2006 OECD Economic Surveys: Netherlands 2006

image of OECD Economic Surveys: Netherlands 2006

This 2005 OECD Economic Survey of the Dutch economy (published as the second issue in the 2006 volume) examines key economic challenges including putting public finances on a sustainable path, increasing resiliency in labour markets, strengthening product market competition, and improving the environment for innovation. As always, it assesses short-term prospects and provides a series of policy recommendations.

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Making Better Use of Knowledge Creation in Innovation Activities

This chapter discusses priorities for strengthening innovation in the Netherlands. The main weaknesses are in business R&D intensity, the share of the population with tertiary education, and in commercially applying new knowledge. About 60% of the shortfall in the business R&D intensity relative to the OECD average is linked to the specialisation of the Dutch economy in R&D extensive sectors. The remaining 40% can be explained by a number of factors, including low R&D intensity of inward FDI. Strengthening co-operation between public research organisations and innovating firms, rationalising support for innovation and increasing both the current and prospective supply of scientists and engineers would help to make the Netherlands a more attractive location for R&D investments. Factors that weigh down tertiary education attainment appear to be, the absence of shorter (2-year) courses especially at a tertiary vocational level, and inadequate incentives for institutions to attract students. The authorities are considering introducing shorter tertiary courses and are experimenting with greater competition among tertiary education suppliers for public funds. Barriers to entrepreneurship contribute to the weak performance in commercially applying new knowledge. The government is encouraging entrepreneurship, notably through education campaigns and reform of bankruptcy laws, but more should be done to strengthen incentives for entrepreneurship.

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