Active Dutch innovation policy should focus on the semiconductor industry exclusively; for all other technologies, generic R&D stimulus suffices, argues Maarten Buijs.
There’s much to do in Dutch media about the governing program of the new Dutch government. Specifically, a lot of entropy is being generated about whether the migration situation should be called an immediate crisis and treated as such. The real crisis, namely that our prosperity is eroding, is only mentioned in passing: in chapter 10 of the program, it’s noted that the Netherlands moved from fifth to ninth position in the IMD World Competitiveness Ranking. This decline has been going on for years now. It strongly indicates that business as usual is certainly not the way to go if we want to remain a prosperous country.
Yet, business as usual is exactly what that chapter is proposing: an incremental extension of past policy. This includes reverting some disastrous recent decisions by parliament considered to be hostile to companies, such as cutting back on tax incentives for expats. It also stresses the importance of the Research and Development Promotion Act (WBSO) and the Innovation Box. These two are the only tools of government support for innovation in industry proven to have an impact. Laudable is also the additional investment in Invest-NL for improving the transition from startup to scale-up phase, which has proven to be a valley of death in the Netherlands.
Unfortunately, apart from these proposals, the plan for the economy in general and innovation as the engine of future prosperity in particular can be summarized as a listing of good intentions and typical government rhetoric. It’s telling that hardly any budget has been reserved for these plans. What little has been set aside is basically coming out of companies’ own pockets. No sense of urgency here, let alone actionable plans and money, to revert the erosion of our national well-being.
There couldn’t be a bigger contrast with “The future of European competitiveness,” the report recently presented by Mario Draghi. The document has a clear description of the problems our prosperity faces: declining population, low growth and low investment versus challenges in keeping up with new technologies and threats to climate and independence. Summarized in a single sentence: “This is an existential challenge.”
The report includes concrete proposals on where and how action should be taken. Its chapter on semiconductors, for instance, recognizes the strong capabilities of the EU in specific chip segments, like sensors, power controls and mature chips for microcontrollers and peripherals. The semiconductor market is expected to grow overall by double digits. Interestingly, the only European companies mentioned by name in the chapter are ASML and ASMI. That alone should give pause to the Dutch government to focus on semiconductors for its economy innovation policy and tie directly into the document’s recommendations.
More specifically, it should wholeheartedly – with significant investment and concrete plans – support Draghi’s recommendation to set up coordinated EU efforts in back-end 3D advanced packaging, advanced materials and finishing processes, support consolidation and leadership in manufacturing equipment in response to competitors’ export restrictions and launch a long-term EU quantum chips plan.
By really focusing our government’s economic innovation policy and budget on this important segment, we stand a fighting chance to punch above our weight and secure some prosperity for future generations. All other technology segments will then have to work with existing tools like the WBSO and Innovation Box and potential support from Invest-NL. That will have the added benefit of freeing up a lot of time and minds now devoted to the National Technology Strategy.
