 of the Ministry of Education, Culture and Science and the Innovation Letter of the Ministry of Economic Affairs. These documents represent the current state of science, technology and innovation policy in the Netherlands. The key issues will be discussed in brief in the following sections. The first two sections focus on national policy, the final section discusses international policy issues. 3.2 National science policy In November 2003 the Dutch Minister of Education, Culture and Science published the Science Budget 2004, entitled ‘Focus on excellence and greater value’ . This Science Budget is the government’s main document with a vision on science policy. Main issues of the science policy are: - Focus and mass In order to maintain and improve the Dutch position in science it is necessary to concentrate research funds on national priorities. Research groups active on these priorities should be strengthened. The priorities are genomics, ICT and nanotechnology. These research areas are supply-driven: a large amount of money is invested worldwide in these areas, they are developing very fast, their results affect many disciplines, and they have many applications. However, this does not mean that other research areas are excluded from support. Some areas are of special importance to the Netherlands because the societal need is very prominent. Examples are: traffic management, logistics management, water control, the vitality of major cities, enduring food production and the use and supply of energy. The research needed is primarily interdisciplinary and multidisciplinary. - Rewarding excellent research The Science Budget 2004 proposes to allocate some funds based on excellent research. It is proposed to give an extra € 50 million per annum to support excellent research groups, funded by the Ministry of Education, Culture and Science, complemented with € 50 million funded by the universities; all to be transferred to NWO. The allocation procedures should be simple and non- bureaucratic, based upon the track records of individual researchers. Another € 50 million should be awarded to excellent forms of co-operation. The Innovation Platform has been asked to make a proposal for the criteria, the selection of themes and implementation. 28 - The utilisation of research results The European paradox is the starting point of a number of activities that aim at the valorisation of research results. For example by strengthening the societal role of the universities, adapting their funding model, and stimulating a university patents policy. - Human resources The Netherlands faces an impending shortage of so-called knowledge workers and researchers, especially in science and engineering. This shortage starts in educational choices. Only 14 percent of the graduates in higher education select these fields (in the EU this is 21 percent) . A ‘Delta plan’ science and technology was published December 2003 with a budget of € 60 million per annum. The plan has four outlines: attractive education, attractive jobs, attractive choices (financial incentives for students) and attractive settlement options for foreigners in the Netherlands. The focus is on primary, secondary and tertiary education. Universities in particular should focus on the promotion of research as a career. They should stimulate the upward trend of women in higher positions, and focus more on the ethnic minorities. The Delta plan also deals with other relevant aspects, namely the removal of obstacles for people from abroad, raising public awareness, and stimulating the formation of science centres. - Public awareness Realising the Dutch ambition within Europe requires not only investments in research and innovation, but it also calls for changes to be made to the system of education, and an adequate strategy on the communication of science and technology. The problem is that fewer pupils in secondary education choose a profile in science and technology and the same holds for students in higher education. Currently the policy on public communication on science and technology, which has the intention to motivate and create interest for science and technology among the general public and especially among young people, is in a process of transition. A new policy will be developed with a role for science centres, museums as well as schools, universities and industries. The aim is to unite the currently diverse regional initiatives for co-operation between knowledge institutions and the educational system. One of the basic premises of the Delta plan is that scientific and technological topics must appeal to all, preferably capturing the imagination at a very early age (if at all possible at the level of primary education) . The plan also proposes to establish a Science & Technology Platform – with experts and representatives of industry, the educational system, and the research sectors – with the aim to stimulate and disseminate initiatives. This platform must not be confused with the Innovation Platform. Ultimately the Science & Technology Platform will advise the government on the distribution of the € 60 million. The Science & Technology Platform is operational by 1 July 2004. 29 3.3 National technology and innovation policy As far as the level of innovation is concerned, the Netherlands is in the middle group when compared to the other European Member States. However, it is the Dutch government’s intention to see the Netherlands move up into the forefront of the leading group of Member States in Europe. In October 2003 the Dutch Minister of Economic Affairs published the Innovation Letter, entitled ‘Action for Innovation: tackling the Lisbon ambition’ . In this letter, the Dutch Government formulated an action plan for fulfilling its ambition. The action plan for innovation is in fact the Dutch follow-up to the European Lisbon strategy and is intended to raise the Dutch knowledge economy up to a leading position in Europe. The government’s new innovation policy is aimed at strengthening the innovation capacity of the business sector. Research shows that the Dutch knowledge economy must overcome a number of persistent bottlenecks. Three main problem areas are addressed by the Innovation Letter: • the innovation climate is not attractive enough; • too few businesses invest in innovation; • research lacks sufficient focus and mass. Tackling these problem areas is key to the new innovation policy, which subsequently has three corresponding targets: - Strengthening the climate for innovation The Netherlands has to become an attractive location for the innovation activities of (international) businesses. The government also has to provide a favourable business environment by pursuing good macroeconomic policy and driving back restrictive laws and regulations. In addition, the government has set aside an extra € 100 million for the stimulation of business R&D by the fiscal R&D incentive WBSO. Furthermore, it initiated a special collaboration scheme in January 2004, providing € 90 million to various business organisations involved in research programmes with other partners. Finally, the Ministry of Economic Affairs, the Ministry of Education, Culture and Science, and the Ministry of Social Affairs and Employment work together to tackle the shortage of technical and research personnel (e.g. by attracting more foreign researchers to the Netherlands) . - Dynamics: encouraging more companies to be innovative Dutch companies must produce more new products and provide more innovative services. In order to achieve this, the government must develop a more dynamic climate, for instance by enhancing competition. In addition, all initiatives in support of technology-based start-ups are streamlined into one institution named TechnoPartner. TechnoPartner’s overall goal is to promote higher quality new businesses based on technology. Furthermore, Syntens, an intermediary organisation partly financed by the Ministry of Economic Affairs, also targets and encourages SMEs to utilise the existing knowledge better. Finally, more activities with an improved focus will be introduced to 30 encourage foreign companies to choose the Netherlands as the location for their knowledge- intensive activities. - Taking advantage of opportunities for innovation by opting for focus and mass in strategic areas It is impossible for the Netherlands to excel in all fields. It should therefore invest in those areas of innovation that provide the best opportunities for strengthening Dutch competitiveness and generating social benefits. The government encourages Dutch knowledge institutes and companies to carry out more joint research projects in those areas. Therefore universities which help to establish spin-offs will be rewarded. Universities are also encouraged to make better use of patents, in order to improve the exchange of knowledge between universities and the private sector. Furthermore, some € 200 million will be available for companies and research institutions participating in long-term collaboration on research projects. Action plans have been launched in areas with great potential, such as ICT and life sciences. And a greater participation by Dutch companies and knowledge institutes in international clusters of knowledge is being encouraged. The three themes referred to above are closely related and reinforce each other. Up to now, the Dutch innovation landscape has been typified by rolling hills and very few peaks. The three main themes will contribute to transforming the Netherlands into a dynamic innovative economy with broad valleys and high peaks. This may only be achieved through excellence and co-operation and by showing nerve and entrepreneurial spirit. Only a team effort will be able to lead the Netherlands to the highest international levels in the wide areas that make up the playground of a knowledge economy. In addition to these three themes, two over-arching (meta) themes run through the new innovation policy. Firstly, there is the necessity for innovation policy to contribute to the drive towards sustainability. This requires further exploration and management of the ambivalent relationship between (a) the environment and the economy, and (b) the economy and social institutions. Innovation may offer possibilities to alleviate certain pressure points. Secondly, the new innovation policy will have to anticipate international (i.e. European) developments. International knowledge will have to be utilised more effectively and the Netherlands must display its expertise in national knowledge areas more clearly. 3.4 International science, technology and innovation policy The international aspects of Dutch science, technology and innovation policy are oriented towards the European Union on the one hand and towards bilateral activities with a number of countries on the other. Furthermore, the Dutch government stimulates participation of Dutch enterprises in the EUREKA network. 31 - EU activities The Dutch scientific and business community wishes to become increasingly integrated into the global research community and is consequently entering into an increasing number of bilateral and multilateral cross-border alliances. The European Union is particularly important to the Netherlands in this regard. The EU’s Framework Programmes for research and technological development provide additional R&D funds and ensure that we also participate in the development of high- quality knowledge and R&D projects within the European context. The Framework Programmes provide access to scientific and technological knowledge generated by the EU as well as third countries, to European networks in different scientific and technological areas and to large-scale, advanced technical facilities. The enlargement of the EU to 25 member states is an extra challenge for further developing the European Research and Innovation Area, making integration and structuring of European research even more important. The EU’s Framework Programmes provide the most important instruments to realise this goal. The evaluation of the new instruments within the present Sixth Framework Programme – the Networks of Excellence and Integrated Projects – will influence the design of the Seventh Framework Programme. Furthermore, several policy issues will influence the shape of the Seventh Framework Programme: • promoting fundamental research and the possible creation of a European Research Council aimed at strengthening scientific excellence by supporting individual research teams in competition at a European level; • co-ordination in the development of European research infrastructures; • co-ordination of national and regional programmes, for example by the ERA-net scheme; • interaction and co-operation between knowledge institutions and business enterprises, strengthening public-private partnerships at the European level; • the supply, quality, and mobility of knowledge workers in order to further develop the European scientific and technological research capacity; • European Technology Platforms, as an example of public-private partnerships, uniting the efforts of all stakeholders concerned in the formulation, implementation and deployment of a common European strategic research agenda in certain areas of technology; • SMEs and innovation, for example the stimulation of the participation of (research-intensive) SMEs in European Funding programmes by decreasing the administrative burden. - Bilateral activities One of the main aspects of the European Research Area is co-operation with countries outside the European Union. The EU has concluded research agreements with a large number of countries with a view to facilitating co-operation. Within the framework of bilateral co-operation, the Netherlands aims to identify the best available knowledge, so that co-operation can produce 32 benefits for both sides. The countries with which the Netherlands has co-operation agreements include China, Indonesia and Russia, and we are now in a position to reap the fruits of our efforts. Over the next few years, for example, the co-operation with Russia and China will focus on co-operation between research institutes. In the co-operation with Indonesia the Netherlands can benefit from the EU’s Asia Link programme, which aims to promote structural co-operation between universities and research organisations, for example to improve research and training. The intention is to make use of the major instruments provided for in the Framework Programme that focuses on integration. It goes without saying that full attention will be devoted to the role of young researchers during these programmes. However, striving for co-operation in the field of research within the European Union, the Netherlands must not lose sight of the scientific expertise of its closest neighbours. The Netherlands has reached agreements with the German Federal Land of North Rhine-Westphalia, with Flanders and with Luxembourg on co-operation in the fields of higher education, science and research. In the field of technology the Dutch Ministry of Economic Affairs stimulates co-operation with the following countries: Brazil, China, India, Indonesia, Japan, Malaysia, Singapore, South Africa, South Korea, Thailand and the USA. - EUREKA The Dutch government seeks to promote R&D collaboration between Dutch and foreign businesses because of the many benefits that international technological partnerships bring. The Ministry of Economic Affairs operates a subsidy scheme to stimulate Dutch businesses to collaborate within the EUREKA network. Launched in 1985, EUREKA is a pan-European network for market- oriented R&D bringing together industry and research institutes from 33 member countries and the European Union. The Netherlands is one of the most active member countries within the EUREKA network. EUREKA helps to forge partnerships that produce marketable results utilising advanced technologies to strengthen European competitiveness. Over the years EUREKA has helped industry and research institutes to co-operate in more than 3000 projects. Many of these companies have experienced significant increases in their annual turnover through the subsequent exploitation of results 33 34 4 Investments in R& D and innovation 4.1 Policy issues During the European Council in Lisbon (2000) the Member States agreed that the European Union would have to develop into the most competitive and dynamic knowledge-based economy in the world within a period of ten years, capable of sustainable economic growth with more and better jobs and greater social cohesion. In Barcelona this objective has been translated into the aim, amongst others, of bringing R&D expenditure in Europe up to a level approaching 3 percent of GDP by 2010, of which 2 percent is to be financed by private funds. The Netherlands endorses this aim and regards the 3 percent target as a beacon for the innovation policy. However, the 3 percent target is regarded as an input indicator, whereas the Dutch policy mix and its instruments are designed with a view to optimal output, addressing the specific strengths and weaknesses of the Dutch dynamic innovation system. The European action plan ‘More Investment in Research’ plays a central role in achieving the European ambition. It includes actions at the European and national level in order to realise the European R&D ambition. During the European Council in Brussels in 2003 the Netherlands has committed itself to implementing the Action Plan according to the Open Co-ordination Method, whereby the EU Member States set common objectives, learn from each other’s experiences, monitor progress and hold each other to account for agreements made. Each year the European Spring Council will meet and discuss progress. The current situation - Although the Netherlands has high ambitions regarding investments in R&D and innovation, in the current situation the Netherlands is still at a far distance from realising the ambitions (Figure 4.1) . Public R&D expenditure is relatively high in the Netherlands (particularly R&D expenditure by universities) , but has been declining somewhat in recent years as a percentage of GDP (Figures 4.5 and 4.6) . Business R&D expenditure has been on a relatively low level in the Netherlands since many years and has been falling further behind in the last few years (Figure 4.2) . However, there is a positive development hidden in this trend: R&D activity among SMEs has increased. This means that the basis for R&D among enterprises has become broader (Figures 2.5 and 2.6 in Section 2.5) . - Results from the third Community Innovation Survey show that not only R&D expenditure but also the total innovation expenditure (which covers a broader range of innovation activities) is relatively low in the Netherlands. Whereas in the manufacturing sector the Netherlands takes a more or less mid position in comparison with 12 other EU countries, innovation expenditure appears to be particularly low in the services sector (Figure 4.8) . 35 - One reason for the relatively low private R&D expenditure in the Netherlands is the sector structure of the Dutch economy. The Dutch economy has a relatively high share of services sectors within the total economy, and a relatively small share of high-tech sectors in manufacturing. Economic research shows that the Dutch sector structure explains about 50 percent of the difference between the business R&D intensity (business R&D expenditure as a percentage of GDP) in the Netherlands and the average business R&D intensity in the OECD countries. 7 - A cause for concern is the sign that business R&D is gradually being relocated abroad. It appears that large Dutch enterprises are investing more in R&D, but not so much in the Netherlands. 8 In addition, the Netherlands does not benefit sufficiently from R&D of foreign companies (Figure 4.4) , which is an indication that the Netherlands has to improve its attractiveness as a knowledge-based country for foreign enterprises. - As put forward in the Innovation Letter, the focus and mass in the research landscape can be improved. International developments force us to make strategic choices. The Netherlands cannot excel in all areas. By concentrating focus and mass on the key points within a number of strategic innovation areas (in particular the ‘key technologies’ such as life sciences, ICT and nanotechnology) , firms can exploit new innovation opportunities much better. The choices need to be market-induced, as part of a bottom-up approach. - The Netherlands does not exploit the potential of venture capital sufficiently for growth in innovative activity. Compared with other European countries, total venture capital investments are relatively high in the Netherlands, but the percentage of venture capital invested as seed and start-up capital is below the European average (Figure 4.9) . Potentially successful high- tech companies, particularly in the seed phase, experience great difficulty in attracting venture capital in the Netherlands. Policy actions Policy actions directed towards more investments in R&D and innovation have already been described briefly in Section 3.3. Here they are discussed in greater detail: - The Netherlands must improve the innovation climate to counter the unfavourable situation concerning business R&D as indicated above. One specific line of action is to intensify the tax incentive for private R&D, ‘The Promotion of Research and Development Act’ (WBSO) . The WBSO is the most important scheme for stimulating business R&D, involving tax breaks for small and 7 M.L. Ruiter (2003) , R&D als productief antwoord op structurele problemen, OCFEB, Erasmus University Rotterdam, Studies in Economic Policy, no. 10, Rotterdam. 8 V.A. Gilsing and H.P.G. Erken (2003) , Trends in corporate R&D, Ministry of Economic Affairs, Policy Studies, no. 1a, The Hague. 36 large companies (see the box) . An extra € 100 million will be put into the WBSO, particularly to encourage SMEs to invest in research and development. This entails an intensification of almost 30 percent. The additional budget for the WBSO will be introduced in phases: € 50 million in 2004, € 75 million in 2005 and the full amount of € 100 million in 2006. Other lines of action to improve the innovation climate involve the introduction of a new (project-based) scheme for stimulating R&D collaboration (see Chapter 6) and the development of policy for tackling the impending shortage of knowledge workers, particularly scientists, technologists and R&D workers (see Chapter 5) . - In addition, the Netherlands needs more enterprises that innovate. One specific way to increase innovative business activity is to improve the climate for high-tech start-ups. A recent policy development is that all initiatives for the creation of technology-based start-ups are streamlined into one programme, named TechnoPartner. The TechnoPartner Action Programme includes the following action items: • TechnoPartner Platform, stimulating the number of technology start-ups by promoting entrepreneurship and listing the bottlenecks that stand in the way of technology start-ups; • TechnoPartner Seed Facility, promoting and mobilising the Dutch venture capital market to the benefit of technology start-ups; • TechnoPartner Knowledge Exploitation Subsidy Arrangement (SKE) , serving to enhance the diffusion of knowledge from knowledge-producing public research centres towards its commercial exploitation by technology start-ups. - Furthermore, in order to increase the number of innovative companies in the Netherlands, the Netherlands needs to attract more knowledge-intensive business activity from abroad. The policy to attract business activity will need to focus more strongly on knowledge-intensive activity. The Netherlands must better promote its strong technological (and scientific) areas on the international stage. Companies invest where the business climate is favourable and where they have access to excellent knowledge. Through technological matchmaking, as well as seeking and linking strategic partners, foreign companies come into contact with this knowledge. In turn, the Netherlands can benefit from the knowledge available in these foreign companies. This has proved to be an important factor for subsequent opportunities to attract foreign business activity. Targeted marketing and matchmaking must ensure that foreign companies will start pursuing their knowledge-intensive business activities in the Netherlands. In addition, through better regional collaboration between the various players, the Netherlands can create genuine ‘hot spots’ that will attract (foreign) knowledge-intensive companies to a particular region. Some regions are already very successful in this, such as Amsterdam, Noord- Brabant and Twente. Apart from the level of investments in R&D and innovation, innovation opportunities can be exploited better through focus and mass in strategic innovation areas. A new line of policy initiated 37 in the Innovation Letter is that companies, public knowledge infrastructure and the government together create focus and mass in areas that strengthen Dutch competitive capability, and which have the potential to produce considerable social benefits. Such a policy demands clear and well- considered choices, the starting point being that within the key technologies the most important thing is to carefully select key points in science and business, in which the Netherlands does or can excel. The government does not make these choices itself, but in consultation with various stakeholders. The Innovation Platform will be consulted on the policy to be pursued relating to the key technologies. The aim is for the Netherlands to excel in these key points and become a European leader. The Advisory Council for Science and Technology Policy (AWT) also recently recommended this explicit choice for a limited number of key points in the advisory report entitled ‘Backing winners’ . Good practice: The Promotion of Research and Development Act (WBSO) The Promotion of Research and Development Act (WBSO) took effect in 1994 in the Netherlands. The WBSO is a fiscal measure that reduces wage tax and social security contributions for companies with R&D employees and deducts a fixed amount from the profit for self-employed persons with R&D activity. The Ministry of Economic Affairs and the Ministry of Finance are involved in the decision-making process of the WBSO. The ministries delegate the execution of the WBSO to the tax department (part of the Ministry of Finance) and to SenterNovem (agency of the Ministry of Economic Affairs) . The scheme is evaluated on a regular basis (every three/four years) . The results are all disclosed. On the basis of an econometric analysis the most recent evaluation of the WBSO concluded that the WBSO makes a significant contribution towards Dutch R&D intensity, both at the corporate level and structurally, at the macro level. 9 Among companies that used the WBSO facility, each € 1 of WBSO allowance led on average to extra expenditure on R&D of € 1.01 to € 1.02 in the short to medium term. This did not take into account the expected positive longer-term effects and the substantial social returns associated with additional investments in R&D activities. The econometric analysis also showed that the WBSO made a significant contribution towards innovation (as measured through higher sales from new products) for companies with up to 50 employees. 9 E. Brouwer, P. den Hertog, A.P. Poot en J. Segers (2002) , WBSO nader beschouwd. Onderzoek naar de effectiviteit van de WBSO, Ministry of Economic Affairs, EZ onderzoeksreeks, no. 4, The Hague. 38 In a report to the European Commission, an independent expert group on fiscal measures mentions various advantages of the WBSO as a scheme for stimulating private R&D.10 The expert group argues that the design of the WBSO scheme implies that the cost reduction of R&D can be linked directly to the R&D activities and departments in the company. This has a greater chance of influencing R&D decisions, since R&D managers can use the predictable level of cost reduction when arguing their case for R&D investments. Another advantage put forward by the expert group is that the allowance is administered monthly, when withholding taxes and contributions on salaries are paid, instead of annually in the case of corporate income tax. Furthermore, among other things, the WBSO makes R&D effectively cheaper and causes much less overhead than direct R&D support. The government decided to increase the budget for the WBSO with € 100 million on an annual basis from 2006. The budget amounts to € 403 million in 2004, € 428 million in 2005 and € 453 million in 2006 and 2007. 10 Independent Expert Group on Fiscal Measures (2003) , Raising EU R&D intensity. Improving the effectiveness of public support mechanisms for private sector Research and Development: fiscal measures, European Commission, Directorate-General for Research, Brussels. 39 4.2 Facts and figures Figure 4.1 Total Research & Development expenditure as a percentage of GDP ..... . ...... . ...... . ...... . ..... . ...... . .... . ...... . .......... . ..... . ...... . ......... . ....... . .... . ....... . ...... . .... . ...... . .... . ....... . ...... . ........ . ..... . ..... . ....... . ..... . ..... . .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ........ . ... . Description Total R&D intensity in the Netherlands decreased and is lower than the EU-25 average in the most recent year (2001) . Sweden and Finland are leading countries in terms of the level as well as the development of total R&D intensity (in the period 1997-2001/2002) . Source Eurostat (NewCronos database) Methodological notes The 2001/2002 figures refer to 2002 for Austria, Finland, France, Germany, Poland, the UK and Slovakia and to 2001 for the other countries; except Luxembourg, for which 2000 is the most recent year available. No data are available for Malta. 1997 figures are not available for Cyprus, the Czech Republic, Estonia, Luxembourg and Poland. 40 Figure 4.2 Research & Development expenditure in the business enterprise sector as a percentage of GDP ..... . ...... . ...... . ...... . ...... . ......... . ..... . .... . ..... . ...... . ...... . .......... . ....... . ...... . .... . ....... . .... . .... . ....... . ...... . ....... . ...... . ........ . ..... . ..... . ..... . ..... . .. . .. . .. . .. . .. . .. . .. . .. . ........ . ... . Description Business R&D expenditure is relatively low in the Netherlands and decreased slightly in the period 1997-2001. As in the case of total R&D expenditure, Sweden and Finland have the highest level and the highest growth in business R&D intensity. Source Eurostat (NewCronos database) Methodological notes The 2001/2002 figures refer to 2002 for Belgium, Finland, France, Germany, Hungary, Poland and the UK and to 2001 for the other countries; except Luxembourg, for which 2000 is the most recent year available. No data are available for Malta. 1997 figures are not available for Cyprus, the Czech Republic, Estonia, Luxembourg and Poland. For Austria the 1997 figure refers to 1998, which is the most recent year for which data are available in the case of Austria. 41 Figure 4.3 Regional distribution of business enterprise expenditure on Research & Development in the Netherlands, 2002 Description The graphs show the distribution of business R&D activity across the 40 COROP areas in the Netherlands. The graph on the left-hand side indicates that R&D activity is highest in the following areas: Greater Amsterdam, Greater Rotterdam, the province Utrecht, the south-eastern and north-eastern part of the province Noord-Brabant and Twente. The graph on the right-hand side shows that R&D activity relative to total employment (which corrects for the degree of economic activity) , is relatively high in the south-eastern part of the Netherlands. In both graphs the highest level of R&D activity is visible in the south-eastern part of the province Noord- Brabant. This can be explained by the fact that the R&D activities by Philips (the largest private R&D spender in the Netherlands) and ASML (one of the other Big Seven companies; see Section 2.5) are concentrated in that area. Source SenterNovem (report Hots Spots 2002 by Paul Schmitz) Methodological notes The graphs are compiled by SenterNovem on the basis of data on labour costs for R&D personnel, which were obtained from projects submitted for the WBSO scheme (the fiscal incentive for R&D; see the box in this chapter for more information) . The WBSO scheme is executed by SenterNovem (which assigns provisional funds to submitted projects) and the tax department (which decides on the final tax reductions) . The WBSO data used by SenterNovem relate to more than 50,000 R&D projects carried out in the year 2002, which covers the vast majority of business R&D in the Netherlands in 2002. 42 Figure 4.4 Research & Development expenditure by foreign affiliates, 2001 or latest available year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. .. ................................ ...... .... ................ ............ .... .... .... .... ... ... ... ... ... ... ... ... ... ............................ ...... ........ ........ ........ .................... ........ .... Note: see the Annex for the country codes. Description R&D expenditure by foreign affiliates is modestly low in the Netherlands in comparison with other EU countries. As a percentage of GDP Sweden benefits by far the most from R&D activities by foreign affiliates. Ireland and the UK rank second and third in this international comparison. Source OECD (Main Science and Technology Indicators, 2003-2) Methodological notes The figures refer to 2001, except for Germany (1999) , Greece (1999) , Hungary (1998) , the Netherlands (2000) and Sweden (2000) . Data are not available for other EU countries than those included in the graphs. 43 Figure 4.5 Research & Development expenditure in the public sector as a percentage of GDP ...... . ..... . ..... . .......... . ...... . ...... . .... . ...... . ..... . ...... . ....... . ...... . .... . ...... . ...... . ....... . ........ . .... . ....... . ..... . .... . ..... . ...... . ..... . ....... . ..... . ......... . .. . .. . .. . .. . .. . .. . .. . ........ . Description The Netherlands is in the group of leading countries with respect to public R&D intensity. Only in Finland, Sweden and France is the level higher. Public R&D intensity decreased considerably in the Netherlands in the period 1997-2001. This is the result of a decrease in R&D expenditure by universities as well as public research institutes as a percentage of GDP. The decrease in R&D intensity of universities, however, was by far the strongest. Source Eurostat (NewCronos database) Methodological notes The 2001/2002 figures refer to 2002 for Germany, Finland, France, Hungary, Poland and the UK and to 2001 for the other countries. No data are available for Malta. 1997 figures are not available for Cyprus, the Czech Republic, Luxembourg and Poland. For Austria the 1997 figure refers to 1998, which is the most recent year for which data are available in the case of Austria. 44 Figure 4.6 Research & Development expenditure in the public sector by subsector, as a percentage of GDP, 2001/2002 ...... . ..... . ..... . .......... . ...... . ...... . .... . ...... . ..... . ...... . ....... . ...... . .... . ...... . ...... . ....... . ........ . .... . ....... . ..... . .... . ..... . ...... . ..... . ....... . ..... . ......... . .... .... ........ .... .... ........ ........ ........ ........ ........ ........ ........ ........ ........ .... ........ .... ........ ........ .... ........ .... .... ........ .... ........ .... ........ .... .... ........ .... .. . .. . .. . .. . .. . .. . .. . ..... . ........ . ..... . ......... . ..... . Description The graph shows that the relative high public R&D intensity in the Netherlands is mainly located in the higher education sector (universities) . R&D intensity of public research institutes (government sector) is 0.03 percentage point higher than the EU average, whereas in the higher education sector the difference with the EU average amounts to 0.10 percentage point. Source Eurostat (NewCronos database) Methodological notes The figures refer to 2002 for Germany, Finland, France, Hungary, Poland and the UK and to 2001 for the other countries; except Austria, for which 1998 is the most recent year available. No data are available for Malta. 45 Figure 4.7 Total Research & Development expenditure by source of funds, percentage distribution, 2001/2002 ......... . ..... . ...... . ...... . ...... . ...... . ...... . .... . ....... . ..... . .... . ....... . ....... . .......... . .... . ..... . ...... . .... . ...... . ........ . ...... . ....... . ..... . ...... . ..... . ..... . ..... . .. .. .... ... ... ..... ..... ...... ..... ..... ..... ..... ..... ..... .. ..... .... ...... ..... .. ..... .... .. ..... .... ..... .. ...... .... .. ...... .... . . .. . .. . .. . .. . ... . ....... . ......... . .... . ....... . ...... . ..... . Description Whereas public R&D expenditure as a percentage of GDP is well above the EU average in the Netherlands, the percentage of total R&D financed by the government is only slightly higher. This can be explained by two facts: •the share of public R&D financed by industry is relatively high in the Netherlands (this applies in particular to the financing of R&D by public research institutes, as is shown in Section 6.2) •a relatively high share of total R&D is financed by funds from abroad (which are mainly funds for business R&D from foreign enterprises) . Source Eurostat (NewCronos database) Methodological notes The figures refer to 2002 for Austria, the Czech Republic, Germany, Hungary and Slovakia and to 2001 for the other countries; except Ireland and Luxemburg: 2000, Greece: 1999, and Italy: 1996. No data are available for Malta. Tax incentives for private R&D (such as the WBSO in the Netherlands) are not included in the government funds for R&D (in accordance with the Frascati Manual for R&D statistics, published by the OECD) . 46 Figure 4.8 Innovation expenditure by enterprises, as a percentage of total turnover in manufacturing and services, 2000 . . . . . . . . . . . . . . . . . . . . . . . . ... ... ... ... ... ... ... ................ ... ... ...... ............... ... ...... ... ... ... ... ... ... ... ........................ ........ ... ........................ ...... ... Note: see the Annex for the country codes. Description Innovation expenditure by enterprises is a broader measure for investments in innovation activities than business R&D expenditure. The graph shows that the Netherlands holds an average position in manufacturing (compared to 11 other former EU-15 countries) , but the Netherlands ranks low in the services sector. Source Eurostat (NewCronos database) Methodological notes The figures are results from the third Community Innovation Survey. Data are currently available for 12 EU countries (the former EU-15 countries excluding Ireland, Sweden and the UK) . The services sector is not fully covered by the survey, but limited to a selection of knowledge- intensive services. 47 Figure 4.9 Investments in venture capital, 2002 ......... . . . .. . ... . ... . ... . ... . ... . ... . ... . . . . . . . . . . . . . . . . . . . . . . . . . .... . . . . . . . . . . . . . ......... . ........... . ......................................... ... ... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....... . ........ . Note: see the Annex for the country codes. Description The Netherlands ranks high with regard to total investments in venture capital as a percentage of GDP. The distribution between seed capital, start-up capital and expansion capital shows that the share of seed capital, and to a lesser extent that of start-up capital, is at the lower end. An increase in these shares would improve the availability of venture capital for high-tech starters. Source European Commission, DG Research (Key Figures 2003-2004) , based on data from the European Private Equity and Venture Capital Association (EVCA) Methodological notes Venture capital investments are equity investments made for the launch, early development and expansion of (high-tech) businesses. Seed and start-up capital are referred to as venture capital in the early stages. This provides financing mainly for the initial business plan, research activities, product development and initial marketing. The EVCA collects data on venture capital in the European countries. 48 5 Human resources 5.1 Policy issues Education and research are key factors in the development of a knowledge-based, innovative society (see also Figure 2.1) . The educational system trains the future carriers of knowledge, which is essential for innovative activities, and the research system produces the knowledge that is necessary for these innovative activities. The persons that play a role in the knowledge-based society are the knowledge workers and only a part of this group of knowledge workers consists of persons engaged in research and development. Efforts are therefore needed to guarantee a high quality educational and research system. For the educational system it is important to provide the highly qualified labour force, needed for innovative activities, for the research system it is important to maintain or to enlarge the influx of young people performing research activities. The current situation - The Netherlands has a relatively large share of Human Resources in Science and Technology (HRST; Figure 5.1) , but it is expected that in the coming years the demand for highly skilled knowledge workers will be higher than the supply. - Fewer young people opt for scientific studies than in other countries (Figure 5.2) , resulting in an impending shortage of people with a science or engineering background. - A shortage of researchers is foreseeable because of the ageing of university personnel. A reasonable share of the scientific personnel of universities already comes from abroad. Shortages are foreseeable in the areas of agriculture, engineering, science and health.11 Business enterprises also face problems in attracting R&D personnel. For realising the Barcelona ambition the Netherlands needs another 30,000 R&D personnel, which is not feasible without additional action.12 - The Netherlands has a high under-representation of women in scientific research, and this is even more prominent in higher positions. The Netherlands ranks quite low in Europe for historical and cultural reasons (Figure 5.4) . Women are likely to resign faster than men because working routines in universities are discouraging. It is essential that this situation is improved, not only on grounds of emancipation, but also for reasons of scientific quality and the need for young and talented researchers. - The share of researchers from ethnic minority groups is quite low.13 11 Ministry of Education, Culture and Science, Ministry of Economic Affairs and Ministry of Social Affairs and Employment, Deltaplan bèta/techniek. Actieplan voor de aanpak van tekorten aan bèta’s en technici, The Hague. 12 Ibidem. 13 M. Crul, K. Kraal, A. Kumcu en R. Penninx (2002) , Kleurrijk talent. Allochtonen werkzaam in het wetenschappelijk onderwijs en onderzoek, Institute for Migration and Ethnic Studies, University of Amsterdam, Amsterdam. 49 Policy actions To solve the impending shortage of science and engineering personnel, all actors – educational and research organisations, government and employers – must unite their efforts. The long-term goal is to achieve a structural improvement of the position of science and engineering professions in society, leading to a more innovative economy. In the present Cabinet period (2003-2007) the government wishes to realise a 15 percent higher influx in science and engineering disciplines of higher education, especially of women and persons from ethnic minorities. Another aim is to raise educational efficiency. Delta plan More specific, the Delta plan science and technology, discussed earlier in Chapter 3, introduces a number of actions based on four broad lines: attractive education, attractive jobs, attractive choices and attractive settlement. - Attractive education activities are oriented to the different educational levels. In primary education technology should be spread out by integrating technology in the different fields of learning. In the first year of secondary (vocational) education technology should be a field of learning. Furthermore, the co-operation between secondary education and companies should be stimulated as well as the profile accentuation of specific secondary education schools (‘technasium’) . Successful and promising initiatives in the different sectors of education and research should be disseminated and embedded. - Attractive jobs activities should lead to better employee conditions and perspectives for research careers in the public sector and to attractive jobs in business enterprises. Research- training programmes should be improved, as well as the development of a top research master training in co-operation with industry. Other activities should be oriented towards introducing more variety in the teacher training programmes of science fields. Public-private mobility should be stimulated by introducing ‘dual’ PhD training programmes. Researchers and teachers in the private sector could be given the possibility to refresh their knowledge in public institutes. Attractive jobs should be offered with adequate career possibilities. - Activities oriented to attractive choices encompass activities such as improving the image of a career in science and technology by using the science centres, and creating scientific heroes. Also, science and technology communication should have a greater focus in order to make young persons aware of the importance of (exact) science and technology. A special website has been created to support teachers and pupils in secondary education on specific exact sciences and technology. Graduates in technological fields can start a company of their own (‘technostarters’) . Experiments will start with a differentiation in tuition fees. A smart card will be introduced, which can be used for a savings balance for obtaining a discount on tuition fees etc. in the next stage of the student training programme. Finally, an intermediate year 50 will be introduced, between secondary and higher education, to enable students to bridge the mismatch between the educational profile and the admission requirements in higher education. - Attractive settlement activities are aimed at removing obstacles standing in the way of the admission of foreigners in the Netherlands. A working group of the Innovation Platform has analysed the situation and concluded that legal dues/fees for residence and work permits are substantially higher than in the neighbouring countries. Other conclusions were that different procedures and the involvement of many ministries make this issue very complex and that verification procedures are a problem for several Asiatic countries. The main solution proposed is to introduce one office, one procedure and a single document for all international knowledge migrants. Other solutions involve reducing the costs for legislative procedures involved in obtaining residence and work permits for knowledge workers, students and their partners and children, improving information facilities, as well as the quantitative and qualitative monitoring of inflow, outflow and return of international knowledge migrants by using the Dutch partners in ERA-More (the European Network of Mobility Centres) . Research as a career Research organisations themselves are responsible for an adequate human resources management policy. They are best suited to creating a research management geared towards talented researchers. Of course, the minister responsible for science policy is responsible for the overall performance of the system of higher education and scientific research. This concerns the quality, the accessibility of educational training and the way the public funds are used. Within the scope of this overall responsibility the Minister of Education, Culture and Science is funding instruments to attract young talented researchers and boost the position of women in research: - Innovational Research Incentives Scheme: the aim of this person-oriented scheme, which started in 2000, is to stimulate renewal in scientific research and give (young) talented researchers the opportunity to perform research; the scheme focuses especially on women (see the box for more information) . - Women and science: there is a specific programme in place which has the aim of improving the upward flow in higher university positions called Aspasia. Evaluations have proven the success of this programme. The original intention was that it would be temporary, but it should be continued (see the box for more information) . - Researchers from ethnic minority groups: the main obstacle here is that the influx to scientific careers remains low despite the growth of students in these groups. However, attention devoted to this aspect is increasing. NWO has taken the initiative to draw up a report on the situation. A specific programme for talented students from these groups has also been established (MOZAIEK) . These students are given support in writing research proposals. These are then judged and the best ones are granted a PhD post. 51 Good practice: The Innovational Research Incentives Scheme (Vernieuwingsimpuls) In order to promote innovative academic research which opens up new fields of study, explores new avenues that lead to surprising new ways of looking at apparently well-known territory, or that creates new knowledge by linking insights from different disciplines, NWO, KNAW and the universities set up the Innovational Research Incentives Scheme in 2000. This subsidy scheme is directed at encouraging individual researchers at various stages of their careers. Its key purpose is to ensure that creative and talented researchers are given the opportunity to conduct their own research and offer them attractive career prospects within the academia. The scheme involves three types of grant for three target groups: - VENI grants: offering researchers who have recently completed their doctorates the opportunity to develop their ideas over an additional three years. The maximum amount of this grant is € 200,000 spread over a period of three years. Per round (every two years) approximately 80 grants are available. - VIDI grants: oriented towards researchers who have completed their doctorates and have already spent some years conducting post-doctoral research. They will be given the opportunity to develop their own innovative lines of research and appoint one or more researchers to assist them. The maximum amount of this grant is € 600,000 for a period of five years. Per round (every year) approximately 75 grants are available. - VICI grants: directed at senior researchers who have proven their ability to develop their own innovative lines of research and that they can act as coaches for young researchers. They can set up their own research teams. The maximum amount of the grant is € 1,250,000 for a period of five years. Per round (every year) approximately 25 grants are available. The scheme is financed by the Ministry of Education, Culture and Science, NWO and the host institutions. The selection procedure is organised and conducted by NWO. Special attention is devoted to the participation of women. The host institutions (which include the universities and the research institutes of NWO and KNAW) will strive to encourage women to submit applications. A first evaluation of the Innovational Research Incentive Scheme was conducted by Technopolis in 2003. The report concluded that, although it was still too early to draw conclusions with regard to the realisation of the actual aim of the scheme, researchers, universities and institutions are very positive about the scheme. Strong elements of the scheme are the subsidy in the form of personal grants, the possibility to identify the best researchers in the country, the career perspective and the non-thematic approach. The scheme can be viewed in the context of the EU 3% Action Plan, published in 2003. One of the activities is geared towards human resources in general, and more specifically, towards developing proposals on researcher careers. Source: NWO brochure. 52 Good practice: The Aspasia programme Equality between women and men has been one of the fundamental principles of the European Union since the Union was founded. If one looks at the data on women representation in research, there is still quite a gap between the ambitions and reality. This applies with regard to the Netherlands too. Women are prominently under-represented in high positions in universities in the Netherlands. Therefore, the Ministry of Education, Culture and Science, NWO and the universities decided to design a national programme to help women into senior university positions. The Aspasia programme was started up in 1999. It is a programme that aims to promote women assistant professors to the position of associate professors. The Ministry of Education, Culture and Science, NWO and the universities contribute in the funding. The subsidy relates to either a four-year PhD project or a two-year postdoctoral project and all associated research costs up to a maximum of € 11,000 euro per annum. This means that the Aspasia laureates will be given the opportunity to become acquainted with research management and the coaching of other researchers. The universities pay for the difference in salary between an assistant and an associate professor. If the evaluation after the (5-year) project is positive, the candidate will remain an associate professor (this implies a long-term commitment by the universities) . NWO, which conducted the selection procedure, organised two rounds in 2000 and 2002. The initial aim to increase the number of women associate professors by at least 100 has largely been achieved. A total of 168 female assistant professors have been promoted to the position of associated professor; this is also thanks to extra promotions granted by the universities themselves. The Aspasia programme was evaluated after each round. These evaluations confirmed the programme’s effectiveness. The percentage of female associate professors increased from 8.6 percent in 1999 to 13.7 percent in 2002. The evaluations also showed beneficial side effects. Besides the increased visibility of talented and ambitious women within the universities, several Aspasia laureates were promoted to professorship positions. Nevertheless, some bottlenecks were also mentioned: - Different policies at universities and faculties: some faculties were very positive and encouraging, others showed strategic behaviour (refraining from acknowledging the success of the person concerned as this implies both financial and personnel commitments by the faculty) . - The fact that the programme is only accessible for women often resulted in negative reactions from – particularly their male – colleagues. Therefore, Aspasia associate professors could be regarded as second-best researchers. In order to pursue the upward trend, and to further strengthen the share of females in the higher academic positions, the Minister of Education, Culture and Science has decided to continue this programme after 2004. 53 5.2 Facts and figures Figure 5.1 Human Resources in Science and Technology (HRST) as a percentage of the population (aged 15 years and older) .............. ........ ........ ...... ..... ....... ..... .......... ....... ............. ...... ....... ....... ...... ....... ....... ............. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Description In almost all countries the percentage of HRST increased between 1997 and 2002. The Netherlands ranks highest in comparison with the other former EU-15 countries. Source Statistics Netherlands (based on Eurostat) and Eurostat (NewCronos database) Methodological notes De definition of HRST (Human Resources in Science and Technology) is based on two criteria: educational level and profession. HRST is defined as all highly educated people with post secondary education (ISCED level 5 and above) and/or working in a S&T profession (Canberra Manual, 1995) . Data are currently only available for the former EU-15 countries. UK and Austria: 2001 instead of 2002. 54 Figure 5.2 Science and engineering graduates per 1000 of population aged 20-29, 2001 ...... . ..... . ..... . ...... . ...... . ........ . ..... . ...... . .... . ...... . ....... . ...... . ..... . ....... . ..... . ...... . ...... . ....... . .... . .......... . .... . ....... . ..... . ...... . .... . ......... . . . . . . . . . . . Description The indicator measures the supply of new graduates trained in science and technology. The Netherlands has one of the lowest scores among the former EU-15 countries and most of the new EU countries too. Source Eurostat (NewCronos database) Methodological notes Science and engineering graduates are defined as all post-secondary graduates (ISCED 5a and above) in life sciences, physical sciences, mathematics and statistics, computing, engineering, manufacturing and processing and architecture and building. Data are not available for Greece and the EU-25 average. Luxembourg: 2000 instead of 2001. 55 Figure 5.3 Percentage of researchers in total R& D personnel (FTEs) , 2001 ....... . ..... . ...... . ...... . ........ . ...... . ....... . ...... . ..... . ..... . .... . ...... . ...... . .... . ....... . ..... . .... . ...... . ..... . ....... . .......... . ...... . ..... . ......... . .... . . . . . . . . . . . . . . . . . . . . Description The core of R&D personnel are researchers. The difference between the countries in the percentage of researchers compared to the total number of R&D personnel is quite large and is almost double in Portugal compared to Italy. The Netherlands ranks quite low. Source Eurostat (NewCronos database) and OECD (Main Science and Technology Indicators, 2003-2) Methodological notes Researchers are professionals engaged in the conception or creation of new knowledge, products, processes, methods and systems and also in the management of the projects concerned. Other types of R&D personnel are: technicians and equivalent staff and other support staff. The figures refer to 2001, except for Austria (1998) , Greece (1999) , Ireland (2000) , Italy (2000) and Luxembourg (2000) . Data are not available for Malta and the UK. 56 Figure 5.4 Percentage of women in academic staff, 2000/2001 ..... . ....... . ...... . ..... . ...... . ..... . .... . .... . ..... . ..... . ...... . ........ . ..... . ....... . ...... . .... . ....... . ....... . ...... . ...... . ...... . .......... . ...... . ..... . .... . . . . . . . . . . . Description The indicator describes the percentage of academic staff at universities who are grade A (professor) and is indicative of the under-representation of women. In all countries the percentage of women in grade A is modest. Compared to other countries, the Netherlands ranks quite low, although the percentage of women in grade A is increasing (2.6% in 1990 . 8.1% in 2002) . Source Eurostat (She-figures 2003) Methodological notes The data are not fully comparable between the different countries due to differences in coverage and definitions. The figures refer to 2000 for the former EU-15 countries and to 2001 for the new members of the EU. Data are not available for Luxembourg, Hungary and the EU-25 average. 57 Figure 5.5 New PhDs in S& E (science and engineering) fields of study per thousand of population aged 25-34, 2001 or latest year available ..... . ...... . ...... . ..... . ..... . ...... . ...... . ...... . .... . ...... . ...... . ....... . .......... . .... . ....... . .... . ....... . ....... . ..... . ........ . ..... . .... . ...... . ...... . ..... . ..... . .... . .. . .. . .. . .. . .. . .. . .. . .. . Description This indicator shows the increase in the highly qualified human knowledge base. A PhD often chooses further scientific employment in the higher education sector and a PhD is helpful for teaching posts in research-related careers in government and business sector. The Netherlands ranks quite low. Source European Commission, DG Research (Key figures 2003-2004) Methodological notes Science and engineering PhDs are defined as all PhD graduates (ISCED 5a and above) in the life sciences, physical sciences, mathematics and statistics, computing, engineering, manufacturing and processing and architecture and building. Data are not available for Luxembourg. 58 6 Public-private interaction and knowledge use 6.1 Policy issues As described in many reports, despite the fact that Europe (and for that matter the Netherlands as well) has a qualitatively good knowledge infrastructure, it is still confronted with shortcomings in the conversion of scientific knowledge into actual contributions to economic and societal development. This situation is known as the European paradox. The aim of policy, in Europe as well as in the Netherlands, is to improve this situation. It is widely recognised that it is vital in this respect to stimulate the interaction between the knowledge infrastructure and the private sector. Such interaction is a complex, non-linear process, and is to a large extent based on formal and informal networks of researchers and research groups and business enterprises. The ability to innovate is dependent on the actual utilisation of the results of scientific research in the development of new products and processes (the so-called valorisation) and the ability to generate new scientific questions based on ideas about innovations (the articulation of specific questions) . Both processes presume an effective interaction and exchange of knowledge between organisations operating within the knowledge infrastructure and business enterprises. In practice, there is a certain division of tasks in the Netherlands between the universities on the one hand, which typically focus on fundamental strategic research, and the research institutes on the other, which mainly conduct applied research. Interaction between research institutes and business enterprises is currently much stronger than that between universities and enterprises. Some impeding factors to an effective interaction between universities and enterprises can be mentioned here:14 - Cultural differences between universities and enterprises, related to different missions, goals and time perspectives for research, hamper the establishment of networks. - The supply of scientific knowledge by universities is often monodisciplinary, whereas the scientific demand by business enterprises is generally multidisciplinary. - Incentives for the valorisation of scientific knowledge are limited. - Businesses enterprises find it difficult to specify their exact needs for new (scientific) knowledge. 14 Ministry of Education, Culture and Science and Ministry of Economic Affairs (2002) , “It takes two to tango” , Zoetermeer/ The Hague; Advisory Council for Science and Technology Policy (2003) , 1+1>2. De bevordering van multidisciplinair onderzoek, Advice no. 54, The Hague. 59 Although research at Dutch universities must remain fundamental and strategic by nature, the interaction between business enterprises and universities requires improvement. An empirical study has shown that corporate involvement does not need to be at the expense of scientific quality and academic freedom.15 It is important, though, that enterprises articulate their demands clearly and are willing to consult universities about their knowledge issues. Mechanisms for public-private co-operation In a study carried out in 2003 for the Advisory Council for Science and Technology Policy (AWT) , the Dutch research and consultancy firm Dialogic categorised the mechanisms for public-private interaction. On the basis of some 150 literature sources 10 groups of knowledge transfer mechanisms and 50 modes of knowledge interaction were distinguished.16 The mechanisms can be characterised by ‘formal versus informal’ , ‘explicit versus implicit’ and the phase of the innovation cycle (invention, adaptation to market needs, diffusion of technology, product/process innovation) . The 10 groups of mechanisms are: 1) mobility of people; 2) co-operation in R&D; 3) contract research and advice; 4) co-operation in the field of education and training; 5) intellectual property; 6) spin-offs and entrepreneurship; 7) facility sharing; 8) publications; 9) participation in conferences, professional networks and boards; 10) other informal contacts and networks. The current situation - The share of public-private co-publications is relatively high in the Netherlands (Figure 6.1) . This share has decreased in recent years, which is a worldwide phenomenon.17 - At worldwide level, Dutch scientific publications are cited relatively frequently in corporate research papers. This indicates that the Dutch scientific output is relatively useful for industry in general (Figure 6.2) . 15 See T.R. Behrens and D.O. Gray (2001) , Unintended consequences of cooperative research: impact of industry sponsorship on climate for academic freedom and other graduate student outcome, Research Policy, 30(2) , 179-199. 16 F. Bongers, P. den Hertog, R. Vandeberg en J. Segers (2003) , Naar een meetlat voor wisselwerking, Dialogic, Utrecht. 17 Netherlands Observatory of Science and Technology (2003) , Wetenschaps- en technologie-indicatoren 2003, CWTS/ MERIT, Leiden/Maastricht. 60 - Dutch scientific publications are also cited relatively often in patents, but this occurs only to a small extent in patents owned by Dutch companies.18 - For the most part, business enterprises finance commissioned research in (semi-)public research institutes such as TNO and the Large Technological Institutes (Figure 6.3) . While this is much less the case in universities, the share of enterprises in the funding of university research is growing (Figure 6.4) . - The share of innovative enterprises with co-operation arrangements is on an average level in the Netherlands when compared with other European countries (Figure 6.5) . However, the share of innovative enterprises that co-operate with universities or research institutes is relatively low in the Netherlands (Figure 6.6) . - Compared with other European countries, Dutch innovative enterprises attach relatively much importance to research institutes as a source of information, while universities seem to play a comparatively modest role in this respect (Figure 6.7) . - The Netherlands has a moderate number of spin-off companies from public organisations (Figure 6.8) . - Organisations in the knowledge infrastructure own relatively few patents.19 Furthermore, the Dutch patents of businesses and public institutes seem to be commercially exploited to a lesser extent than in other countries.20 - Mobility between organisations in the knowledge infrastructure and business enterprises is quite low in the Netherlands.21 - It must be noted that several important aspects of public-private interaction are hard to quantify, especially the more informal and personal aspects. The analysis of public-private interaction is therefore incomplete. Policy actions A general aim of Dutch policy is to strengthen the societal return on investments in public research through the better use of high-quality knowledge from basic research and so to utilise the possibilities for innovation more effectively. The government has a variety of options to stimulate improved public-private interaction. Main mechanisms are: a) financial incentives, b) institutional arrangements, c) valorisation of results from public research and d) public-private mobility of researchers. 18 CPB Netherlands Bureau for Economic Policy Analysis (2002) , De pijlers onder de kenniseconomie. Opties voor institutionele vernieuwing, The Hague. 19 F. Bongers, P. den Hertog, R. Vandeberg en J. Segers (2003) , Naar een meetlat voor wisselwerking, Dialogic, Utrecht. 20 Ibidem. 21 Ibidem. 61 Financial incentives To what extent can universities and research organisations avail themselves of (financial) incentives to devote attention to the usability of research or co-operation with business enterprises? There are various schemes in place geared towards co-operation between universities and business enterprises: - Innovation-Oriented Research Programmes (IOPs) This Ministry of Economic Affairs subsidy scheme awards grants to innovative technological research projects at universities and other non-profit research organisations within public- private research programmes (10 programmes are currently running and 25 have started since 1981) . By taking this approach the government wishes to make the research world more accessible to the business community, and to improve and intensify contacts between the two sides. A precondition is that the projects concerned must match the long-term research needs of the business community. Major efforts are being made to ensure that each completed programme leads to 1) lasting co-operation between the Dutch research world and the business community with a view to fulfilling technological developments, 2) broad networks and research strongholds in strategic areas and 3) active transfer of knowledge to the business sector. - Programme-based scheme for R&D collaboration It is the intention that IOPs will be a part of a new scheme operated by the Ministry of Economic Affairs for R&D collaboration on key points. In order to boost utilisation of innovation opportunities, companies and the public knowledge infrastructure must create focus and mass in strategic innovation areas. As was pointed out in Chapter 4, this concerns carefully selected key points in the science and business sectors in which the Netherlands does or can excel (whereby the choices will be made in consultation with the various stakeholders on the basis of a market-induced bottom-up approach) . The new programme-based collaboration scheme stimulates long-term collaboration between companies and knowledge institutions on these key points. The scheme builds on, and brings greater coherence to those forms of programme- based collaboration that have proved to be highly fruitful over the past few years, such as the IOPs, the Leading Technological Institutes (LTIs) and successful public-private programmes in fields such as genomics and catalysis. A new aspect of this scheme is that it stimulates a more integral approach from knowledge application to fundamental research, and vice versa. Applied research and pre-competitive development will be incorporated in the new programmes. Furthermore, institutes of professional education will be able to participate. - Project-based scheme for R&D collaboration Public-private collaboration is stimulated in a generic sense through a new project-based collaboration scheme of the Ministry of Economic Affairs. The scheme devotes particular attention to SMEs and their collaboration with knowledge institutes. The scheme will be widely accessible to a range of collaboration projects in various target groups. Assessment criteria 62 here are quality, innovativeness, sustainability, and economic potential. The scheme came into effect in January 2004 and replaced four existing schemes. - Technology Foundation STW The Technology Foundation STW is part of the National Research Council NWO and funds university research in the field of science and technology. Tenured university staff can apply for a research grant, provided that their proposal also includes embedment of the results in society. STW actively supports utilisation by involving market parties in the users’ committee and by playing an active role in patenting and commercialisation of research results (see the box for further information) . - Investment Incentive Scheme for the Knowledge Infrastructure (Bsik) The Investment Incentive Scheme for the Knowledge Infrastructure is part of the general funding scheme for strengthening the economic structure of the Netherlands. It is a scheme that subsidises projects in public-private consortia with the aim of strengthening the knowledge infrastructure in areas of societal importance. Two such schemes have already been implemented. The third scheme will run from 2004 to 2010, with a budget of € 800 million. Five thematic fields were selected by the Dutch Cabinet in March 2002. In November 2003 funds were allocated to individual programmes within the five priority themes: • € 215 million for 9 programmes in the field of ICT; • € 130 million for 3 programmes in the field of microsystems/nanotechnology; • € 165 million for 12 programmes in the field of genomics/life sciences; • € 134 million for 5 programmes in the field of high-quality spatial use; • € 156 million for 13 programmes in the field of sustainable system innovations. - Modernisation of university funding The public funding of universities has largely a non-competitive lump-sum character. The Ministry of Education, Culture and Science is engaged in modernising and improving the dynamics of university funding. This involves inter alia performance-budgeting of a part of university research, where applicability is one of the elements in assessing quality in innovation-relevant areas. - TNO co-funding programme of the Ministry of Economic Affairs Research at TNO is financed by three types of funding: basic funding, programme funding and contract research funding. Basic funding is destined for basic research and is made available by the Ministry of Education, Culture and Science. Programme funding is destined for specific government-oriented and business-oriented programmes. The government-oriented programmes are financed by various ministries, while the business-oriented programmes are jointly financed by the Ministry of Economic Affairs and business enterprises. For the business- oriented programmes firms are required to contribute, on average, 40 percent of the research costs (the distance to the market of the actual research project determines the contribution: 10, 25 or 50 percent) . The co-funding requirement ensures that the business-oriented programmes 63 carried out by TNO are considered useful by Dutch enterprises. To some extent co-funding mechanisms are also applied in Large Technological Institutes. - TechnoPartner Seed Facility and TechnoPartner Knowledge Exploitation Subsidy Arrangement The TechnoPartner Seed Facility and TechnoPartner Knowledge Exploitation Subsidy Arrangement are part of the TechoPartner Action Programme. The seed facility aims to stimulate and mobilise the bottom end of the Dutch venture capital market in such a way that high-tech start-ups (including spin-offs from public institutes) are able to satisfy their capital requirements. The knowledge exploitation subsidy encourages the utilisation of publicly financed scientific knowledge by businesses. Two facilities available within this subsidy scheme are a pre-seed facility and a patent facility. The pre-seed facility provides pre-seed capital to high-tech start-ups prior to the actual start. The patent facility makes funds available to public knowledge institutes for financing the costs associated with applying for patents. See Chapter 4 and Chapter 8 for further information on the TechnoPartner Action Programme. Good practice: Technology Foundation STW In view of the aim of utilisation the Technology Foundation STW has developed a format for project guidance that has proved quite successful over the years. A users’ committee is installed for each individual project. The users’ committees closely monitor progress of the work and advise the STW Board on matters of evaluation after the first two years, especially with respect to utilisation. Members of these committees have a priority claim regarding the actual use of the knowledge developed in the project. All matters discussed at the meetings, which take place twice a year, are confidential. Each year the Technology Foundation reports on utilisation. The tentative results of projects that started five years earlier, and the final results of projects which started ten years earlier are evaluated systematically. Most technological research needs a great deal of time before the outcome with regard to application in society can be assessed, and even then the outcome might not lead to actual developments. Over the years, about one third of the STW projects led to the actual utilisation of the knowledge developed, and one third remained in the category of basic research on which further work was to be done. The outcome of the remaining projects is somewhere in between. The financial returns from the knowledge generated in STW projects is increasing. Some of the profit flows back to the Technology Foundation. This can then be used to further the research of the group that performed the initial research. In this way, additional funding for research is made available to successful research groups: the process is self-supporting. 64 The users’ committees of the Technology Foundation STW serve as the main instrument for utilisation. The committee of a specific project is the forum for communication between university and industry. Here the transfer of knowledge takes place in a sphere of confidentiality. The real utilisation starts if during the course of the project a company decides to use the results commercially. Along the route that must lead to utilisation, the user himself will need to invest money in order to bring the technology concerned to the market place. If all goes well, the final product will be marketed and should bring in respectable returns. The user must be prepared to pay back some of these returns into the research group. How much and in what way is determined in consultation with all parties concerned. Source: STW. Institutional arrangements - A good example of an institutional public-private arrangement is the Leading Technological Institute model. In this model existing institutes in the knowledge infrastructure co-operate with companies. Four such institutes have been in operation since 1998. These are engaged in the field of nutrition, metals, polymers and telematics. A first evaluation (carried out in 2002) showed that this model is functioning well in terms of strengthening the innovative capability of the private sector (see the box for more information on this model) . - Other examples of institutional arrangements are the 34 Knowledge Centres in which TNO and the universities co-operate on specific themes, and the 50 university professors working in part- time positions at TNO. - In the Netherlands, TNO, the agricultural research institutes, and the Large Technological Institutes (ECN, GeoDelft, MARIN, NLR and WL | Delft Hydraulics) were set up to act as ‘transfer’ institutes for the production of basic knowledge at universities and its application in society. It is their task to perform applied research for both the private and the public sector. At the same time they contribute to the application of scientific knowledge by giving advice. Therefore, they must be closely connected with universities, business enterprises and other societal organisations. An evaluation of the transfer function of TNO and the Large Technological Institutes was undertaken in 2003. The aim of this evaluation is to determine how the institutes are functioning as transfer units between the basic research performed in universities and the applications of that research in the private and public sector. The evaluation, based on consultation with the parties concerned, forms the basis for government action required to strengthen innovations in companies, society and government. The evaluation consists of three parts: a self-evaluation, an evaluation by an external committee, and a view of the Cabinet. The self-evaluations were finalised in September 2003, the report of the external committee was published in May 2004 65 and the view of the Cabinet is expected in September 2004. While the external committee is of the opinion that TNO and the Large Technological Institutes are important for the transfer of knowledge, it recommends that their role within the dynamic innovation system be modernised. The main elements of the recommendations put forward by the external committee are: 1) a change in the funding structure of the institutes towards an entirely demand-driven system (in which the government and private parties articulate their demands) , 2) an active involvement of the business sector and 3) a more co-ordinated steering model at governmental level. Good practice: Leading Technological Institutes (LTIs) The so-called Leading Technological Institutes (LTIs) were launched in 1997 as virtual organisations in which companies and knowledge institutes participate via a public-private partnership for innovation. There are four such institutes today, namely in the fields of nutrition, metals, polymers and telematics. Their significance is qualitatively far more important than their modest share in the overall science and technology budget would suggest (less than 1 percent) . Not only is a competitive process used to select LTIs, but also the organisational arrangements and incentive structure ensure industry commitment and leadership in determining the strategic research orientation of each LTI, while securing the pursuit of public interest. The OECD peer review of the LTI programme concluded that the LTI programme is a proven good practice in mobilising public and private research towards common objectives of high importance for the economy and society.22 The Dutch government requires that LTI activities be regularly monitored (annually) and evaluated (every four years) by the Technology Foundation STW (which is a part of the National Research Council NWO) . Thus far, the four government-sponsored partnerships referred to above meet the expectations of the main stakeholders. The main factors of success appear to be the following (as concluded in the OECD peer review) : • Sound economic rationale: LTIs are founded on a sound public-private partnership concept of how to remedy well-identified systemic failures in the Dutch innovation system. • Customized implementation: the concept has been applied in a flexible manner, with different organisational arrangements to suit the specific needs of different technological fields, taking into account the peculiarities of the Dutch innovation system in each of these fields. 22 OECD (2003) , Public-private partnership for research and innovation: an evaluation of the Dutch experience, Paris. 66 • Legitimacy: the LTIs were launched as part of a broader movement towards public- private partnership and network-based approaches to innovation policy, reflecting a new consensus between public and private actors regarding the best way to identify and achieve common strategic goals. • Legacy: LTIs were not created from scratch but built on pre-existing networks. • Quality: LTIs emerged from a stringent bottom-up selection process where proposals had to compete, based on the quality of their scientific content, their industrial relevance and the soundness of their business plan. • Leverage and long-term commitment: the cost-sharing arrangements ensure high reciprocal leverage, which is key to ensuring sustained commitment from both public and private partners. • Leadership: all LTIs include leading enterprises and public research centres, headed by management with broad experience and close links with both academia and industry. • International openness: not only have LTIs opened up to foreign firms, they have also opened up to foreign knowledge institutions. • Learning hubs: LTIs are platforms for learning about good practices in managing public- private partnerships for actors that are well-positioned to diffuse lessons learned throughout the Dutch national innovation system. The participation of TNO in all four LTIs is key in that regard. • Visibility: the institutionalisation of the research networks in the form of ‘institutes’ helps to acquire visibility in the Netherlands as well as internationally. This visibility aids in attracting competent partners, in positioning LTIs within international networks, and in creating continuous peer pressure for improvement from the side of other competing forms of public-private relations. Valorisation of results of university research - Next to engaging in public-private partnerships for R&D, another way for a university to contribute to a strengthening of the innovative ability of the Netherlands is to commercialise university knowledge, also referred to as valorisation (giving economic value to research results) . At this moment the transfer of knowledge is one of the three main tasks of universities. Valorisation is part of this task, yet for universities it is unclear as to how far they should pursue this valorisation. The Science Budget 2004 announces five actions in this respect: • Make the task of valorisation much more transparent in the law governing the universities, by specifying the article on knowledge transfer (adding for example that a spin-off company is a possible form of knowledge transfer) . 67 • Make valorisation a separate compartment of the university-funding model (as a percentage of their fixed contribution for research) . • Stimulate economic activity on the basis of expert guidance of technostarters, in combination with the availability of venture capital. • Develop well thought-through legal and organisational models within the framework of European regulations. • Start the discussion within the EU for making valorisation of university knowledge possible within EU regulations, for example by amending these regulations. These actions are incorporated in the TechnoPartner Action Programme, which is a joint effort of the Ministries of Economic Affairs and of Education, Culture and Science. - The commercial application of knowledge developed by universities may be strengthened by an adequate policy on university patents. Several activities were undertaken to stimulate the notion of the usefulness of a professional university policy on patents, such as: • a national conference on patent policy in 2002; • encouragement of the creation of a national network of professionals engaged in intellectual property rights and knowledge transfers; • the formation of a patent facility at the Ministry of Economic Affairs. The aim of these activities, to create an active and professional university policy on patents, seems to be successful. The Association of Universities in the Netherlands (VSNU) made an action plan for the national network of universities and formulated regulations for the financial support of university patent application. Public-private mobility of researchers The Ministry of Economic Affairs and the Ministry of Education, Culture and Science are currently working on an initiative to stimulate the mobility of researchers between the public and the private sector. This initiative serves a double purpose. Firstly, it serves to stimulate better industry- university relations, which should lead to better usage of academic research by industry. Secondly, it aims to broaden the perspective for young people entering a scientific education by stimulating a career path which has a scientific basis, but which does not necessarily lead to a career in universities (see also Chapter 5) . Close collaboration with the Innovation Platform has lead all actors concerned to adopt the idea of a financial scheme to build in dual aspects in the research training and research careers of Dutch scientists, presently going by the name of the Casimir scheme. The Casimir scheme aims to increase public-private mobility of researchers by giving the Dutch private sector a financial incentive to hire Dutch young researchers as opposed to hiring foreign scientists. The Casimir scheme also intends Dutch researchers to become more familiar with the public as well as the 68 private sector and to pursue a career in both. The French Ciffre scheme and the Marie Curie fund in the EU are reference points for the current preliminary plan in the Netherlands for the Dutch Casimir scheme. 6.2 Facts and figures Figure 6.1 Public-private co-publications Share of public-private co-authored research publications, as a percentage of domestic publications output; 1996-2001 ... ... ... ... ... ... ... ... ....................................................... ... ......... ... ... ... ...... . Description The data give an indication of public-private co-operation in scientific publications. The Netherlands ranks high in comparison with other European countries. Additional data show that public-private co-publications account for 68 percent of the total publication output of the Dutch business enterprise sector in 2001. Source Netherlands Observatory of Science and Technology (Science and Technology Indicators 2003) , based on ISI data. Methodological notes Publican counts refer to the time-interval 1996-2001. Public-private co-publications include at least one author address referring to a company or a private sector R&D laboratory located in the country, and at least one address referring to an institution in the public sector in that same country. The countries included in the graph are the EU countries for which figures are available in the above-mentioned source. Since a figure for the EU-25 average is not available in that publication, the average for the former EU-15 countries is shown in the graph. 69 Figure 6.2 Attractiveness of domestic science base to corporate research Share of citations received from corporate research papers worldwide, relative to the share of the domestic publication output in the worldwide publication output; 1996-2001 ... ... ... ... ... ... ... ................................... ....... ............. ..... ....... ................ .... .... .... .... Description The data give an indication of the usefulness of scientific research for corporate (basic) research by comparing the number of received citations from corporate researchers with the total number of scientific articles. The Netherlands scores 3 percent above the worldwide average (which is by definition 1.00) . The average score of the former EU-15 countries is 13 percent below the worldwide average. Source Netherlands Observatory of Science and Technology (Science and Technology Indicators 2003) , based on ISI data. Methodological notes Publication and citation counts refer to the time-interval 1996-2001. The worldwide average of the indicator is 1.00, since the citations from corporate research papers as well as the domestic publication output are measured as shares in the worldwide totals. The countries included in the graph are the EU countries for which figures are available in the above-mentioned source. Since a figure for the EU-25 average is not available in that publication, the average for the former EU-15 countries is shown in the graph. 70 Figure 6.3 Percentage of R& D expenditure in the government sector financed by industry .......... . ..... . ...... . ..... . ....... . ...... . ..... . ...... . ...... . ....... . .... . ....... . ...... . ...... . .... . ...... . ..... . ......... . ....... . ...... . ...... . .... . ..... . ..... . ..... . . . . . . . . . . . ........ . Description The Netherlands ranks number one on this indicator. A substantial share of the R&D performed by research institutes in the Netherlands, such as TNO and the Large Technological Institutes, is financed by industry. Source OECD (Main Science and Technology Indicators, 2003-2) and Eurostat (NewCronos database) . Methodological notes The 2001/2002 figures refer to 2002 for the Czech Republic, Germany, Hungary, Italy and Slovakia and refer to 2001 for the other countries; except Estonia, Latvia and Luxembourg, for which 2000 is the most recent year available. No data are available for Lithuania, Malta and the EU-25 average. A 1997 figure is not available for Luxembourg. For Austria and Cyprus the 1997 figure refers to 1998, which is the most recent year for which data are available in the case of Austria and Cyprus. 71 Figure 6.4 Percentage of R& D expenditure in the higher education sector financed by industry ..... . ...... . ...... . ...... . .... . ...... . .......... . ..... . ....... . ...... . ..... . ..... . ...... . ..... . ...... . .... . ..... . ...... . ...... . ..... . .... . ....... . ....... . ....... . . . . . . . . . . . . . ........ . Description The share of industry funding in R&D expenditure by universities (higher education sector) is much lower in the Netherlands than the share of industry funding in R&D expenditure by research institutes (government sector) . In recent years the Netherlands has improved its position on this indicator. Source OECD (Main Science and Technology Indicators, 2003-2) and Eurostat (NewCronos database) . Methodological notes The 2001/2002 figures refer to 2002 for the Czech Republic, Germany, Hungary and Slovakia and refer to 2001 for the other countries; except Cyprus, Estonia, Ireland and Latvia, for which 2000 is the most recent year available. No data are available for Lithuania, Luxembourg, Malta and the EU-25 average. A 1997 figure is not available for Cyprus. For Austria the 1997 figure refers to 1998 and for Italy the 1997 refers to 1996, which are the most recent years for which data are available in the case of Austria and Italy. 72 Figure 6.5 Innovative enterprises with co-operation arrangements Innovative enterprises with co-operation arrangements in 1998-2000, as a percentage of total innovative enterprises (aggregated manufacturing and services sectors) , 2000 . .. .. .. .. .. .. ............................ ... .. .. ...... .... .. .... .. .. Note: see the Annex for the country codes. Description The share of enterprises with co-operation arrangements is on an average level in the Netherlands, compared with other European countries. Finland is by far the leading country here. Source Eurostat (NewCronos database) . Methodological notes The figures are results from the third Community Innovation Survey. Data are currently available for 14 EU countries (the former EU-15 countries excluding Ireland) . The services sector is not fully covered by the survey, but limited to a selection of knowledge-intensive services. 73 Figure 6.6 Innovative enterprises participating in public-private co-operation Innovative enterprises that participated in co-operation arrangements with higher education institutes or research institutes in the last three years, as a percentage of total innovative enterprises (aggregated manufacturing and services sectors) , 1996 (NL: 1996-2000) . . .. .. .. .. .. .. .. .............................. ......................................... . . .. ....... .... .. .. ..... . ..... . . . .. .. .. .. .. .. .. .............................. .................................. .. ......... .. .. .. .. ..... . ..... . Note: see the Annex for the country codes. Description The share of innovative enterprises that participate in partnerships with universities or research institutes is relatively low in the Netherlands. Finland outranks the other countries by a long chalk. Source Eurostat (NewCronos database) and Statistics Netherlands (2000 figures NL) . Methodological notes The figures for 1996 are results from the second Community Innovation Survey in the former EU15 countries (excluding Greece) . Figures for 2000 from the third Community Innovation Survey are not sufficiently available yet for other countries than the Netherlands. In the NewCronos database the information is currently missing for a large part of the enterprises in the various countries. 74 ................................ ................................... ................................. .......................... ............................................. ... . . .. . . .. . . .. . . .. .. .. . . .. . .. .. . .. .. . .. .. . .. .. . .. .. . .. .. ............ ... . .... ...... ...... ...... .... .... .. ................................ ................................... ................................. .......................... Figure 6.8 Spin-offs from universities, annual averages in 1999-2001 Average number of spin-offs per 1000 FTEs employment at universities (estimates) ... ... ... ... ... ... ... .......................................... ... ... Description Spin-off activity from universities is lower in the Netherlands than in a benchmark of seven other countries. The seven foreign countries are Belgium, Denmark, Finland, France, Germany, the UK and the United States. Source Top Spin International (‘Researchers op ondernemerspad’ , report published by the Dutch Ministry of Economic Affairs in 2003) . Methodological notes The figures are estimates, based on a survey among universities in the Netherlands and in the aforementioned seven foreign countries. 76 7 Scientific and technological performance 7.1 Policy issues Within the concept of the dynamic innovation system the input and output of the knowledge infrastructure form the basis for the performance of a knowledge-based society. R&D outputs and outcomes cannot directly be influenced by policy, They are, however, essential in realising the national goals and ambitions of S&T policy. Therefore, science policy aims to maintain and increase the quality and excellence of scientific research. This can be done by optimising the conditions for the researchers and by increasing the level of competitiveness between research groups, especially in universities. In the long run these efforts will affect the way a country develops as a competitive and dynamic knowledge society. Besides scientific performance, technological performance is a keystone for economic development. Technological performance is the basis for innovation, but the ultimate innovation performance also depends on the successful application of (new) technological knowledge in products and processes. Innovation performance will be dealt with in the next chapter. This chapter focuses on the more basic concept of technological performance, which refers to the development of technological knowledge. The output of scientific research, essentially new knowledge, has different manifestations: publications of all kinds (scientific articles, reports, articles in papers and popular magazines) , but also patents, designs, new skills, scientific instruments, new methods, etc. Scientific publications are a major part of scientific output and are measured systematically.23 Scientific publications and citations from one publication to another can be used to measure part of the performance of the knowledge infrastructure. Scientific publications are the most important output of academic research and are used to measure the (development of the) world knowledge base. Citations measure the impact of the cited publications and can be used as a proxy of the quality of research. Technological performance can partly be proxied by the level of patenting. Patent figures indicate how successful economies are in the development and application of new techniques and technologies.24 Especially enterprises patent their new techniques and technologies, public organisations to a lesser extent. 23 The results of this measurement, carried out by the Centre for Science and Technology Studies of Leiden University, are published biannually in the Science and Technology Indicators report of the Netherlands Observatory of Science and Technology (www.nowt.nl) . 24 Patents statistics represent inventive output. It should be noted that only a part of the inventions is patented and that patents differ in (technological and economic) value. 77 The current situation - Being a rather small country, the Netherlands ranks 10th with regard to scientific publication output, while it is third to Switzerland and the United States regarding the citation impact of the publications (Table 7.1) . Approximately 75 percent of the Dutch scientific production originates from the universities. The Netherlands is one of the leading countries in the EU when it comes to the number of publications and the number of highly cited papers relative to the size of the population (Figure 7.1) . - Disciplines that produce a large share of the Dutch publication output are clinical medicine (22.7%) , basic life sciences (11.3%) , basic and experimental medicine (11.0%) , physics and material science (8.8%) , chemistry and chemical engineering (8.2%) and biological sciences (4.2%) . In 22 out of 35 disciplines the Netherlands has an impact score higher than the world average (Table 7.2) . High impact scores are not only to be found in the universities, but also in the public research institutes and the private sector. In 7 out of 27 disciplines the public research institutes have a higher score than the total score for the Netherlands. For the private sector this applies for 13 out of 30 disciplines. - There is an increasing share of internationally co-authored publications, which applies for most other countries as well. In 2001, approximately 44 percent of the publications by one or more Dutch authors had a foreign co-author. If publications are based on international co-operation, they generate higher impact scores than non co-operative publications. There is a tendency towards a stronger intra-European co-operation. More than 60 percent of the Dutch coauthored papers is intra-European (Figure 7.2) . - The Netherlands scores well on patents. Relative to the size of the labour force the number of patents granted by the European Patent Office (EPO) , as well as the number of patents granted by the United States Patent and Trademark Organisation (USPTO) , is relatively high in the Netherlands (Figure 7.3 and Figure 7.4) . The same applies for patent applications in high- technology fields (Figure 7.5) . - Data on patent applications in different high-tech groups indicate that the Netherlands is relatively strong in technologies related to ICT (Figure 7.5) . Within a general classification system, covering all fields of technology, the Netherlands is relatively highly specialised in the areas of ‘electricity’ (including the important high-tech group ‘communication technology’) and ‘physics’ (Figure 7.6) . Policy actions Policy actions can be divided into science policy and technology policy. Science policy refers to the performance of research organisations, technology policy to the process of technological development in firms and technological knowledge institutes. 78 Science policy The Science Budget 2004 specifies three activities oriented towards increasing the quality of research and stimulating competitiveness: - The introduction of a new system of research quality assessment, initiated by the research organisations themselves. This will replace the present system of disciplinary assessments. The main elements are an evaluation of units once every six years, a self-evaluation every three years, linking the evaluation to the mission of the unit, evaluation of management and organisation, and the development of a national information system. - The strengthening of university funding, based on research performance (short-term activity) . A fund has been created, in which the government participates with a sum of € 50 million, supplemented by the universities themselves with the same amount. This money will be distributed by NWO on the basis of the quality of the proposals put forward by universities wishing to obtain extra funding. - The development of a system to monitor the performance of the research organisations (qualitative and quantitative) , especially the universities (long-term activity) . The research organisations themselves will play a role in the development of this system. The aim is to make this system operational in 2006. The results will also be used in the (performance-based) funding of universities. Technology policy Technology policy, aimed at improving technological performance, has already been discussed in the previous chapters on investments in research and innovation (Chapter 4) and public-private interaction (Chapter 6) and in the general section on technology and innovation policy (Section 3.3) . One aspect that will be further elaborated upon here within the context of technological performance is the stronger focus on key points within a number of strategic innovation areas, in particular the ‘key technologies’ . The government attempts to create focus and mass in areas that strengthen Dutch competitive ability by supporting close collaboration between companies and the public knowledge infrastructure. This attempt entails clear and well-considered choices of key points in which the Netherlands is able to obtain an excellent position. An integral approach is needed for these themes. In an integral approach, attention focuses on various aspects in the fields of technology. Not only funding, but also legislation, regulations and social acceptance are important. Four key technologies have been chosen as areas in which the Netherlands has high potential for an excellent position: ICT, life sciences, nanotechnology and catalysis. The main action lines and government activities in these technological areas are summarised below. For ICT and life sciences integral action plans have been developed. 79 - ICT (action plan) In May 2004 the Action Plan Competing with ICT Competences was published and sent to parliament by the Minister of Economic Affairs and the Minister of Education, Culture and Science. The action plan was accompanied by a decision by the Dutch Cabinet to establish an ICT Research and Innovation Authority. This authority is a central steering and co-ordinating organisation, which task is to strengthen and focus research in ICT and to ensure that ICT research is better utilised for the development of concrete new ICT products. The establishment of the ICT Research and Innovation Authority is a core element in the Action Plan Competing with ICT Competences. The action plan consists of the following four action lines: • Strengthening and focusing ICT research. The ICT Research and Innovation Authority will formulate a strategic agenda for ICT research in the Netherlands and will ensure a structural strengthening of strategic concentrations of ICT research at universities and research institutes. • Speeding up innovation in the field of ICT by increasing the utilisation of ICT research in new ICT products. This involves an improvement of the interaction between public knowledge institutes and business enterprises and the valorisation of the results of ICT research. The ICT Research and Innovation Authority has been assigned a specific task with respect to the valorisation of research results. Furthermore, the TechnoPartner programme will be utilised for the promotion of spin-offs from public knowledge insitutes. • Stimulation of ICT applications in SMEs. This action line is aimed at a wider use of (new) ICT applications in SMEs. This will be promoted by informative activities (seminars, workshops and individual advices) , in which (new) advanced ICT products will be brought to the attention of SMEs by intermediary organisations. • Strengthening the international position of the Netherlands in the field of ICT research. This action line involves, among other things, the stimulation of Dutch participation in international programmes such as Information Society Technologies (IST) and Eureka. - Life sciences (action plan) In March 2004 the Action Plan Life Sciences was published and sent to parliament by the Minister of Economic Affairs.25 The objective of this action plan is to enhance the Dutch innovation capacity and competitive power in life sciences and to take optimal advantage of the potential social benefits of this research field. The five policy lines of the action plan are: • Entrepreneurship in the life sciences. Since 2000 entrepreneurship in life sciences has been stimulated by the BioPartner programme (2000–2004) . From 2005 there is a budget for two 25 An English version, entitled ‘Action Plan Life Sciences. Seizing opportunities, dealing with obstacles’ , is available at www.ez.nl and www.lifesciences.ez.nl. 80 specific activities: expertise networking, and facility sharing for production equipment. With the TechnoPartner programme life sciences start-ups will be supported by institutions such as seed capital and scouting networks. • Simplification of legislation and regulations. This policy action focuses on the simplification of the legal framework for biotechnology and on simpler and more transparant procedures. • Reinforcement of the knowledge base. The goal of this action line is to keep the knowledge base updated and focused on strategic market applications with a long-term view. The Dutch life sciences sector also needs a good linkage with the international and EU life sciences networks. The generic Dutch R&D schemes and the European Framework Programme are core elements in this policy line. In addition, substantial funds (approximately € 205 million for the period 2001-2007) have been made available by the Dutch government for an integral research programme in genomics, which is directed by a central co-ordinating and steering organisation named the Netherlands Genomics Initiative (see the box) . • Enhancement of the international networks. This action line involves attention for international co-operation, international investments, and the implementation of the roadmap of the EU strategy for life sciences. • Clear and unambiguous government communication. The government strives to maintain perspicuous communications on life sciences, related policies and their impact on society. Good practice: The Netherlands Genomics Initiative The Dutch government launched the Netherlands Genomics Initiative at the end of 2001. The Initiative has as its main ambition to combine the opportunities genomics offers with the strong points of scientific research in the Netherlands in such a manner as to develop a world-class knowledge infrastructure within five years. This world-class knowledge infrastructure is firmly embedded in society and provides a springboard for pioneering and innovative research that yields a continuous influx of new commercial applications. The underlying objective is to raise the national genomics infrastructure to a world-class level. The Genomics Initiative is an independent task force for the realisation of a national genomics strategy carried out under the auspices of the NWO, the Netherlands Organisation for Scientific Research. It has a five-year budget of € 189 million to finance Genomics Centres of Excellence and other genomics projects. The strategy targets the complete innovation chain, from basic research to applications, in the following areas: - the relationship between food and health, including food safety; - the mechanisms of infectious diseases; 81 - the origins of multifactorial diseases, in which both genetic and environmental factors play a role; - the functioning of ecosystems, focusing on sustainable, environmentally safe and healthy vegetable and animal products. Central to the strategy are the Genomics Centres of Excellence of universities and research institutes where fundamental and industrial research in the field of genomics takes place. Firms participate in these Genomics Centres of Excellence by funding part of this research. Four centres were appointed: Cancer Genomics Centre, Centre for Biosystems Genomics, the Kluyver Centre for Genomics of Industrial Fermentation, and the Centre for Medical Systems Biology. Also part of the strategy is the Innovation Oriented Research Programme on Genomics (IOP Genomics) . The aim of the IOP instrument is to strengthen strategic pre-competitive fundamental research at universities and research institutes in response to industry needs via a programmatic approach. Transfer of knowledge and implementation of research results, stimulation of long-term collaborations, and the formation of networks are other important targets of the programme. The Netherlands Genomics Initiative supports and co-ordinates other national genomics projects that are carried out at various institutes. The two most promising fields are proteomics and bio-informatics, which are of vital importance if genomics research in the Netherlands is to achieve global excellence. Source: OECD (2003) , Public-private partnership for research and innovation: an evaluation of the Dutch experience, Paris. - Micro-and nanotechnologies • The Netherlands has an outstanding position in the development of micro- and nanotechnologies (MNT) . Over 10-15 years of successful Dutch investments in MNT find their origin in bottom-up initiatives, strengthened by a broad government policy portfolio, consisting of components some of which are illustrated below. • Over 80 companies and 20 knowledge institutes invest in nanotechnology research. Around 130 companies and institutes invest in research and production of microsystems. Total investments in MNT research (companies, knowledge institutes and government) can be estimated at € 400 million annually. Strategic infrastructure for nanotechnology research in the Netherlands is combined in one virtual NanoLab. 82 • In 2003 the Dutch government allocated € 130 million to the new advanced public-private research clusters NanoNed (€ 95 million) , MicroNed (€ 28 million) and BioMaDe (€ 7 million) , on top of earlier investments of € 30 million for other research initiatives (such as Process on a Chip and NanoImpuls) . The additional € 130 million is funded by the Incentive Scheme for the Knowledge Infrastructure (see Chapter 6) . • The Netherlands also invests in European excellence, as a major player in the industry-driven pan-European research programmes ITEA and Medea+ , which are co-funded by the Dutch government. • Furthermore, stakeholders in micro- and nanotechnology have joint forces in MinacNed, which is a liaison between companies, universities, government agencies and other intermediaries in the field. MinacNed stimulates roadmapping, further research, knowledge dissemination and awareness. • Apart from the investments in R&D programmes, the Dutch government pays attention to social and ethical aspects of MNT development. - Catalysis • In an explorative study in 2001, named Technology Roadmap Catalysis, the Ministry of Economic Affairs, together with almost every leading Dutch catalysis exponent, ascertained that structured co-operation was necessary if the Netherlands was to maintain its leading international position in the field of catalysis. The findings of the Technology Roadmap Catalysis led to the establishment of ACTS, the institute for Advanced Catalytic Technologies for Sustainability, early in 2002.26 • ACTS is the Dutch platform for collaborative, pre-competitive research in catalysis and related disciplines. In ACTS universities and other knowledge centres work in close collaboration with industry. The funding of the ACTS programmes is equally shared between the knowledge institutes, the business enterprises and the Dutch government (Ministry of Economic Affairs) . All three parties contribute one third of the programme costs. • ACTS focuses on developing new concepts for sustainable production and sustainable energy provision. It pursues three thematic research programmes, which were identified in the Technology Roadmap Catalysis: (1) Integration of Bio- and Organic Synthesis (IBOS) , (2) Sustainable Hydrogen and (3) Advanced Sustainable Processes by Engaging Catalytic Technologies (ASPECT) . Recently a new programme, named Bio-based Sustainable Industrial Chemistry (B-BASIC) , was added, which is financially supported by the Incentive Scheme for the Knowledge Infrastructure. • To optimise Dutch catalysis at an international level, ACTS works together with several European sister organisations in ACENET (the European Network in Applied Catalysis) . 26 Brochure ‘ACTS. The key to sustainability’ . 83 7.2 Facts and figures Table 7.1 World ranking on scientific output and impact Scientific publication output and international citation impact by country, 1997-2001 Number of publications World share in publications (% ) Citation impact United States United Kingdom Japan Germany France Canada Italy Russia China Spain Australia Netherlands India Sweden Switzerland South Korea Belgium Israel Taiwan Poland Brazil 1,269,036 354,724 337,810 313,712 231,550 164,182 150,013 127,965 115,403 106,023 103,648 93,129 73,787 72,469 65,878 57,399 47,685 46,336 44,457 43,518 43,373 28.9 8.1 7.7 7.1 5.3 3.7 3.4 2.9 2.6 2.4 2.4 2.1 1.7 1.7 1.5 1.3 1.1 1.1 1.0 1.0 1.0 1.42 1.21 0.85 1.09 1.01 1.21 0.95 0.32 0.41 0.85 1.01 1.25 0.37 1.13 1.44 0.65 1.09 1.06 0.65 0.55 0.55 Description The table shows countries with a publication world share of 1.0 percent or above. The US dominates the scientific publications market at country level, but when the EU is taken as a whole, the scientific output of the EU is approximately 10 percent higher than in the US. The share of the Netherlands in the worldwide scientific publication output is 2.1 percent. The citation impact score of the Dutch publications reaches a level of 1.25. This is 25 percent above the worldwide citation average (which is by definition 1.00) . Source Netherlands Observatory of Science and Technology (Science and Technology Indicators 2003) , based on ISI data. Methodological notes Publication counts are based on a ‘whole counting’ scheme. The citation impact is normalized by world average citation counts within all ISI-covered journals attributed to fields of science (worldwide average = 1.00) . The citation counts exclude author self-citation. 84 Figure 7.1 Total scientific publications and highly cited papers, per million population ......... . ............ . ........ . ........ .............................. ... ... ... ......... ............ ........ ........ .... ..... . .... . ...... . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Note: see the Annex for the country codes. Description Scientific publications can be used as a partial indicator of scientific performance, and citations can be used as a proxy for the quality of this scientific performance. The Netherlands scores relatively high with respect to the number of scientific publications and even better when it comes to citations to these publications. Source Eurostat (NewCronos database) . Methodological notes The figures are based on data from the Institute for Scientific Information (ISI) in the United States. This institute has large databases, covering the results of worldwide science in all disciplines. 85 Table 7.2 Scientific profile of the Netherlands Citation impact by discipline and institutional sector, 1998-2001 NL-total University Non-academic Private Clinical medicine Basic life sciences Health sciences Medical technical sciences Basic and experimental medicine Earth sciences and technology Environmental sciences and technology Agriculture and food science Biological sciences Physics and material science Chemistry and chemical engineering Astronomy and astrophysics Computer sciences Mathematics Statistical sciences Electrical engineering and telecommunication Civil engineering and construction Mechanical engineering and aerospace General and industrial engineering Energy science and technology Instruments and instrumentation Information and communication sciences Management and planning Social and behavioural sciences, interdiscipl. Economics and business Political science and public administration Psychology Educational sciences Sociology and anthropology Literature Creative arts, culture and music Language and linguistics History, philosophy and religion Law and criminology Multidisciplinary journals 1.23 1.10 1.00 0.93 0.94 1.35 1.25 1.24 1.14 1.46 1.45 1.29 1.11 1.04 0.92 1.14 1.01 0.98 0.90 0.65 0.82 1.65 1.26 1.10 1.02 0.99 0.93 0.87 0.84 2.20 1.20 1.09 0.74 0.64 1.69 1.22 1.09 0.98 0.91 0.95 1.42 1.24 1.25 1.13 1.49 1.49 1.29 1.15 1.04 0.89 1.12 0.93 0.97 0.88 0.71 0.90 1.62 1.36 1.09 1.07 0.98 0.94 0.88 0.84 1.72 1.20 1.08 0.72 0.68 1.48 1.38 0.74 0.54 0.77 0.55 2.68 0.29 0.45 0.70 0.62 1.03 0.95 1.45 2.36 0.83 0.61 0.22 0.66 0.62 0.68 1.80 0.32 1.57 1.63 0.88 0.77 0.63 1.50 1.28 0.97 0.81 1.07 1.16 1.46 1.36 1.25 1.35 1.28 1.14 1.07 1.18 1.17 1.10 0.82 0.98 0.80 0.79 0.73 1.55 0.89 0.75 0.97 0.84 1.49 1.43 0.90 2.44 Description For NL-total seven disciplines score above the overall citation score (1.25; see Table 7.1) . For universities this applies to eight disciplines, for non-academic to seven and for the private sector to ten disciplines. The overall citation scores of the Netherlands lie between 0.64 and 2.20. Universities tend to approach the overall scores (which is logical for they account for 75 percent of the publications) . Source Netherlands Observatory of Science and Technology (Science and Technology Indicators 2003) , based on ISI data. Methodological notes Some disciplines have no citation data, for reasons of low publication output. 86 Figure 7.2 Scientific co-operation between the Netherlands and partner countries Share of foreign countries in the co-authored publications listing at least one Dutch author address (in %) , 2000-2001 . . . . . .. .. ................................ .. ........... ...... ... . ... . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . Note: see the Annex for the country codes. Description The graphs show a strong interaction with other EU countries, especially with the UK and Germany. Source Netherlands Observatory of Science and Technology (Science and Technology Indicators 2003) , based on ISI data. Methodological notes Percentage of the country in all author addresses listed in (partially) Dutch research publications that refer to organisations or people based in countries other than the Netherlands. Not all EU countries are listed because of the low share of co-publications. 87 Figure 7.3 Patents granted by the European Patent Office (EPO) , per million labour force (by country of origin) ......... . ...... . ..... . ...... . .......... . ..... . ...... . ...... . .... . ...... . ..... . ...... . .... . ...... . ....... . ..... . ...... . .... . .... . ..... . .... . ....... . ....... . ....... . ..... . ...... . ..... . ........ . ... ... ... ... ... ... ... ... ... ... .. .. .. .. .. .. .. . . . . . . . . . . . . .. . .. . .. . .. . .. . .. . ... . ... . Description The Netherlands takes up a fifth position in patents granted by the EPO in 2002. However, judged from the number of patents granted in 1997 and in 2002, the growth rate of EPO patents granted is considerably lower in the Netherlands than in Luxembourg, Germany, Sweden and Finland. Source Patents data: EPO (Annual Report 1997 and Annual Report 2002) . Labour force data: OECD (Main Science and Technology Indicators, 2003-2) and European Commission, DG Research (Key Figures 2003-2004) . Methodological notes The EPO grants European patents for the contracting states to the European Patent Convention, which are currently 28 European countries (22 EU countries and 6 non-EU countries) . Protection is provided only in the contracting states for which a patent application was filed. 88 Figure 7.4 Patents granted by the United States Patent and Trademark Office (USPTO) , per million labour force (by country of origin) ..... . ...... . ...... . ......... . ...... . ...... . .......... . ..... . ...... . ..... . ...... . .... . ...... . .... . ....... . .... . ...... . .... . ..... . ..... . .... . ....... . ...... . ....... . ........ . ..... . ..... . ....... . ... ... ... ... ... ... ... ... ... ... ... ... .. .. .. .. .. . . . . . . . . . . . . .. . .. . .. . .. . .. . .. . .. . .. . ... . ... . Description The Netherlands takes up a seventh position in patents granted by the USPTO in 2001. However, as is the case with EPO granted patents, judged from the number of patents granted in 1997 and in 2001, the growth rate of USPTO patents granted is considerably lower in the Netherlands than in the top four countries (Sweden, Germany, Finland and Luxembourg) . Source Eurostat (NewCronos database; data originate from the USPTO) . Methodological notes The USPTO grants patents for the United States of America. Protection is provided for the whole country of the United States. 89 ...... ............. ...... ...... ........ ........ ..... ......... ...... ....... ........ ..... ....... ..... .......... ....... ..... ....... ............. ....... ...... ....... ....... ...... .......... ....... Figure 7.5 High-tech patent applications to the European Patent Office (EPO) by technology field (high-tech groups) , per million labour force, 2002 . . . .. . .. . .. . .. . ............ . ......... . ............. . ....... . .. . ........ . ....... . ........ . .... . ............. . .. . ...... . .......... . ....... . Description The Netherlands takes up a second position in high-tech patent applications to the European Patent Office. The Netherlands has relatively strong positions in the following fields: ‘communication technology’ , ‘computer and automated business equipment’ and ‘semiconductors’ . Source Eurostat (NewCronos database; data provided by the EPO) . Methodological notes High-technology fields are defined in the Trilateral Statistical Report, which was published by the European Patent Office, the Japanese Patent Office and the United States Patent and Trademark Office in 1999. The six high-technology fields are constructed by aggregating technology fields at the subclass level of the International Patent Classification (IPC) . The figures for Latvia refer to 2001 instead of 2002 (EU-25 includes 2001 figures for Latvia) . 90 Figure 7.6 Technological profile of the Netherlands and the EU-25, 2002 Total patent applications to the EPO, percentage distribution by technology field (IPC) ... ... ... ... ... ... ... ... ... .... .. .. .. . .. .. .. .. .. .. . . .. .. . . .... . . . .... . ............ . . . .... . .......... . . . ......... . .......... . ........... . . . ......... . ........... . ........ . ....... . ....... . ....... . . . ......... . ......... . . . ...... . . . ........ . .... . . . .......... . Description The technological profile of the Netherlands, judged from total patent applications to the EPO, shows some marked deviations from the average EU-25 technological profile. The technology fields ‘electricity’ (which includes the high-tech group ‘communication technology’; see Figure 7.5) and ‘physics’ make up considerably more of the Dutch technological profile, ‘mechanical engineering; lighting; heating; weapons; blasting’ and ‘performing operations; transporting’ considerably less. Source Eurostat (NewCronos database, data provided by the EPO) . Methodological notes The International Patent Classification (IPC) distinguishes 120 different technology fields at class level, which are grouped into eight sections (Sections A - H) . The graph shows the distribution of patent applications to the EPO across the eight sections. In the NewCronos database data are also available for the technology fields at class level. 91 92 8 Innovation performance 8.1 Policy issues This final chapter deals with the innovation performance of enterprises. It focuses particularly on innovation output, albeit in relation to all aspects of the dynamic innovation system. Investments in R&D and innovation, human resources and public-private interaction were discussed in Chapters 4, 5 and 6 as important aspects of the dynamic innovation system. In Chapter 7 the focus was on scientific and technological output, measured on the basis of scientific publications and patents. The Netherlands apparently performed quite well in both fields. This contrasts with a moderate performance on innovation output indicators, such as the share in turnover of new or improved products. On the other hand, the level of labour productivity per hour worked, as well as the level of GDP per capita, is relatively high in the Netherlands. This indicates that the Netherlands is a well-developed knowledge economy, despite the relatively low score on the share in turnover of new or improved products. Nevertheless, the relatively high scores of the Netherlands regarding scientific publications and patents suggest that there is room for improvement in innovation output as measured by the share in turnover of new or improved products. The OECD states: “Overall, it can be concluded that the favourable score on (public) research output contrasts with the score on economic output (…) pointing to inefficiencies in market and non-market interactions within the innovation system. In this regard, one of the most important perceived weaknesses of the Dutch NIS (national innovation system, eds.) is inadequate interactions between science/higher education and industry at a time when such interactions become an even more important vector of knowledge creation, transfer and commercialisation.”27 This aspect of public-private interaction has already been addressed in Chapter 6. However, it plays an important role again in the context of innovation performance since the weaknesses in public-private interaction are one of the reasons for the mediocre position held by the Netherlands with regard to innovation output. The current situation – As shown in the European Innovation Scoreboard, the innovative capacity of the Dutch business sector is reasonable in general terms.28 One cause for concern, though, is the relative decline in the innovation position of the Netherlands. The Netherlands is ‘losing momentum’ (Figure 8.2) . Various indicators of the knowledge economy are pointing downwards. If this trend continues the Netherlands will drop to a position below the (European) average. 27 OECD (2003) , Public-private partnership for research and innovation: an evaluation of the Dutch experience, Paris. 28 European Commission (2003) , 2003 European Innovation Scoreboard, SEC(2003) 1255, Brussels. 93 – Today’s challenges for the Dutch economy can be further illustrated on the basis of the strengths and weaknesses of the Dutch innovation system as analysed in the recently published Innovation Letter of the Dutch Ministry of Economic Affairs. These are shown in the form of a traffic light (see Figure 8.1) . Most of the strengths and weaknesses have already been discussed in the previous chapters. Some remaining issues concerning the performance of the Dutch innovation system will be addressed here. These issues relate to innovation output and innovative entrepreneurship. Figure 8.1 Strengths and weaknesses of the Dutch innovation system ....... . ..... . .......... . . . .. . .. . ......... . ........... . . . ...... . .. . .......... . ........ . ......... . ............... . .. . . . ...... . . . ......... . ....... . .......... . ...... . ........ . ............. . .. . ....... . ..... . ........ . . . .......... . ......... . .... . . . .. . .. . ....... . ....... . . . ....... . .... . . . ........ . .. . ..... . ........ . ...... . . . .... . ...... . ......... . .......... . . . ....... . ......... . .......... . ... . ........... . ........... . .. . . . ....... . ......... . . . ..... . . . .......... . .... . . . ...... . ..... . .. . .......... . .. . ...... . . . ......... . ....... . ..... . . . ...... . .... . . . ....... . ..... . . . .. . ........ . . . ..... . ...... . ....... . ......... . .......... . . . ............ . ..... . . . .. . .. . .. . . . .. . .. . ..... . . . ........ . ...... . . . ...... . ..... . Source: Ministry of Economic Affairs (largely based on the Innovation Letter) . Note: strengths are shown in the green box, weaknesses in the red box and middle positions in the orange box. – Indicators suggest that innovation output in the Netherlands is modest compared with other well-developed countries: • The Netherlands has a relatively large share of innovative enterprises (measured as enterprises that have realised product or process innovations over the last three years) in manufacturing, whereas the share of innovative enterprises in services is on an average level compared with other EU countries (Figure 8.4) . 94 • Whereas the Netherlands scores quite well in terms of the share of innovative enterprises, the Dutch business sector obtains relatively little turnover from new or improved products (Figure 8.5) . The share of turnover from new or improved products is particularly low in the services sector where the Netherlands has one of the lowest positions within the group of former EU-15 countries. • The Netherlands also has a relatively small share of high-tech and medium high-tech sectors in the total economy (Figure 8.6) . This is another indication that innovation output in the Netherlands is lagging behind. – It should be noted that the share of turnover from new or improved products, and the share of (medium) high-tech sectors in value added and employment, partly depend on the choice of location by multinationals with regard to their innovative production. A recent study conducted by the CPB Netherlands Bureau for Economic Policy Analysis shows that large multinationals in the ICT manufacturing sector in the Netherlands concentrate their R&D activities in the Netherlands, whereas the innovative products resulting from the R&D activities are largely produced in foreign countries.29 As a result, since this indicator refers to turnover generated from production in the Netherlands, highly innovative multinationals such as Philips contribute relatively little to the share of turnover from new or improved products in the Netherlands. For the same reason the contribution of these multinationals to the share of (medium) high-tech sectors in value added and employment in the Netherlands is also limited. On the other hand, the weak position held by the Netherlands in terms of innovation output is also revealed in statistics for small and medium-sized enterprises (SMEs) , which indicates that shortcomings in the generation of successful innovative products are a widespread phenomenon in the Dutch business sector. As pointed out in the Innovation Letter, particularly in SMEs there seems to be much room for better exploitation of the innovation potential. – Innovative entrepreneurship can be measured on the basis of various indicators. The total number of high-tech start-ups (as a percentage of total start-ups) is average in the Netherlands compared to the figures available for some other countries.30 As discussed in Chapter 6, the number of spin-offs from knowledge institutions is relatively low in the Netherlands (see Figure 6.8 in Section 6.2) . There are also relatively few fast-growing companies in the Netherlands.31 Although the picture is a somewhat mixed one, the indicators show that the Netherlands scores rather low on the different aspects of innovative entrepreneurship. 29 B. Minne and H.P. van der Wiel (2004) , De Nederlandse ICT-industrie en multinationals, CPB Netherlands Bureau for Economic Policy Analysis, CPB Document no. 55, The Hague. 30 M. Kreijen and E.V. van Scherrenburg (2002) , Closing the gap. The Dutch paradox and the role of technology-based start-ups, Paper for the High-Technology Small Firms Conference in Enschede, Ministry of Economic Affairs, The Hague. 31 W.H.J. Verhoeven and A. Bruins (2001) , Internationale benchmark ondernemerschap 2001, EIM, Zoetermeer. 95 – Four obstacles for innovative (high-tech) entrepreneurship in the Netherlands are described in the TechnoPartner Action Programme.32 They are: • Lack of financing for high-tech start-ups. Because of the higher risks and the generally long development times of their projects, high-tech start-ups have a problem in attracting venture capital. At the same time, venture capitalists and informal investors experience a lack of good propositions, which means there is untapped venture capital available among venture capitalists. This mismatch between venture capital supply and demand occurs predominantly at the bottom end of the capital market. As a result, the majority of high-tech start-ups (63 percent) must find financing from their own funds or with the help of family and friends (known in the business as ‘friends, family and fools’) . • Lack of entrepreneurial skills. High-tech starters generally have a technical or scientific background, which means that entrepreneurial skills are hardly developed, if at all. This, among other things, is reflected in the fact that these entrepreneurs have difficulty translating technologies into commercially viable products, and thus experience problems in attracting customers. • Lack of entrepreneurial spirit in the Netherlands. Although independent entrepreneurship has become considerably more popular in recent years, the Netherlands does not have a real entrepreneurial culture to date. The Dutch have a tendency to avoid taking risks, which is not beneficial to entrepreneurship. Figure 8.3 illustrates that the Dutch are one of the most risk-averse peoples of Europe. Partly as a result of the lack of entrepreneurial culture, the entrepreneurial climate in many knowledge institutes is relatively underdeveloped compared to other countries. For example, there is little incentive for researchers to start an enterprise (or allow others to start an enterprise) on the basis of their research results. • Obstacles in the university culture for obtaining patents. The more research-driven starters experience difficulties in obtaining patents. Among other things, Dutch universities apply for relatively few patents and lack professionalism in this area. This means that the process of transferring patents to starters can be somewhat laborious. Policy actions Policy aimed at improving innovation performance should be directed towards all elements of the dynamic innovation system since all elements fulfil a function in the innovation process. It was discussed in Chapter 4 that private investments in R&D and innovation should be improved and current policy actions were presented. The impending shortage of science and technology personnel was addressed in Chapter 5 on human resources. Chapter 6 focused on public-private interaction and presented a wide range of policy actions to improve the utilisation of public 32 Ministry of Economic Affairs and Ministry of Education, Culture and Science (2004) , TechnoPartner Action Programme. From knowledge to prosperity, The Hague. 96 research for innovation in enterprises. This seems to be an important way to improve innovation performance in the Netherlands, as was pointed out in the introduction to the present chapter. Chapter 7 showed that the scientific performance, as well as technological performance measured by patents statistics, is at a high level in the Netherlands. More public-private interaction can lead to a better transformation of the (basic) scientific and technological knowledge into innovation output. Partly related to this are two policy lines that were advocated in the Innovation Letter: improving the climate for innovative entrepreneurship and improving knowledge dissemination to SMEs. These policy lines are dealt with below. Improving the climate for innovative entrepreneurship One of the ways to stimulate innovative business activity is to improve the climate for innovative entrepreneurship. In the past few years there have been various initiatives for high-tech start-ups (such as BioPartner, Twinning, Dreamstart) which often focused on specific areas of technology. These initiatives have now been streamlined in the TechnoPartner Action Programme (see Chapter 4 and Chapter 6) . The TechnoPartner programme is characterised by an integral approach: from information supply, via the creation of networks, coaching and financing, to facility sharing. The objective is to promote more and higher-quality high-tech start-ups. Within the context of the TechnoPartner Action Programme, a real effort will also be made to encourage an entrepreneurial climate. This will be pursued, inter alia, by stimulating and anchoring entrepreneurship in education and by clarifying in the Higher Education and Scientific Research Act that the exploitation of university-based knowledge (including the stimulation of starters) is one of the key tasks of universities. Improving dissemination of knowledge to SMEs Dissemination of knowledge (public as well as private knowledge) plays a major role in innovation. SMEs do not make sufficient use of knowledge which is already available to others, even though existing knowledge can play an important role in developing new products or processes. That is why the dissemination of knowledge is being stimulated. Syntens, an intermediary advisory organisation on innovation for SMEs (which works under the authority of the Ministry of Economic Affairs) , will adopt an even more focused approach in exploiting the potential of SMEs by concentrating on the (technologically-oriented) enterprises that are truly motivated to innovate. The exchange of knowledge between these companies and the knowledge infrastructure will be actively stimulated, for example through network creation and knowledge vouchers (which encourage SMEs to use knowledge from the knowledge infrastructure for innovation) . This will allow SMEs to maximise their potential, giving them the impetus they need to develop innovative behaviour. Concrete policy actions are currently being developed. The Innovation Platform is involved in this process. 97 8.2 Facts and figures Figure 8.2 Innovation index from the European Innovation Scoreboard ...... . ......... . .... . ..... . . ... . . . ..... . . . . . ..... . .... . ....... . .... . . . . . . . . . ...... . ...... . . . ....... . . . ..... . . . . . . . . . . . . . . . . . . . ...... . ..... . . . .... . ......... . .. . Note: see the Annex for the country codes. Description The graph shows the Summary Innovation Index on the vertical axis and the average trend performance on the horizontal axis. Countries above the horizontal dotted line have an innovation performance above the EU-15 average, while the trend for countries to the right of the vertical line improved faster than the average EU-15 trend. Sweden and Finland appear as European innovation leaders. The new members of the EU are catching up. The Netherlands takes up a position above the EU-15 average but the trend performance is less favourable than the average EU-15 trend. This relative decline of the Dutch innovation position is characterised as a situation of ‘losing momentum’ . Source European Commission (European Innovation Scoreboard 2003); adaptation by the Dutch Ministry of Economic Affairs Methodological notes For the various former EU-15 countries the Summary Innovation Index is based on all 28 indicators of the Innovation Scoreboard. For the new members of the EU the Summary Innovation Index is available for a limited set of 12 indicators. The average trend figures are based on 13 indicators for all countries. Figures for the Summary Innovation Index for both groups of countries have been combined in the graph by using index numbers that relate both kinds of figures to the average of the former EU-15 countries. 98 Figure 8.3 Level of risk-aversion in various countries . . . . . . . . . . . . . . . . . . ... . . . ..... . ... . . . . . . . . . . . . . ..... . ... . ... . .. . .. . .. . .. . .. . ... ... ... ... ... ... ... ................................. ............... ... . ..... . .. . .... . . ....... . . . .... . . . . ... . . . .... . .... . Note: see the Annex for the country codes of the EU countries; the additional code US represents the USA. Description The Dutch lack entrepreneurial spirit. The Dutch have a tendency to avoid risks (horizontal axis of the graph) . There also appears to be a stigma on failure in the Netherlands (vertical axis) . Source Boston Consulting Group, based on EOS Gallup (Flash Eurobarometer 83, September 2000) Methodological notes The figures in the graph are based on a telephone survey among citizens in the former EU-15 countries and the USA carried out in September 2000. The survey was conducted by EOS Gallup Europe on behalf of the European Commission (DG Enterprise) . The graph shows the shares of interviewed people that agreed or agreed strongly with the statements written along the horizontal and vertical axis. The graph originates from the Boston Consulting Group and was published in the Boston Consulting Group report ‘Setting the phoenix free’ (2002) . 99 Figure 8.4 Innovative enterprises as a percentage of total enterprises in manufacturing and services, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. ............... .. .. .............. ........ .... . .. .. .. .. .. .. .............................. ........ ...... .. .. .......... .... .. .. .. Note: see the Annex for the country codes. Description In the manufacturing sector the share of innovative enterprises (defined as enterprises that have realised product or process innovations in the last three years) is relatively high in the Netherlands. The share of innovative enterprises in the services sector is on an average level in the Netherlands in comparison with the other countries. Source Eurostat (NewCronos database and, as a supplementary source for the UK and Ireland, the 2004 edition of the report ‘Innovation in Europe’) Methodological notes The figures are results from the third Community Innovation Survey. Data are available for 15 EU countries (the former EU-15 countries) . The services sector is not fully covered by the survey, but limited to a selection of knowledge-intensive services. 100 Figure 8.5 Share of turnover from new or significantly improved products as a percentage of total turnover in manufacturing and services, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. ............... . .... ...... ...... ...... .. .. . . .. .. .. .. .. ............................ ........ .. .... .. .. .......... .. .. .. Note: see the Annex for the country codes. Description The share of turnover from new or improved products is an important output indicator of innovation. The Netherlands ranks low in the manufacturing sector and even lower in the services sector. Source Eurostat (NewCronos database) Methodological notes The figures are results from the third Community Innovation Survey. Data are currently available for 14 EU countries (the former EU-15 countries excluding Ireland) . The services sector is not fully covered by the survey, but limited to a selection of knowledge-intensive services. The figures for the UK are estimates of the Dutch Ministry of Economic Affairs on the basis of information about the share of new or significantly improved products in the total turnover of product innovators (instead of total enterprises) . The latter information is available in the 2004 edition of the Eurostat publication ‘Innovation in Europe’ . 101 Figure 8.6 Share of high-tech and medium high-tech sectors in total employment ...... . ..... . ...... . .... . ....... . ....... . ...... . ..... . ...... . ...... . ...... . ....... . ..... . ...... . .... . .... . ...... . .... . .......... . ...... . ....... . ........ . ..... . ..... . ......... . ..... . .. . .. . .. . .. . .. . ... . ... . ... . ... . ... . ... . Description The share of high-tech and medium high-tech sectors in total employment is below the EU-25 average in the Netherlands. This is another indication (in addition to the relatively low share of turnover from new or improved products) that innovation output is rather low in the Netherlands. Source Eurostat (NewCronos database) Methodological notes High-tech and medium high-tech sectors are defined as sectors with a relatively high R&D intensity. They consist of the following (groups of) sectors within the NACE classification system: manufacture of chemicals and chemical products (NACE 24) , manufacture of machinery and equipment (NACE 29-33) , manufacture of transport equipment (NACE 34-35) , post and telecommunications (NACE 64) , computer and related activities (NACE 72) , and research and development (NACE 73) . Data are not available for Malta and Poland. 102 Figure 8.7 Labour productivity level per hour worked (NL = 100) ......... . ..... . ...... . ...... . .......... . ...... . .... . ...... . ...... . ..... . ...... . ..... . ...... . .... . ..... . ....... . ....... . .... . ....... . ........ . ...... . . . . . . . . . . .. . .. . .. . Description Labour productivity per hour worked in the Netherlands is one of the highest in the EU. Labour productivity is largely dependent on innovation, the skills of the labour force and quality improvements in the capital stock. Source Eurostat (NewCronos database) Methodological notes The figures refer to GDP per hour worked, expressed in Purchasing Power Standards (on the basis of Purchasing Power Parities) . Since data availability on hours worked is limited the figures should be considered as estimated values. Data are not available for Cyprus, Hungary, Latvia, Malta, Poland and Slovenia (and, consequently, the EU-25 average) . 103 Figure 8.8 Labour productivity level per person employed (NL = 100) ......... . ...... . ...... . ..... . .... . ...... . ...... . ...... . .......... . ..... . ...... . ..... . .... . ...... . .... . ..... . .... . ..... . ....... . ....... . ...... . ....... . .... . ....... . ..... . ........ . ...... . ..... . . . . . . . . . . .. . .. . .. . .. . ... . ... . Description The previous figure showed that labour productivity per hour worked in the Netherlands is one of the highest in the EU. It should be taken into account, however, that the average numbers of hours worked per person employed in the Netherlands is very low compared to other countries. As a consequence, the Netherlands ranks much lower when labour productivity is measured per person employed. Labour productivity per person employed in the Netherlands is higher than the EU-25 average, but compared with other former EU-15 countries the Netherlands ranks quite low. Source Eurostat (NewCronos database) Methodological notes The figures refer to GDP per person employed, expressed in Purchasing Power Standards (on the basis of Purchasing Power Parities) . 104 Figure 8.9 Gross domestic product per capita (NL = 100) ......... . ...... . ...... . .......... . ...... . ..... . ...... . ...... . ..... . ..... . ...... . ...... . .... . .... . .... . ..... . ....... . ..... . ....... . .... . .... . ....... . ...... . ....... . ..... . ...... . ........ . ..... . . . . . . . . . . .. . .. . .. . .. . .. . ... . ... . Description The level of GDP per capita, which is a commonly used measure of the level of a nation´s prosperity, is relatively high in the Netherlands. High labour productivity per hour worked and an average number of hours worked per person of the population explain the high position of the Netherlands. While the number of hours worked per person employed is relatively low in the Netherlands, the number of hours worked per person of the population is on an average level as a result of a relatively high participation rate, defined as persons employed as a percentage of the population. Source Eurostat (NewCronos database) Methodological notes The figures refer to GDP per person in the population, expressed in Purchasing Power Standards (on the basis of Purchasing Power Parities) . 105 106 Annex: Country codes AT Austria BE Belgium CY Cyprus CZ Czech Republic DE Germany DK Denmark EE Estonia EL Greece ES Spain FI Finland FR France HU Hungary IE Ireland IT Italy LT Lithuania LU Luxembourg LV Latvia MT Malta NL Netherlands PL Poland PT Portugal SE Sweden SI Slovenia SK Slovakia UK United Kingdom 107