Statistics Netherlands announced today that investments in the Netherlands have seriously fallen behind in the past years. One of the reasons is the output contraction in the construction sector. Another factor which plays a part in this respect is that Dutch companies invest much more abroad through foreign subsidiary companies than they used to do in the early years of the twenty-first century.
Domestic investments distinctly down since 2008
Investments have declined by nearly 20 percent since the onset of the recession in 2008; the total volume of the economy shrank by 3 percent over the same period. Investments in construction projects, accounting for approximately half of total investments, have fallen significantly over the past years. Investments in transport vehicles, machinery and installations also decreased. ICT is the only sector to have shown investment growth during the past five years. The level of investments in Research and Development remained unchanged.
Total domestic investments by corporate sector and public sector
Companies invest more abroad
Apart from the current economic crisis and the slump in the construction sector, domestic investments are also under pressure as a result of the growing globalisation. Proportionally, companies headquartered in the Netherlands are much more actively investing in other countries than at the beginning of the twenty-first century. In fact, foreign investments exceeded domestic investments in 2005. Foreign investments are made through ownership of shares in subsidiary companies in other countries. Foreign investments tend to vary considerably and shrank in recent years. Corporate investments in the Netherlands remained fairly stable.
Part of the revenues annually generated by the corporate sector after deduction of taxes comes from subsidiary companies abroad. This part has grown rapidly over the past decade.
Revenues from ownership foreign shares versus total savings
Mark de Haan and Hans Langenberg