Figure 2 - private R&D expenditure in % GDP0,00%1,00%2,00%3,00%4,00%NetherlandsEU-15OECD
GermanyFranceUKDenmarkFinlandItaly
SwedenUS
JapanCanadaSource: OECD, main science and technology indicators, volume 2003/1It is also important to note that innovation is more than just R&D. A firm can outsource R&D to
(foreign) universities, can learn from (international) contacts, can buy licenses and learn from
innovations in (imported) products. This is in particular the case for the Netherlands with three
neighboring important R&D-countries (France, Germany and the U.K.) and the international orientation
of the economy (Keller, 2002).
If we not only look at R&D expenditure but also at immaterial investments such as royalties, licenses,
advertisements, software, the Dutch position improves. In international perspective Dutch companies
invest a relatively large amount in business-orientated immaterial investments and especially in royalties
and licenses, which illustrates the openness of the economy and the fact that a lot of knowledge is
imported.
The environment in which companies operate is also important. The government influences the market
conditions with regulation and institutions. More competition increases the necessity to adopt new
technologies and incentives to innovate, whereas patent policy may guarantee a company that it may be
able to benefit from its innovations. Through streamlining of regulation and competition policy the
government can also make an important contribution to innovation policy. Also important is the working
of the labour market. An OECD study proves that countries with more flexible regulation have
experienced higher labour productivity growth, because there countries were able to adapt themselves to
technological developments, shifts in demand and economic shocks (OECD, 2002).
A final indicator of innovative potential is the available labour potential for innovative processes. Based
on an international index of available human resources in science and technology, the Dutch position is
among the best within the EU in this aspect. The Netherlands have a good fundamental knowledge base
and Dutch researchers have relatively many publications in international scientific journals and
magazines. Also there are relative many references of foreign researchers to Dutch investigation.
The indicators mentioned above are all input-related. On the basis of these indicators the Netherlands
takes a position in the middle group of internationally comparable countries. More relevant however is
the output that is achieved.
If we look at output indicators, it turns out that the percentage of companies that are involved in
innovative activities in the Netherlands is relatively high. At first sight, this may seem a bit paradoxical
given the fact that total R&D is relatively low, but as mentioned before this indicator is disturbed by the
large share of R&D investment of large companies in other countries. Therefore, it is still possible to
have a large number of companies that are involved in innovative activities. On the other hand, the use of
scientific research by private companies is low. Patent applications and references to Dutch scientific
research by Dutch companies considerably falls behind the US and European average. Though there may
be some measurement problems in this respect it appears that innovative potential is not fully used.