Advisory report 28: Foreign private investment in R&D and knowledge-intensive production

On its own initiative VARIO worked on an advisory trajectory about foreign private investments in R&D and knowledge-intensive investments in production in Flanders. As a result of this, VARIO delivered its advisory report 28 ‘Foreign private investment in R&D and knowledge-intensive production’ to Flemish minister of Innovation Jo Brouns.

Besides the many positive aspects such as job creation, positive impact on productivity growth, strong contribution to total private R&D in Flanders, added value, realization of agglomeration effects..., foreign knowledge-intensive investments also pose challenges. VARIO refers for instance to the strong concentration of R&D in a limited number of foreign companies, the competition with domestic companies for talent, the increasing reliance on suppliers from abroad… VARIO advises that policy initiatives should ensure that the benefits of foreign investments for the local economy, such as maximizing spillover effects, are as great as possible, and the cost as low as possible.

To perpetuate and strengthen foreign private R&D and knowledge-intensive production in Flanders, VARIO puts forward five recommendations based on an integral, coherent policy framework:

1. Focus on the important localization factors and offer customization;
2. Ensure maximum spillover effects to the local economy;
3. Keep the local ecosystem open and put the international connection first;
4. Focus on new future-proof investments that fit into a long-term vision of the Flemish knowledge and innovation region. Cross-over domains and digital and sustainable technologies are important drivers to realize this;
5. Make a complementary effort to strengthen the R&D and (business) dynamics of domestic ambitious and internationally oriented companies.

In response to VARIO's report, minister of Innovation Jo Brouns emphasized, among other things, that Flanders should continue to invest in the attractiveness of the region, for example by further expanding the favorable cooperation between VLAIO and FIT.