From Dirigisme to a Renaissance Economy?

Discovering possible paradigms behind the ideational reasoning used in Dutch industrialisation and innovation policy since the Second World War

A study of the main influencing reports on industrialisation and innovation policy

“A common weal arises out

of the synergies stemming

from the sharing of fixed costs, like the old story of

the blind man and the deaf man whose weal was

improved by acting

together“

Friso Thomas Bernhart van Asten S1581546

Leiden University – Campus The Hague

Master Governing Markets: Regulation and Competition

15 August 2016

Supervisor: Dr. J. Christensen

Second Reader: Dr. A. Afonso

For my mother…

Wish you were still here, so I could finally answer that bloody question.

Yes, I did finish my thesis

Inhoud Abstract ...... 6 Foreword ...... 7 Chapter 1 – Introduction & Problem Statement ...... 8 1.1 Problem Statement ...... 8 1.2 Industrialisation and Innovation Policy ...... 9 1.3 Public Economy- and Managerial Public Administration-Theories ...... 10 1.4 Scientific Impact ...... 11 1.5 Societal Impact ...... 12 1.6 Reading Guide ...... 13 Chapter 2 – Literature Review ...... 14 2.1 Public Economic Theories ...... 14 2.1.1. Dirigisme (Developmental Bureaucratic State) ...... 15 2.1.2 Corporatist Export-Based Economics ...... 16 2.1.3 Keynesian Demand Management ...... 16 2.1.4 (Neo-)Classical Economics ...... 17 2.1.5 Schumpeterian Renaissance Economics (Developmental Network State) ...... 20 2.1.6 Additional Economic Arguments ...... 22 2.2 Managerial Public Administration Theories ...... 23 2.2.1 Traditional Public Administration ...... 24 2.2.2 New Public Management ...... 24 2.2.3 Public Value Management (in a situation of Networked Governance) ...... 25 2.3 Economic Policy (-Instruments) ...... 26 2.3.1 Legal Instruments ...... 26 2.3.2 Economic Instruments ...... 26 2.3.3 Communicative Instruments ...... 27 2.3.4 Infrastructural Instruments ...... 28 2.4 Hypotheses ...... 28 2.4.1 First hypotheses: ...... 28 2.4.2 Second hypotheses ...... 28 2.4.3 Third hypotheses ...... 28 2.4.4 Fourth hypotheses ...... 29 2.4.5 Fifth hypotheses ...... 29

2.4.6 Sixth hypotheses ...... 29 2.4.7 Seventh hypotheses ...... 29 Chapter 3 - Research Design ...... 30 3.1 Methodology ...... 30 3.1.1 Historical Desk Research ...... 30 3.1.2 Qualitative Content Analysis of Existing Primary Material ...... 30 3.2 Operationalisation ...... 34 Chapter 4 - Empirical Analysis ...... 38 4.1 The Dutch Economy from 1945-2016 ...... 38 4.2 Enacted I&I-Policies from 1945-2016 ...... 42 4.2.1 The Industrialisation-Period 1945-1970 ...... 42 4.2.2 The Bumpy Road 1970-1979 ...... 44 4.2.3 Crashing and Recovering 1980-1985 ...... 47 4.2.4 Innovation, Innovation, Focused Innovation 1990-2005 ...... 49 4.2.5 Mediator, Consultancy and/or Bank? 2007-2015 ...... 51 4.3 Usage of Public-Economy Theories in I&I-Policy ...... 54 4.3.1 The Industrialisation-Period 1945-1970 ...... 54 4.3.2 The Bumpy Road 1970-1979 ...... 56 4.3.3 Crashing and Recovering 1980-1985 ...... 59 4.3.4 Innovation, Innovation, Focused Innovation 1990-2005 ...... 63 4.3.5 Mediator, Consultancy and/or Bank? 2007-2015 ...... 67 4.4 Usage of Managerial Public Administration Theories in I&I-Policy ...... 71 4.4.1 The Industrialisation-Period 1945-1970 ...... 71 4.4.2 The Bumpy Road 1970-1979 ...... 72 4.4.3 Crashing and Recovering 1980-1985 ...... 73 4.4.4 Innovation, Innovation, Focused Innovation 1990-2005 ...... 74 4.4.5 Mediator, Consultancy and/or Bank? 2007-2015 ...... 76 4.5 Hypotheses and Paradigms ...... 78 4.5.1 Overview of Total Coding Results ...... 78 4.5.2 Hypotheses ...... 82 4.5.3 Possible Paradigms ...... 86

Chapter 5 – Conclusion & Discussion ...... 88 5.1 Conclusion ...... 88 5.2 Discussion ...... 91 Chapter 6 – Literature List ...... 94 6.1 Used Scientific Articles, -Books and -Reports ...... 94 6.2 Used Websites ...... 99 6.3 Used Images ...... 99 Chapter 7 - Appendices ...... 100 Appendix 1: Coding Scheme ...... 100 Appendix 2: Workfile Frequency Table including Graphs ...... 101 Appendix 3: Workfile Quotations Empirical Data ...... 101 Appendix 4: Coded Empirical Data ...... 101 Appendix 5: Frequency Table ...... 102

Abstract This study discusses the changes in industrialization and innovation policy, and in the ideational reasoning underlying that same policy. It does so by analysing 35 government reports from the period 1945 – 2015 using qualitative methods. The conclusions are divided up into five periods, each with a different governmental role in industrialisation and innovation policy. The first period from 1945-1970 shows a government that lays out the framework, but puts a strong emphasis on full structural employment, amongst other by keeping wages moderate. In the second period from 1970-1979, government has a much closer tie to the economy and economic subjects and gets actively involved using state support to prevent lay-offs. The period 1980- 1985 is marked by a crash of government’s policy from the previous period and shows a government wanting to reinvent its economic stance. Although the strive for human/knowledge capital has been evident during the entire period since the Second World War, the period from 1990-2005 shows an absolute focus on innovation and a clear wish to stay away from state support. The last period from 2007-2015 shows a different role for government again. Faced by the financial crisis, rapid technological innovation, and globalisation, the entrepreneur is put as the focal point of policy. Secondly the golden triangle of government, research institutions and the private sector need to focus on strategic sectors to strategically position themselves globally.

Foreword “A common weal arises out of the synergies stemming from the sharing of fixed costs, like the old story of the blind man and the deaf man whose weal was improved by acting together.”

It was this quote by Reinert (1999: p.269) that sparked my initial interest in further researching the interaction between the market and the state, and specifically direct interference by the state in the economy without becoming a completely planned one. First introduced to this topic during my minor on scandals and crises in the global capitalist system, in my bachelor thesis I focused primarily on the role of the government in the genesis of the financial crisis of 2007/2008 and the solving of the problems that led to the crisis and that emerged from the aftermath. During my masters’ year I focused more on the direct role of the government in the economy at large: Cases like the parliamentary enquiry into the Rijn-Schelde-Verolme concern, the existence – but also recent reboot – of NedCar or the natural gas drillings by the Dutch Petroleum Company, but also foreign cases like the bankruptcy of SAAB show how the collaboration between government and market parties can be successful, unsuccessful or raise new issues.

In the years since the financial crisis, the Dutch state developed initiatives to – on a large scale – give out loans and guarantees to Small and Medium Enterprises (SMEs) and to further move firms to innovative, because the market wouldn’t do so. Since this is the first time the government is – again – directly involved in the economy since the time of the industrialisation policies in the 50s, 60s and 70s of the last century, I was interested in researching whether there was a paradigm shift in the economic thinking a) since Reaganomics/Thatcherism kicked in during the 80s in the U.S. and the U.K. (and did it really kick in in the Netherlands?) and b) whether the ideational reasoning now is different than the ideational reasoning was in the period of specific industrialisation policies. This thesis therefore focuses on a longer historical period and tries to distil shifts in paradigms over the years a) with regards to public economic theories and b) with regards to managerial public administration theories.

Chapter 1 – Introduction & Problem Statement The role of the government in the economy is a widely researched topic. At the same time the relationship between the public sphere and the market is rapidly evolving, especially since the design of the economy is changing due to – amongst others – innovations that are coming to market at twice or thrice the speed and at the same time can disrupt markets as well as governments (/legislation). The quarter century after the Second World War was characterised by very steep economic growth in the Netherlands. The 70s brought with them a steep economic decline, but were quickly followed by a quarter century of new growth from the 80s, until the financial crisis of 2007/2008 ended the upward motion. Currently, the economy is still experiencing difficulties as a result of that crisis and more than ever a discussion is being held on whether we can actually still expect economic growth in the future (and secondly what is the result of all the technological innovations on our societal structures?)(see for example Gordon (2016)).

This study aims to find out how the Dutch government acted over the years to help make that economic growth happen: Which of the ideas from the influential economic thinkers on the front page were used and when?1 Secondly this study focuses on how government evolved in its thinking and acting over the years since the Second World War: were there demarcated periods in which certain ideas prevailed or not?

1.1 Problem Statement The title of this study is “From Dirigisme to a Renaissance Economy?”. The question mark is specifically added because this is what this study aims to find out: Has there indeed been a shift of ideational reasoning in the discourse of industrialisation and innovation policy? This study intends to answer these questions by analysing the industrialisation and innovation policy discourse: parliamentary reports, parliamentary memorandums and laws that were written and enacted since the Second World War on these topics.

From this objective the following research question follows: How has the Industrialisation and Innovation-discourse changed since the Second World War and to what extent were these changes congruent with theories of public economics and managerial public administration?

1 On the picture on the front page: from left to right Adam Smith, Karl Marx (in this study a Marxian fully centrally-planned economy is not discussed since that was never considered a viable option by the Dutch people/government), Joseph Schumpeter and John Maynard Keynes)

The following sub-questions follow from this main question:

1. What type of industrialisation- and innovation policies were formulated and enacted since the Second World War? 2. Were public-economic theories used in the formulation of new policy? 3. Were managerial public administration theories used in the formulation of new policy? 4. Can the choices regarding industrialisation and innovation policies that were made be related to a specific prevailing paradigm (or collection of theories) in a specific period?

The first question focuses on the specific choices that were made with regards to policy- instruments. This question is asked to give an overview of the outputs (measures taken by the government) of industrialisation- & innovation-policy (I&I-policy), which is fundamentally different compared to the reasoning behind the policies (which focuses more on the input and outcome of the policies). The second and third question specifically focus on the reasoning used in formulating the I&I-policies with regards to the aforementioned public economic theories and managerial public administration theories. The fourth and final question is theoretical of nature: a step back is taken in order to see whether there are similar uses of reasoning and measures over a longer period of time in relation to the theories used in this study and whether these uses and theories together form possible overarching theoretical paradigms.

1.2 Industrialisation and Innovation Policy Industrialization is defined in the Oxford Dictionary as “the development of industries in a country or region on a wide scale”. Innovation, or innovating is described as the act of “making changes in something established, especially by introducing new methods, ideas, or products”. (Oxford Dictionaries, 2015). After the Second World War, the country had to be rebuilt and the Dutch government decided that instead of taking on its traditional laissez-faire role, it would now actively take part in solving economic problems. Industrialisation was one of the pillars of the new economic policy, next to – amongst others – an active role in the labour market and the wage policy (and –determination)(Van Zanden, 1997: p.16).

According to Van Gelder (1973: p.19) industrialisation-policy in essence should aim to let society profit from technical and industrial developments. The industrial capacity must be expanded (per capita) in order to let industry work as efficiently as possible in a certain society. Van Gelder (ibid.: p.19-20) however also states that industrialisation policy can be divided into

9 three different kinds of policy: Correcting on a short term, shaping a development on a long term and changing society’s structure on a long term. This has its implications with regards to the formulation of industrialisation policy since long term planning presupposes (complete) information on future developments, which is often missing or incomplete. Due to this information asymmetry Van Gelder (ibid.: p.28) distinguishes between two types of industrialisation policy: Targeted and selective policy. Targeted policy is pre-formulated and has parliamentary goals attached, whereas selective policy isn’t pre-formulated and needs an ex post decision by the government to whom the policy applies and who stands to profit/to lose from it. Wijers (1982: p.8-11) adds regarding the policy and its environment, that industrialisation policy should primarily be evaluated according to its effectiveness and not solely according to its possibly non-free-market-like-instruments. This, especially since government isn’t isolated in the decision making process on industrialisation: big private firms traditionally have a place in the public economic arena.

The problems arising in industrialisation policy with regards to its development, its instruments and its evaluation, also apply to innovation policy. Velzing (2013: p.19) defines innovation policy as ‘the complete set of government measures aimed at stimulating innovative activities within companies’. This differs from the definition used by for example Edquist (2011: p.1728) who uses a broader definition, namely the set of government measures aimed at influencing innovation processes (which includes for example national scientific policy). Where industrialisation policy could – according to Van Gelder (1973) – be categorized into three separate kinds of policy, Edquist (2011: p. 1729-30) states it is much more difficult in innovation policies: The determinants of innovation processes are not known in great detail and hence the determinants influencing the innovation processes can’t be completely isolated either. However, this doesn’t mean that the influencing policies can’t be determined at all; most likely the policies will be of a multicausal nature: they will support and reinforce one another. Velzing (2013: p.19-20) agrees and states innovation policy can even be seen as one of the pillars of industrialisation policy and vice versa.

1.3 Public Economy- and Managerial Public Administration-Theories This study touches upon multiple fields of research: Economic history, business history, political economy, macroeconomics, mesoeconomics as well as political science, political history, public policy, national law and public administration. The focus of this specific study however, are two different sub-fields of on one side political economics and on the other side

10 public administration, namely: Public economics and managerial public administration. Schilder (2000: p.7) states about economics and public administration that they are becoming increasingly interlinked due to a shift in government paradigms focusing on both motive (economics) and implementation (public administration).

Kolm (2010: p.690) states public economics focuses on the choice of actions in the public sector, with regards to technical and economic facts on one side and the social setting (the political or moral objective) on the other side. It is different from “private” economics in the sense that it concerns moral choices to be made by people (the administration) not seeking direct political power nor gaining personal income or power. Furthermore it is concerned with all things economical to do with government, for example the choice of public investments, optimum taxation and the management of externalities.

Managerial public administration theories according to Stoker (2006: p.41-4)(or paradigms according to Stoker, for the readability in this study the term “managerial public administration theories” is used) have two main elements: they imply a different way of working for policy makers and secondly they consist of a range of ideas to comprehend management challenges. Stoker argues that they can primarily be distinguished on how they handle accountability and efficiency, but since they are management paradigms they will also have different visions of management and different ways of public service delivery. In short, they are concerned with the design and workings of an administration. Hall (1993: p.279) adds managerial theories act as a prism through which reality can be seen. This prism shows how the world is observed, which goals could be met through policy and which instruments could be used to meet these goals. These managerial theories are thus of influence to the political discourse and the ideas behind them give structure to the policymaking process.

1.4 Scientific Impact The scientific impact of this report will be to add to the body of knowledge regarding the role of governments in an economic system, and especially with regards to industrial policies as well as innovation polices. It will focus not so much as other studies have done (see Wijers (1982), Dercksen (1986), Velzing (2013)) on the policies themselves, but on the ideational reasoning that influenced them and the possible paradigms that can be derived from that.

The multidisciplinary character of this study adds to the scientific impact of this study. Connecting the academic fields of public economy and public administration isn’t new, but applying theories and insights from both fields on empirical data covering 65 years of economic policy is. Especially since – again –, this study isn’t focusing so much on the policies themselves as on the ideational reasoning behind them, and secondly on researching whether new combined public economic/public administrative theoretical paradigms can be distilled from the empirical data.

Furthermore, (state-supported) innovation policies (and innovation economics) are a new empirical field of study, since the system architecture that was designed in the 90s (see for example Lundvall (1992) or Nelson (1993)) is slowly starting to produce effects that show how successful/unsuccessful cooperation between government, (private) research & development, and capital can be (see Mazzucato (2013) and Block (2008)). Research into the ideational reasoning behind these innovation policies in Dutch policy documents hasn’t been conducted as of yet either. The possible connections and possible shifts between Dutch industrialisation and innovation policies in connection to the shift between the “big theories” hasn’t been extensively researched either (although specific connections have been made, see for an example on public value management and innovation Koolma (2013)).

In conclusion, this report will add to multiple bodies of knowledge in the fields of public economy and public administration, as well as will try to connect theories from both scientific fields into separate theoretical paradigms.

1.5 Societal Impact After the Netherlands was hit by the credit crunch and the following economic crisis, the government decided – again – to take a more pro-active role in the economic system. It was forced to do so by the too-big-to-fail mechanism in the case of the state aid for financial institutions, but afterwards it also decided to enact new types of policy to for example support Small and Medium Enterprises (with specific – amongst others – loans or guarantees, described in paragraph 4.2.5).

However, the money spent on these new forms of financing as well as the money spent on innovation nowadays is rarely publicly scrutinized, especially compared to other projects that saw the government investing in something innovative and sometimes losing a lot of it (for example the Fyra-parliamentary enquiry where 800 million euros was lost (BNR, 2015)). The fact of the matter however is that the Dutch government, without much opposition, rebooted

NedCar (along with VDL and BMW) using 25 million euros from the Guarantee Fund Enterprise Financing (Garantie Ondernernemingsfinanciering) and supplying 3,25 million euros as an investment subsidy (along with the Province of Limburg)(Verlaan, 2015). In total, the Dutch government supported the Dutch private sector for over 8 billion euros between 2009 and 2013 (in loans and guarantees)(Rijksoverheid, 2014).

This study aims to give some insight into the why and how of this support. This, in order to show the Dutch society why 8 billion (which adds up to approximately the total interest of the Dutch national debt) has been spent in the last years. Furthermore, it also tries to show to the public, how the Dutch government positions itself in the national economy. Has it truly picked up a direct role in the economic system again just like it did in the 70s, or is there a difference?

1.6 Reading Guide In chapter 2 the theories that will have a central role in this study are discussed. In chapter 3 these theories will be operationalized, hypotheses will be introduced and the methodology of this study will be explained. Chapter 4 shows the results of this study based on the empirical data. In chapter 5 the conclusions of this study will be presented along with a discussion on the scientific as well as the empirical results that have been found and how future studies could further the subject of this study. Lastly chapter 6 shows the literature list with the used sources and chapter 7 holds the appendices.

Chapter 2 – Literature Review This literature review is organized in four paragraphs. The first two will describe the public economic theories and the managerial public administration theories. The third paragraph will focus on the possible policies (& -instruments) that administrations might choose in relation to I&I-policy and the fourth and final paragraph will focus on the hypotheses central in this study.

2.1 Public Economic Theories The presupposition that government and business both need each other is older than the first theories by Adam Smith in the 18th century. He stated a market economy would only work properly if there was an institutional setting in place that included both political- and legal rules and regulations. These market conditions together with a minimal set of institutions and ‘moral sentiments’, like for example rules of exchange and property rights, are, what Heemskerk, Mokken and Fennema (2012: p.253-4) argue, why corporate business need the state. According to the same authors the state needs the corporate sector to provide jobs and income, and to organise investment, production and services.

These examples of why the private sector needs the state and vice versa are however already a certain conviction about the relationship between the state and the private parties and one that can differ – according to conviction – on (1) objectives, on (2) when a government is allowed to step in, and on (3) ideas about economic growth and innovation. As stated in paragraph 1.2, public economics is concerned with the public choice of economic policy. Furthermore Blyth (1997: p.246) suggests that ‘ideas could be providing the necessary conditions for collective action among agents with an interest in restructuring relationships’.

In this paragraph the public economic theories – and thus also the underlying ideas (Blyth) – that might be used in the formulation of I&I-policy and that accordingly express a certain conviction about the relationship between the market and the state, will be discussed. These theories are the following: 2.1.1 – Dirigisme (Developmental Bureaucratic State) 2.1.2 – Corporatist Export-Based Economics 2.1.3 – Keynesian Demand Management 2.1.4 – (Neo-)Classical Economics 2.1.5 – Schumpeterian Renaissance Economics 2.1.6 – Additional Economic Arguments

2.1.1. Dirigisme (Developmental Bureaucratic State) Hall (2001: p.4) and Crouch (2009, p.385) state the economic policies of France from the 50s until the 80s can best be described by the French word Dirigisme, which stands for a government that directs the way the economy should go and actively participates in the economy to set this direction into motion. The state also actively persuaded firms to go into mergers or acquire other firms in order to eliminate inefficient producers and to make a move towards big corporations and sectors that are efficient and have a high-technology-intensity.

Bos (1970: p.142-3) states central planning (government directing the way) according to Tinbergen requires overcoming three central problems: (1) the choice of the rate of growth of the total production, (2) the choice of the desired economic structure and (3) the selection of investment projects and of production techniques. The choice of the rate of growth depends on the optimum levels of savings or investment and these again depend on the maximum satisfaction from consumption from consumers. Based on this last figure, policies to either encourage saving or investing must be implemented. The choice of the desired economic structure and the selection of investment projects is dependent on the nation’s economic structure and -regions. A distinction between international (agriculture, mining and manufacturing) and national industry (construction, energy, transport) is made, where international industry knows more competitors (and thus interchangeability) than national industry does. Policy-choices include investing into either the international industry to compete on exports or into the national industry to further national supply (dependent on national demand which is again ultimately dependent on the international industry).

Block (2008: p.3) calls the model of directed economic growth the Developmental Bureaucratic State (DBS). This DBS would provide economic incentives, instructions or subsidies to stimulate established firms to enter into markets that weren’t otherwise open to those firms either due to high entrance costs or due to too high risks. Reinert (1999: p.281) adds to this directive role – with regards to the two economic roles government could take – in both getting the nation into the right business and creating a comparative advantage in that business. Both these roles involve government establishing the sectors (or companies (something Block (2008: p.15) calls “picking winners”)) that will lead the nation to activities that produce increased returns and thus economic growth. These sectors can either be selected resource-based or skill- based.

2.1.2 Corporatist Export-Based Economics The corporatist export-based economic thinking is defined as being a mixture between the Japanese and the German model of economic thinking after the Second World War. Crouch (2009: p.385), as well as Boltho (1996: p.104) to a lesser degree, state the German model was the textbook example of an (corporatist) export-based economy: In this economy, wealth is first and foremost created by depending on economies (countries/regions) with other economic circumstances that therefore can purchase products made in – in this case – Germany (or Japan). This is only possible if the state expenditure on welfare is low in the first years, in order to keep state-expenditure overall low. This will cause a beneficial exchange rate in favour of the export. After several years however, consumer confidence can rise (partly due to a system of limited welfare) and a strong home market can originate. Its corporatism was industry-sector based as Manlow (2005: p.94-5) states. This corporatism ensured a focus on long-term engagements rather than anonymous short-term spot-market exchanges and ensured labour relations based on negotiation and consent rather than command and control.

In the Japanese model, as Gourevitch (1996: p.251-4) states, the government is involved in the economy via strong ties to the biggest corporations in its economy. Via these networks the industry is able to quickly adapt to a changing economic situation or can be directed in a certain agreed direction. This model raises strong barriers against dissidents and new entrants and fosters economic growth as long as the big corporations (keiretsu, in Japanese) perform well. Jasanoff (1985: p.24) adds that the interest representation of companies is organized into a ‘limited number of singular, compulsory non-competitive, hierarchically ordered and functionally differentiated categories’. The categories are licensed or recognized (and sometimes created) by the state and in exchange for the representational monopoly, the companies must allow for certain controls of their selection of leaders and articulation of demands.

2.1.3 Keynesian Demand Management Faced with the continuous issue of unemployment in the United States, John Maynard Keynes published his book “The General Theory of Employment, Interest and Money” in 1936. Until then, the common presumption was that market forces will always return society to a status of full employment, due to the price mechanism that will lower the cost of labour in times of hardship and up the cost of labour in times of prosperity (Schilder, 2000: p.9). Keynes however, saw only a limited role of price effects in the determination of overall output and employment. This was mostly due to the fact that individuals are not able to reach optimal investment decisions, since there is always uncertainty regarding the investment decisions of other

16 individuals. Keynes argued that therefore the volume of demand was much more important and that there was a role for the government (via fiscal or monetary policy) in determining the satisfactory level of demand, in order to realise a full utilisation of available production factors.

According to Crouch (2009: p.386) government gets actively involved in the economy especially during a recession or a time of hardship. It would then take on debt in order to for example keep taxes low and thereby stimulate economic growth. In better economic times, governments are supposed to reduce their spending and pay of the accumulated debt.

2.1.4 (Neo-)Classical Economics In thinking about the government-market relation, the standing point of the (neo-)classical economists has always been to discourage government involvement, due to perversity-, futility- and jeopardy arguments. These arguments primarily are based on former attempts of government in which the social order was changed in an unintentional direction (perversity), which totally failed (and were doomed to fail from the start)(futility) or with such high costs that previous achievements were jeopardized (jeopardy)(Hirschman, 1991: p.7-8).

Furthermore, the monetarists argued that more often than not government policies experienced delays in their implementation which may lead to a weak influence of the expansionary policies and/or to pro-cyclical rather than contra-cyclical policies. Therefore, instead of focusing on demand management, government should control the aggregate demand by focusing on the choice of a stable and moderate money supply in the economy as a whole. By adjusting this money-supply individuals and companies could be incentivized to either spend money or save money based on the current economic growth figures (Schilder, 2000: p.12-3)

Bordewijk and Klaassen (2011: p.60-2) state that the (neo-)classical paradigm of the supply- economy (as opposite of the Keynesian Demand-economy) meant that in times of hardship, instead of Keynesian demand-policies, the supply of cheaper labour via the labour-market or a change in labour-regulation should lower production prices for the time being. Furthermore, the individual is to be regarded as central to (economic) policy making. This means policies have to be developed, aimed at incentivizing the individual and policies aimed at increasing service-delivery – as an alternative to direct involvement – by government to let individuals/individual organizations choose their own path in a free market.

Friederiszick, Röller, and Verouden (2006: p.30-6) stated all economic policies a government should want to implement would have to be deemed appropriate according to either of three policy standards of economic efficiency: Total welfare, effect-on-rivals and internal market. With regards to total welfare it means that all economic policies should ensure the efficient working of markets and thereby increase the total welfare of a country (not necessarily every individuals’ welfare). The effect-on-rivals is also concerned with the efficient working of markets, in this case by creating a level-playing-field which leaves all competitors’ market position unchanged. A government thus shouldn’t take action if this disrupts a certain company or the sector in which the company operates. The internal market standard is based on the functioning of the internal market: An intervention is only deemed efficient if it doesn’t form an obstacle to the internal market policies – and thus free trade – between nations.

With regards to innovation policy, Smith (2004: p.76) and Rodrick (2003: p.7) argue that the (neo-) classic theory first and foremost focuses on the workings of the free market and its market incentives to promote economic growth. The fact that an individual company is able to easily access markets and in those markets has the flexibility to make profits – even in a disruptive environment – bodes for free markets as the way to economic growth (together with macroeconomic stability). Innovation is therefore mainly boosted by the establishment of property rights that ensure that innovators are able to profit from their inventions/innovations on the free market, by protecting the intellectual property (creations of the mind) behind those inventions/innovations.

2.1.4.1 Market Failure Within the (neo-)classical theory, the foremost situation in which government intervention is expected, is in case a market failure arises. In total, there is a distinction between nine different types of market failure:

1 Intrinsic Value 6 Lowering Transaction Costs 2 Support Motive 7 Preventing Monopolies 3 Merit & Demerit Goods 8 Underinvestment in R&D 4 Externalities 9 Imperfect Information- & Capital Markets 5 Public Goods

Bordewijk and Klaassen (2011: p.33-4) discuss the following three market failures: (1) The intrinsic value market failure concerns the protection of a good or service because, even though there are little or few users of a good, the government or the citizens still think it deserves

18 protection (for example nature reserves). (2) The support motive regards goods or services that will go defunct without a government intervention because citizens that use the good or service are not willing or able to pay (fully) for the good or service. (3) The third market failure(s) are the merit and demerit goods: These goods are supported (merit goods) or discouraged (demerit goods) due to the functions they fulfil. Merit goods are supported because exclusion of users leads to undesirable social situations. Demerit goods are discouraged because it is socially undesirable to let the producer expand its supply/let consumers expand their usage exponentially.

(4) Externalities, as Bordewijk and Klaassen (2011: p.33) argue, arise if the negative or positive impact of the use or production of a good, isn’t reflected in the market price or if this impact has a negative or positive impact on other citizens. (5) Public goods in this case are defined as products for which it is impossible to exclude the usage by non-paying citizens (non- excludable). The use of these goods also shouldn’t be impacting the use of the same good by another use (in other words, they should be non-rivalrous). (6) The lowering of transaction costs is concerned with creating a level-playing-field. If transaction costs – whether they be information-costs, bargaining costs or enforcement costs – are low, a market is able to function more efficiently. (7) De Kam et al. (2008: p.22) state monopolies threaten the functioning of efficient markets and to prevent this government should – as much as possible – regulate businesses that can only exist profitably if there are just a few (or even only one) supplier(s). In the worst case it can decide to grant a regulated monopoly to a business in order to guarantee accessibility to society.

(8) Bartik (1990: p.363-7) argues that due to the possibility of research spillovers (other companies profiting (more) from a firm’s investment in research and development), underinvestment by companies in their research and development may take place. It can however be tackled by specific targeted subsidies, guarantees or loans. (9) Lastly, the imperfect information- and capital markets form a market failure, because they both fail to deliver the efficient amount of either information needed to support economic growth, or capital to lend socially profitable loans or make socially profitable investments.

2.1.4.2 Government Failure The negative market failure in this theory concerns the public choice critique (Schilder, 2000: p.14-5). In contrast with Keynesian demand management it isn’t only opposed to cyclical policies, but it questions the effectiviness and efficiency of government policies in general. This is what is known as government failure. According to Friederiszick et al. (2006: p.20-1), it regards the discouragement of economic action by government due to its inability to pick

19 winners due to either the lack of relevant information and/or because they are supporting their own (individual, private) goals by handing out favours (as part of what Schilder (2000: p.14) calls political opportunism, bureaucratic self-interest or rent-seeking behaviour by interest groups). Therefore a government should test whether its policy is appropriate (Friederiszick et al.: p.40), in other words whether there isn’t a more effective or less costly instrument that can be chosen. It shouldn’t intervene either if an intervention brings no incentive effects with it, i.e. if it doesn’t change the behaviour of firms to get in line with the policy. Without such an incentive, tax money is simply transferred to private companies without a pay-off.

2.1.5 Schumpeterian Renaissance Economics (Developmental Network State) One of the eldest economic theories, is what Reinert (1999) calls the renaissance theory by Antonio Serra from the 17th century. According to Reinert (ibid.: p.287) Serra studied the differences between the countryside and the cities (in casu the city of Venice and its surrounding areas) and concluded there were economic advantages to gain in cities, due to the composition of the population and the quality and diversity of their economic occupations/professions. Both variables were influenced by the state of knowledge and technology in the city, since technological sophistication in return caused a sophisticated pattern of demand and that again caused, that a large and diverse skillset was asked from the workforce which in return asked for a knowledgeable and ingenious population. Next to knowledge and technology, the different economic activities should also be geared to each other, since the presence of great commerce also ensured the presence of great manufacturers and vice versa. This “gearing” of the economy and the emphasis laid on the function of knowledge and technology (and related skills) are what both Wade (1996: p.87) and Reinert (1999: p.279) argue as being the role of the state in the new (Renaissance) innovation-intensive economy.

The author that added the importance of new knowledge (technological development) to his theories was Joseph Schumpeter. Common economic theories presuppose rationality and other static certainties, but Schumpeter stated economics was more involved with dynamic probabilities. Actors don’t just pursue their self-interest, but are motivated by a string of sentiments and emotions. The entrepreneur wants to give way to its creativity and more than anything wants to outshine its competitors. Innovation and technological development is therefore driven by the thirst for action of the entrepreneur (Boels, 2012: p.28-31). Knowledge in itself is inactive and will only be activated by an innovation’s transformation into the economic process by an entrepreneur. This transformation will not only affect the economic system, but also has its effects on society and societal structures (ibid.: p.56).

According to Reinert (1999: p.282-4) and Wade (1996: p.87) economic growth in this theory is focused on the skills and knowledge of the workforce and this focus is institutionalised by Block in the Developmental Network State (DNS). Reinert and Wade conclude there should be an emphasis on the value of knowledge. Government should create an infrastructure to provide the market with committed, flexible, skilled labour and entrepreneurship. Bartik (1990: p.363-7) argues underinvestment in human capital can be seen as a market failure because human capital is the main driver of innovation and therefore underinvestment will in the long term cause economic losses. Secondly, human capital also instils civic duties to bring social stability and provide opportunities for the poor to get ahead in life.

Block (2008: p.4-5) and Reinert (1999: p.282) argue a DNS should contain four specific goals: 1. Targeted resourcing; 2. Opening windows & Brokering; 3. Facilitation; 4. Creating Demand.

Targeted resourcing concerns making investments in certain sectors or companies, but knowing when to pull out of a project due to the involvement of independent expertise. Opening windows is about creating a framework in which every idea could blossom. This means not only creating a financial network, but also a knowledge network and a facilities network, in order to stimulate in-kind interpersonal assistance (a free flow of ideas throughout the system). This can be done by getting involved in brokering, which can be split up into technological and business brokering. Technological brokering is actively connecting existing technologies to new users. Business brokering is about bringing together business connections with technologists/inventors who are trying to find a way to commercialise their idea.

The facilitation parts of the Developmental Network State are the underlying (legal) frameworks that have to be in place for any economic growth to take place. Block as well as Reinert (1999: p.281-3) distinguish supplying the infrastructure for firms to grow, setting standards, creating regulatory frameworks/legal system(s) and coordinating between vertical and horizontal product sectors. Lastly, Reinert (ibid: p.282) also distinguishes the role of government as the creator of high-quality demand. The redistribution of income or particular

21 incentivized/subsidized programmes can lead to companies being able to answer a demand they otherwise wouldn’t have been able to.

As aforementioned, innovation within this theory takes place via the “commercialization of new knowledge”. In order for this commercialisation to take place, certain circumstances are needed, according to Carlsson (2009: p.20): A mechanism that focuses on the search for solutions for day-to-day problems can bring consumers towards entrepreneurs and/or soon-to-be- entrepreneurial technologists. There should be a possibility to fail in order to facilitate learning and drastic improvement. New markets should be able to form without regulatory boundaries and finally there should be a social and political legitimization for companies that (try to) innovate and improve society (“backing” winners).

2.1.6 Additional Economic Arguments The following arguments could present themselves in the analysis, but aren’t specific to one of the aforementioned theories.

2.1.6.1 Income Distribution Income distribution is seen by both De Kam et al. (2008: p.15) and Hebbink and Van Velthoven (2008: p.170) as a main function of governmental economic policy to equalize – to a certain degree – the purchasing power of its citizens.

2.1.6.2 Full Employment De Kam, Koopmans and Wellink (2008: p.15), and Hebbink and Van Velthoven (2008: p.164) argue one of the reasons for government intervention is to stabilize the economy. It can do so by trying to achieve full employment. Glyn (1995: p.109-110) states it can do so to achieve more equality and more security for its citizens, but at the same time higher employment yields the need for extra resources and thus extra demand. This, because the earning of a wage causes a multiplier effect in consumption, which in return means an increase in demand and thus an increase in production. Bartik (1990: p.362-3) stresses the importance of the involuntary part of the unemployment and the solution (i.e. employment), which can only be reached if the cost- benefit analysis of employment programmes show a positive balance compared to the costs of a welfare programme.

2.1.6.3 Public Value Failure Public value failure is a concept introduced by Bozeman (2002: p.150-1): In economic policy, it is concerned with the hoarding of benefits, and short-time horizons & substitutability vs. the conservation of resources. Bozeman (ibid.: p.151-5) states hoarding of benefits takes place when certain organizations are able to limit distribution to the entire population, but are still able to reap the exponential benefits of public commodities or services for themselves. Short- time horizons are a failure if ignoring the long-term view causes harm to the set of public values in place. The substitutability vs. conservation of resources failure may cause policy makers to focus on substitutability in cases where there is no suitable substitute and/or where it would be in the interest of the public to conserve the resource rather than use it up (or substitute it). In both cases government should introduce policies that counter the public-value failures: Regulate the possible benefits from public commodities or services, and emphasizing the damage a short-term outlook does, for example by encouraging the conservation of the resources and/or promote substitutes deemed appropriate.

2.2 Managerial Public Administration Theories As Hall (1993: p.289-90) argues, in policymaking, puzzling and powering often go together. This means that the struggle to find a policy – taking into account former policy(ies) and (expert) opinions, while trying to stay autonomous (ibid: p.277-78) – together with the struggle for empowerment of the specific policy, are dimensions of a process to change a policy. The institutions in place militate between the power-based and the ideas-based idea of politics, but at the same time ‘the institutions reflect the particular set of ideas about what can and should be done in the sphere of policy’ (ibid: p.290). In other words: Institutions or institutional frameworks both reflect the ideas of the political discourse as well as intervene in the continuous political struggle between power and ideas. As Stoker (2005: p.41-2) argues, in public administration, these frameworks are expressed in three central managerial theories: Traditional Public Administration, New Public Management and Public Value Management (in a situation of Networked Governance). As mentioned in paragraph 1.3, Hall (1993: p. 273) argues they differ on how the world is observed, which goals could be met through policy and which type of instruments could be used to meet these goals.

2.2.1 Traditional Public Administration As Stoker (ibid: p.43-5) states, the model of traditional public administration (TPA) is mainly based on the Weberian perception of the world. This perception draws on three main arms, namely leadership, the party and the bureaucracy. In this paradigm, leaders are chosen via general elections and the parties are primarily there to keep the leaders accountable. The bureaucracy however is the main executioner of policy. The policy goals are handed by the Minister (political) and worked out by the bureaucracy into standardized procedures and prescribed rules. Public service delivery follows the same hierarchal logic or it happens via self- regulating professions. There are sectors that make horizontal or vertical agreements and if deemed sufficient and competent by the political leaders they can work in this inter- organizational institutional structure.

Instrument Selection With regards to their instrument selection, TPA follows the refined-traditional method as distinguished by Bagchus (1996: p.63). This method assumes a strict goal-mean rational in the selection of the instruments, meaning instruments (means) have pre-formulated goals. However, the policy instruments have intrinsic characteristics, i.e. they can’t be used in any situation. Following from this, the instruments should fit with the (pre-formulated) values and norms in a certain community and therefore should be discussed and agreed upon with the same policy community. The valuation of the outcomes of the instruments is done on the basis of effectivity (has the mean indeed resulted in the goal that was formulated?) and on whether ex post the fit was ensured with the community. Stoker (2006: p.50) argues the efficiency is guaranteed by both breaking tasks into strict procedures and by making the bureaucrats accountable to the political leaders that competitive elections have provided, but at the same time by creating independency (bureaucratic hierarchy) from short-term political interference due to life-long appointments.

2.2.2 New Public Management The New Public Management (NPM) theory focuses on the (neo-)classical principle of free markets to achieve welfare in a country. The focus of government should be on service provision and the creation of market-conditions – creating amongst other a level-playing field for a free market to operate –, but production (meeting consumer demand) should be done by private organizations. This is also seen in the vision on new public management Stoker (2006: p.45-6) introduces: Politicians as goal setters for bureaucrats in order to answer demand by

24 citizens (seen as consumers). Furthermore, as Heemskerk et al. (2012: p.256-7) argue, there is a bigger role for independent expertise within the goal setting of government and there is a new way of service delivery by autonomous administrative units that are organized according to private principles. The starting point should however be that service delivery as much as possible is left to the (private) free market.

Instrument Selection The vision on instruments is traditional (Bagchus, 1996: p.63) which means there is again a strict goal-mean rationality (as in the refined-traditional method) but without instruments with intrinsic value. All instruments of government should be standardized and thus are not dependent on a certain context. In this approach society is partly malleable by government – because the individual is malleable – since it is understood as a complex machine and therefore its independent parts can be changed/moulded. The way this is possible, is by incentivizing actors to get them to move in a certain direction. The choice for an instrument is made on the basis of pre-formulated goals and a cost-benefit analysis which leaves just one instrument that is best.

The valuation of the effectivity of whether an instrument has met its goal is done exactly on that basis: Has it met the goal and was it always aimed at reaching that specific goal, regardless of other developments (ibid.: p.63). Stoker (2006: p.50) states efficiency can be reached by policy makers by reaching the performance targets and –indicators set by politicians (which are mostly monetary in nature). The accountability is to these same politicians and in the end to citizens that set the targets.

2.2.3 Public Value Management (in a situation of Networked Governance) Stoker (2006: p.46-7) argues the Public Value Management paradigm (PVM) is – other than TPA and NPM – focused on not only politicizing the input and the evaluation of policy, but by politicizing the entire policy process in order to constantly review which public services should be run. (Networked) Governance in this theory involves networks of deliberation – with all possible relevant stakeholders – that try to pursue and deliver public value (PV) to the people. That public value is more than a summation of individual preferences of actors: It is collectively built through deliberation between all relevant stakeholders (ibid.: p.42).

The vision on management is accordingly (ibid.: p.44-7): The network of deliberation and public managers should conform to those values. There is no one best way of delivering public service, but instead multiple options are available as long as they are effective with regards to achieving PV-related outputs and outcomes.

Instrument Selection Bagchus (1996: p.88) emphasises – in the institutional instruments approach – the fit with the context (the network). The instruments themselves are a collection of components and rules instead of strictly goal-oriented and they also derive their meaning from the interaction with the policy context (stake-holders). The design and the implementation of the instruments should also be discussed with the network in order to be compatible with the social dynamic.

The instruments derive their legitimacy (and thus valuation) from the involved actors (stakeholders), the process, and the values that come from the networks of deliberation. Efficiency is reached by continuously checking whether the instrument fits the purpose of reaching the formulated public values. Accountability is reached by negotiated goal setting and oversight by the same network of deliberation (Stoker, 2006: p.50-1).

2.3 Economic Policy (-Instruments) In analysing economic policy, three different sets of instruments can be distinguished, based on Bekkers (2011: p.189-90): legal instruments, economic instruments and communicative instruments. These policy instruments aim to change the way in which actors behave and therefore try to steer (the economic) society in a certain direction. In addition, Van Gelder (1973: p.31) and Ringeling (1993: p.133) state the state can provide infrastructural services as a fourth set of instruments.

2.3.1 Legal Instruments The legal instruments are concerned with the regulatory and legislative power of government and are about changing the law. For example, a part of the facilitation aspect as discussed in the paragraph on the DNS-model (paragraph 2.1.5) is part of this set of instruments in building a legal system and setting (industry-specific) standards (Block, 2008: p.4-5). Reinert (1999: p.283) adds to this that a government should also provide a system of property rights as part of their legal structure in order to foster economic activity on a long-term. Bestebreur et al. (2004: p.132-4) also distinguish a system of handing out permits as a legal instrument. Lastly, Rodrick, (2006: p.4) stresses the opposite of regulating, namely deregulation as the last legal instrument to steer economic actors.

2.3.2 Economic Instruments Economic instruments are aimed at altering the cost-benefit assessment of individuals/organizations (Bekkers, 2011: p.189-90). They influence the economic system

26 using monetary measures and/or using executive power (based on the legal system) to release/keep/gain some form of control over an actor. The first and foremost economic instrument a government has, is influencing the taxation regulation. According to Van Gelder (1973: p.31) taxation-rulings can encourage (tax-deductions) or discourage (tax-levies) certain economic movements.

Bestebreur et al. (2004: p.130-2) distinguish subsidies, loans and guarantees as the second big economic instrument a government has. Subsidies are always used as a way to encourage certain behaviour. Examples are interest-subsidies, settlement-subsidies and research & development-subsidies. When loans and guarantees are used by government, they differ in comparison with their private-equivalents in their risk-assessments (mostly higher risk) and/or outcomes (deemed beneficial for governmental policy-goals). Reinert (1999: p.284) also sees this role for government as capitalist (and entrepreneur) of the last resort, for example by what Wade (1996: p.87) calls targeted industrial support (either “picking” or “backing” winners2).

Van Gelder (1973: p.31) furthermore distinguishes government assignments and procurement as an economic instrument (a mean) to move economic actors in a certain direction. The last economic instrument as distinguished by Heemskerk et al. (2012: p.255) and Toninelli (2008: p.5-7) is the privatization or nationalization of companies, for example due to political/ideological reasons (ensuring the presence of certain sectors (autarky) or creating a free market were there wasn’t one before) or due to social reasons (securing employment)

2.3.3 Communicative Instruments The third set of instruments are what Bekkers (2011: p.189-90) calls communicative instruments: They are about the knowledge position of government versus society: Since government is a society-overarching institution, it has a different knowledge position compared to individual firms and citizens. This means government can take on an independent holistic approach in changing the perceptions and knowledge position of individual actors, for example in their marketing-campaigns to encourage certain individual career-choices (and thus education-choices), but also in their (written) encouragement of sectors/firms to strategically move in a general direction or to invest in specific research and development.

2 Picking winners concerns selecting specific firms or sectors that according to the government will be successful in the future and actively help them achieve that success. Backing winners concerns helping specific firms or sectors that have the potential of becoming successful without directly (f.e. in a monetary way) supporting them.

2.3.4 Infrastructural Instruments Van Gelder (1973: p.31) distinguishes one last set of policy instruments: the infrastructural instruments, aimed at supplying the economy with a certain physical substratum to thrive upon. These can be divided into three categories: social-economic, technical and social-cultural instruments. The social-economic instruments concern supplying independent data (by statistic bureaus or fundamental research agencies) and supplying an energy infrastructure. The technical infrastructure has to do with building roads, canals, (air)ports, industrial zones and other physical infrastructure. The social-cultural infrastructure concerns the provision of cultural facilities like museums and libraries, and the provision of sufficient educational facilities on all levels to foster a knowledgeable labour force.

2.4 Hypotheses Below are the seven hypotheses of this thesis. The hypotheses describe the relations between the theories and the specific time period, which might or might not show in the empirical analysis.

2.4.1 First hypotheses: The first hypotheses focuses on the two decades after the Second World War. In this period the economic theory dirigisme is expected to be prevailing: In the period 1945-1970, dirigisme was the prevailing theory in I&I-policy

2.4.2 Second hypotheses The second hypotheses focuses on the (roughly 20) years between 1965 through to the end of the Seventies. In this period the economic theories corporatist-export and Keynesian are expected to be prevailing: In the period 1970-1979, corporatist-export and Keynesian economic theories were prevailing in I&I-policy

2.4.3 Third hypotheses The third hypotheses concerns the short period from 1980 until the report of the RSV-enquiry was presented (in 1984). It focuses on this period, since a reconsideration of I&I-policies is expected, but the new period is specifically expected to start with the report of the RSV-enquiry committee. It is expected that there was a prevailing ideational reasoning induced by mostly TPA & Dirigisme-theories from 1945-1979, but NPM & Neo-Classical theories are expected to be prevailing in the transition period from 1980-1984: In the period 1980-1984, NPM & Neo-Classical theories were prevailing compared to TPA & Dirigisme theories in the period 1945-1979.

2.4.4 Fourth hypotheses The fourth hypotheses specifically focuses on two reports, since these reports are expected to really be the turning point in I&I-policy: In the conclusions of the RSV-enquiry committee and the Report on the Reconsideration of State Participations, NPM & Neo-Classical theories are expected to be the dominant theories.

2.4.5 Fifth hypotheses The fifth hypotheses focuses on the introduction of the “open borders” policy in 1990, from which point a deviation from the prevailing (neo-)classic theories is expected, and a higher usage of Schumpeterian-Renaissance theories is expected: From 1990, a drop in the usage of (neo-)classic theories is expected and a higher usage of Schumpeterian-Renaissance theories is expected in I&I-policy

2.4.6 Sixth hypotheses The sixth hypotheses focuses on the introduction of a European-goals based policy in 2001 (the Lisbon-Agenda), from which point a higher amount of Public Value Management-theory induced policies are expected to be introduced: From 2001, the PVM-theories are used more often compared to the other MPA theories in the period 1945-2000 in I&I-policy

2.4.7 Seventh hypotheses The seventh hypotheses focuses on the period after the financial crisis of 2007/2008. Expected is to find a higher usage of Dirigisme theories again: From 2007, a higher usage of dirigisme theories is expected in I&I-policy

Chapter 3 - Research Design 3.1 Methodology This study is a deductive study into the theories behind the reasoning of policy makers with regards to innovation and industrialisation polices. The research strategy chosen is historical desk research, using qualitative research techniques and doing a content analysis of existing material (method).

3.1.1 Historical Desk Research According to Verschuren and Doorewaard (2007: p.201-3), desk research is characterised by three features: (1) usage of existing material, (2) no direct contact with the object of research and (3) usage of material from a different perspective as the author of the material. The existing material can consist of literature, secondary data or civil statistic data. In this case specific existing literature will be used to analyse possible changes in ideational reasoning since the Second World War. This literature will consist of parliamentary reports, parliamentary memorandums and laws that were written by the Ministry of Economic Affairs and used by specific governments to set out their policy. The analysis of the arguments in that data is different compared to the pragmatic way in which they were used at the time they were written (which was to set out an administration’s policy). Since this is a historical study, the object of research isn’t included since the policy makers that wrote the policy in the former decades aren’t the same as the ones writing the policies now. This is also the reason why this research isn’t included into for example one case study with multiple research methods: the object of study itself has changed over a too long a period of time and is therefore not researchable as a set (a case) during a specific period of time.

3.1.2 Qualitative Content Analysis of Existing Primary Material As mentioned, this study will use existing material from the Ministry of Economic Affairs, written after the Second World War. It is not produced specifically for this study and can therefore be considered primary material. Van Thiel (2007: p.120-1) states the analysis of existing material is particularly useful in historical research. Furthermore, she states it is of great importance to make a proper selection of the material. Conventionally the reliability and validity of desk research is lower compared to for example a case study, because triangulation (multiple research methods) is harder to accomplish. However, in this case the selection of the historical material is made on the basis of multiple studies that deemed this data as most influential in the shaping of economic policy (see Wijers (1982), Velzing (2013), Van Gelder (1973), Van Zanden (1997) and Nationaal Archief (2014)) and therefore the selection in itself is reliable (consistent) and valid (a right selection of data)(Van Thiel, 2007: p.57-9).

The following reports, memorandums and/or laws have been determined influential by the aforementioned authors:

Table 1: Overview Sources Primary Data

No. Year of Name Law, Report or Memorandum Publication (Dutch name in brackets) 1 1948a Establishment of Organisation of European Economic Cooperation (Organisatie Europese Economische Samenwerking) 2 1948b Announcement Marshal Assistance (Bilaterale Overeenkomst US & NL) 3 1949 First Industrialisation Memorandum (Eerste Industrialisatienota) 4 1955 Law on the Industrial Guarantee Fund (Wet op de Stichting Industrieel Garantiefonds) 5 1963 Eighth Industrialisation Memorandum (Achtste Industrialisatienota) 6 1970 Explanatory Memorandum Budget 1971 (Memorie van Toelichting Begroting 1971) 7 1971a Letter on the Arrangement for Specific Financing (Brief betreffende de Regeling Bijzondere Financiering) 8 1971b Explanatory Memorandum Budget 1972 (Memorie van Toelichting Begroting 1972) 9 1972 Establishment of Dutch Restructuring Society (Oprichting Nederlandse Herstructureringsmaatschappij (NEHEM)) 10 1976 Memorandum on Selective Growth (Economic Structure Memorandum) (Nota inzake de Selectieve Groei (Economische Structuurnota)) 11 1979a Progress of the Economic Structure Policy: Sector Memorandum (Voortgangsrapport Economisch Structuurbeleid: Sectornota) 12 1979b Memorandum on Technological Innovation (Technische Innovatienota) 13 1979c Report Individual Support Companies (Rapport Steunverlening Individuele Bedrijven) 14 1981 Report Wagner Commission: A New Industrial Momentum (Rapport Commissie Wagner: Een nieuw industrieel elan) 15 1982a Establishment of Society for Industrial Projects (Oprichting Maatschappij voor Industriële Projecten) 16 1982b Agreement of Wassenaar (Akkoord van Wassenaar) 17 1984a Memorandum on Market-Based Technology Policy (Nota inzake Marktgericht Technologiebeleid) 18 1984b Conclusions Parliamentary Enquiry Committee RSV (Conclusies parlementaire enquêtecommissie RSV) 19 1985 Report Reconsideration State Participations (Heroverwegingsrapport Staatsdeelnemingen) 20 1990 Memorandum Economy with Open Borders (Nota Economie met Open Grenzen)

No. Year of Name Law, Report or Memorandum Publication (Dutch name in brackets) 21 1993 Establishment Fund from Natural Gas Revenues (Instelling Aardgasbatenfonds/FES) 22 1997 Letter on Clusters (Clusterbrief) 23 1999 Letter on Industry (Industriebrief 1999) 24 2001 Letter on Innovation: Memorandum on the Knowledge Economy (Innovatiebrief: Nota Kenniseconomie in zicht) 25 2003 Letter on Innovation: Innovation in Action (Innovatiebrief: Innovatie in Actie) 26 2005a Note on Renewed Economic Instruments for Entrepreneurs (Notitie Sterke Basis voor Topprestaties: Vernieuwde EZ-Instrumenten voor Ondernemers) 27 2005b Introduction to Report Organizational Capability: Key Area Policy (Inleiding van Rapport Organiserend Vermogen: Sleutelgebiedenaanpak) 28 2007 Letter on Entrepreneurship (Ondernemerschapsbrief) 29 2008a Microfinancing Pilot (Microfinancierings-pilot) 30 2008b Letter on Industry (Industriebrief 2008: Industrie, een wereld van oplossingen) 31 2011 Key sector policy (Topsectorenbeleid) 32 2012 Letter on Agreement Plan NedCar (Brief Betreffende de Overeenkomst voor een Plan voor NedCar) 33 2014 Action Plan SME-Funding (Actieplan MKB-Financiering) 34 2015 Establishment Future Fund (Instelling Toekomstfonds) 35 2015 Explanatory Memorandum Budget 2016 (Memorie van Toelichting Begroting 2016)

The analysis of the data will be done according to the method of content analysis. This content analysis aims to generate new data from the existing data. As Van Thiel (ibid.: p.123) states, often this is done using a textual analysis. This textual analysis can either be a narrative analysis, a discourse analysis or a rhetoric analysis. In this study, the discourse analysis is chosen in order to identify language patterns and connect those patterns to the operationalized theory. These language patterns often show the prevailing ideology of the author in a certain social reality (ibid.: p.124). Furthermore, in this study both a qualitative and a quantitative content analysis, as Verschuren and Doorewaard (2007: p.239) state, is done, since the relevant information (the language patterns) are analysed and represented according to their merit and their meaning, as well as categorized in a system of closed categories (coded, see the next paragraphs) and analysed according to the quantitative outcomes of that coding.

Lastly, qualitative techniques are used to analyse the content from the primary data. Although this seems contrary to the last paragraph (which also stated a quantitative approach), there is a fundamental difference between quantitative and qualitative techniques: The quantitative techniques involve (large) data sets of statistics that are gathered using easily repeatable research methods (like surveys). Those data sets can subsequently be used to perform statistical tests in order to show patterns within a large population/set of data (Van Thiel, 2007: p.135). In this study, this is not possible.

The selection of the historical primary data prohibits a inferential statistical analysis, since the content of the data differs too much per individual report or memorandum. Therefore, qualitative techniques are used: unstructured data is structured into categories in order to be analysed on its content as well on the numerical outcomes of the categorisation. This numerical outcome however isn’t inferentially statistically analysed, but by using descriptive statistics: Both high frequencies as low frequencies can be deemed significant in explaining phenomenon (in this case the usage of ideational reasoning from a certain theory)(ibid.: p.166). The categorisation will be done according to codes, which in this study concerns selective coding (Verschuren and Doorewaard, 2007: p.198). Selective coding means these codes will logically follow from the operationalization of the theory, since this is a deductive study (theory-testing). They are concise descriptions into several keywords/-sentences which are numbered. These words and sentences are highlighted in the text and given a code. Afterwards these codes are structured and analysed.

3.2 Operationalisation In the tables below, the concepts/variables from the theoretical construct are transformed into measurable indicators. For the public economic theories this is done in an imperative mode, in order to suit the possible arguments policy makers might use in the primary data. For the managerial public administration theories, the measurable indicators focus on the formulation and selection of the instruments themselves. Each policy that is formulated and enacted can include (1) the initiating parties (how is the policy goal formulated), (2) ways of being accountable, (3) intrinsic characteristics of the instruments themselves and (4) ways in which public service is delivered.

Table 2: Operationalisation Public Economic Theories

1. Dirigisme (Developmental Bureaucratic State)

Variable Measurable Indicators Active Persuasion Persuade individual firm to go into mergers or acquire other firms Direct Investment Individual “Pick Winners” to… Firms National Industry Encourage domestic supply International Industry Explore possible new markets/Getting into the “right” business Direct Economic Incentives, “Pick Winners” to… Instructions or Subsidies Individual Firms (DBS) National Industry Encourage domestic supply International Industry Explore possible new markets/Getting into the “right” business

2. Corporatist Export-Based Economics

Variable Measurable Indicators Dependency on export Urge firms to primarily grow over borders (more than producing for the domestic market) Beneficial Exchange-Rate Keep welfare spending low and thus state-expenditure in order to beneficiate the exchange-rate Corporatism Industry-Sector Based Base labour relations on negotiation and consent in industry- specific setting Big-corporations based Monopolize interest representation into limited amount of companies organized in hierarchal categories

3. Keynesian Demand Management

Variable Measurable Indicators Influencing of demand Use monetary or fiscal policies to influence purchasing power… Pro-Cyclical Aimed at sustaining/starting positive development Contra-Cyclical Aimed at slowing down development National Debt Pro-Cyclical Take on debt to sustain/start positive development Contra-Cyclical Reduce debt to slow down development

4. (Neo-)Classical Economics

Variable Measurable Indicators Money Supply Keep a stable and moderate money supply without peaks or drops Cheap/Easy Labour Reduce labour costs/change labour-regulation as a pro-cyclical policy Incentivizing Individual Use the individual in a free market as the focal point. That individual is malleable with government incentives Free Market Ensure an efficient free market and thus a level-playing field. Government is a service deliverer in that free market Strict Property Rights Guard intellectual property in order for actors in the free market to profit from their inventions/innovations Market Failure Government is allowed to step in, in order to… Intrinsic Value Protect goods/services with low usage Support Motive (Partly) pay for goods/services because individuals don’t want to/can’t Merit Goods (Partly) pay for goods/services because exclusion of users leads to socially undesirable social situations Demerit Goods Discourage goods/services because of socially undesirable effects of production Externalities Prevent not reflecting negative or positive impacts of the production of goods in market prices, or to prevent this production to have a negative or positive impact on other citizens Public Goods Pay for a good for which usage it is impossible to exclude non- paying citizens from Lowering Transaction Further the functioning of a free market by lowering Costs unavoidable transaction costs (information, bargaining or enforcement costs) Preventing Monopolies Regulate monopolies/oligopolies to ensure the working of an efficient market Underinvestment in R&D Compensate companies to perform R&D when threats of research spillovers arise Imperfect Information- Provide independent information to ensure socially profitable and Capital Markets loans and investments are provided Government Failure Discourage economic action by government entirely, because it is only used as a mean to further political agenda’s

5. Schumpeterian Renaissance Economics (Developmental Network State)

Variable Measurable Indicators Focus on Entrepreneurship Use the entrepreneur in a free market as the focal point and ensure it is easy for him/her to activate knowledge into a business opportunity Emphasize the value of Prevent an underinvestment in human capital and ensure the knowledge provision of committed, flexible and skilled labour/entrepreneurs Developmental Network Government should… State Targeted Resourcing Make investments in certain sectors or companies, but with a clear exit strategy Free flow of ideas Broker between technologists/inventors/innovators to commercialise intellectual property and thus bring new technologies to new users Supplying Infrastructure Set standards and coordinate between vertical and horizontal product sectors Creating High-Quality Provide programmes or distribute income such that it stimulates Demand firms to develop products/services that answer a demand they otherwise wouldn’t have been able to answer Failure-Friendly Create an environment where failure is allowed and (easily) Environment possible in order to facilitate learning and improvement New Market Development Ensure new markets can grow without obstructions from rules and regulations, as well as conventional actors Backing Winners Give an amount of social and political legitimization to companies that (try to) innovate and improve society

6. Additional Economic Theories

Variable Measurable Indicators Income Distribution Equalize the purchasing power of citizens Full Employment Initiate employment programs in order to (1) reach more equality and security and/or to (2) increase future demand Public Value Failure Government is allowed to step in, in order to… Hoarding of Benefits Prevent the exponential benefitting of organizations from public commodities or services Short-Term Horizons & Prevent too much of a focus on short-term benefits and Substitutability vs. encourage conservation of resources or appropriate substitutes Conservation of Resources

Table 3: Operationalisation Managerial Public Administration Theories

X. Traditional Public Administration

Variable Measurable Indicators Policy Goal Formulation Broader goals formulated by politicians, worked out by bureaucrats Accountability Instruments To the hierarchy (and ultimately politicians) Instrument Selection Strict goal-mean rational: pre-formulated goals and standardized procedures and prescribed rules as means. These means have intrinsic characteristics and thus should fit with pre-formulated values and norms from the policy community. Public Service Delivery Bureaucrats or politicised inter-organizational structures

Y. New Public Management

Variable Measurable Indicators Policy Goal Formulation Goals formulated by politicians based on demands from citizens and independent expertise with clear targets and indicators Accountability Instruments To the politicians and citizens on the basis of depoliticised targets and indicators Instrument Selection Standardized instruments aimed at incentivizing actors to move in a certain direction Public Service Delivery Autonomous administrative units

Z. Public Value Management

Variable Measurable Indicators Policy Goal Formulation Goals formulated by the network of deliberation based on the formulated public values Accountability Instruments By continuous negotiated goal setting and oversight by the network of deliberation Instrument Selection Collection of components and rules that derive their meaning and working from the interaction with the policy context Public Service Delivery By actors within networks of relevant stakeholders

Chapter 4 - Empirical Analysis 4.1 The Dutch Economy from 1945-2016 The Second World War left the Netherlands with total damages around 11,425 billion guilders (current purchasing power of 52 billion euros), due to direct damages, robberies and omitted investments (Rijksoverheid, 1948c: p.26). The Central Bureau for Statistics (CBS) concluded that around 29 percent of the total capital goods were lost, mostly in the transporting sector (61 percent) and in industry (29 percent). This meant that the Dutch economy had to be drastically rebuilt. At the same time however, there was a lack of enough food, charcoal and other resources, which meant that money was to be used primarily to import goods as well. Using the assistance of the U.S. government, a programme was put into place that would build up the Dutch industry again (more on that in the next paragraphs)(Van Zanden, 1997: p.171)..

The end of the Second World War marked a new beginning for the Dutch economy. The destruction proved to be a fertile ground for drastic change, in the structure of the economy as well as with regards to social policy. With regards to international politics influencing the Dutch economy as well as regarding natural resources, the independence of the former colonies in 1949 (Indonesia), 1962 (New-Guinea), and 1975 (Surinam) was of great influence, as well as the formal start of the European co-operation in the European Coal and Steel Community (1952) and the European Economic Community (1958)(Stichting van der Arbeid, 2016).

Social policy changed as well after the Second World War. The Polder-Model was started with the establishment of the Social Economic Council (Sociaal Economische Raad (SER) in 1950 – in which employers and workers unions had regular meetings to agree on social-economic policy – whereafter a rapid expansion of the welfare state followed: The General Elderly Law (Algemene Ouderdomswet (AOW) was introduced in 1957, the General Assistance Law (Algemene Bijstandswet) in 1965, The Disability Law (Wet op de Arbeidsongeschiktheid (WAO) in 1967, and the Minimum Wage was established in 1969. Furthermore, women became legally competent in 1956 (meaning they could make legal decisions and sign contracts for themselves) and in 1961 the five-day work-week was introduced, meaning an extra day off (Saturday) was added to the Sunday, forming a week-end (ibid.).

In 1959, a large natural gas field was discovered nearby Slochteren, in the province of Groningen. Due to this natural resource, a large change in the energy supply could be made, away from charcoal. This however meant that the national subsidised supply of charcoal also was redundant and therefore in 1965 the closure of all Dutch charcoal mines was announced (ibid.).

The end of the 1960s was marked by the rise of social uproar, with a strong wish to further democratise the nation. In 1966 a special party devoted to democratizing politics was established and in 1969 students occupied the administrative building of Amsterdam University for five days (Maagdenhuisbezetting). This also had its consequences for enterprises, since the Law on the Workers Council was changed as such that it wasn’t only a meeting between the workers and the employers, but that the workers in the Councils actually represented the interest of all the workers in the company and that they should be heard with regards to strategic decisions. This more pro-active attitude of workers showed for example in 1972, when the ENKA-factory in Breda (predecessor of AkzoNobel) was occupied for five days to prevent management from shutting it down completely (ibid.).

This democratization movement finally surfaced, when in 1973 the first predominantly social- democratic government of the Netherlands took office under prime minister Den Uyl: This cabinet’s main intention was to equally spread knowledge, power, and income over the entire society. It was however frustrated in its intentions, partly due to the Lockheed-Affair and the First Oil Crisis of 1973. The oil crisis was caused by the support of Western governments for Israel in the Yom Kippur War and the reaction of the Middle East on that decision by boycotting those same governments. It had a big influence on Dutch businesses, since the prices of energy skyrocketed. It was also during the Den Uyl cabinet that the first nuclear power plant of the Netherlands opened (in Borselle, in 1973), which was already in the pipeline, but it actually started operating at the right time since in 1972 the influential Club of Rome published its report on the limits of economic growth due to environmental reasons. The relationship between the cabinet and the multinationals wasn’t great: 9 CEOs of 9 CEOs of multinationals multinationals sent an open letter to the prime minister in sent an open letter to the prime minister in 1976, 1976, demanding international competitiveness to be demanding international enhanced (by lowering wages) and by lowering the power competitiveness to be of the unions. One of the successes the Den Uyl-cabinet enhanced (by lowering did achieve, was the spreading of government services wages) and the power of the unions lowered. over regions with high unemployment numbers (more on that in the next paragraphs)(Parlement.com, 2016).

The cabinet fell however in 1976 and in 1977 it became clear that there wasn’t going to be a second Den Uyl cabinet. This meant that a lot of big reforms that were in the cabinet’s pipeline were never implemented. A new government was faced with a Second Oil Crisis and focused on bringing down the national debt. 1979 marked the start of the European Monetary System

39 in which currencies in the European Economic Community were interlinked to prevent large fluctuations. The economic downturn continued however, until under the new prime minister Lubbers, the workers and employers unions signed the Agreement of Wassenaar (more on that in the next paragraphs)(Stichting van de Arbeid, 2016).

The early 1980s were mostly dominated by austerity-measures and protests against these same measures. A new wind was blowing in the Western political world, since in the United States as well as in the United Kingdom strong anti-government leaders were elected; Ronald Reagan and Margaret Thatcher. Government retracted largely from the economic arena and in the Netherlands this was mostly prominent due to the RSV-enquiry into a large loss of public money on a supposedly private company (more on that in the next paragraphs). 1986 both marked the completion of the Delta Works for the Netherlands – which marked the end of a large technological project and a process of 20 years aimed at keeping the sea from entering the country – and brought the Chernobyl nuclear disaster, which powered anti-nuclear forces all over the world. In 1989 the Berlin Wall fell, which also marked the end of the Soviet Union: capitalism was perceived as the dominant system from now on (ibid.).

In 1992 the Maastricht Treaty was signed, marking the intention to form an internal market without trade barriers as well as an intention to come to a single monetary union with a single currency. The internal market was completed in 1994 and the monetary union was founded in 1999. The Euro was finally introduced in 2002. Meanwhile, in 1993, the internet was introduced for commercial use in the Netherlands. The internet phenomenon started a boom in the stock of internet-related companies in 1997, and the upward line wasn’t broken until 2001, when the so called dot.com-bubble burst and a lot of tech-companies went bankrupt. Meanwhile the country was led for the first time in history by a liberal and a social-democratic party that joined hands. This gave way to liberal social policies as well as to – internationally influenced – liberal free market policies. The 9 September 2001 terrorist attack on the World Trade Center caused a crash on Wall Street and other stock markets all over the world and gave way to a 1% interest rate of the U.S. Central Bank (ibid.).

This low interest rate again caused a worldwide free flow of cheap capital (partly based on sub- prime lending in the United States), which also gave way to looser capital standards in the Netherlands. This meant a booming housing market and a simultaneous growth of the national economy. In 2007 however the entire system of sub-prime lending collapsed which caused a

40 world-wide recession in 2008, which fully reached the Netherlands in the autumn/winter of 2008 as well. One of the largest banks of the Netherlands, ABN AMRO had to be nationalized after a take-over by a consortium of other banks partly failed, which was in some ways also due to the financial crisis (the Fortis-part). The recession that followed together with the costs of the nationalisations and other support for the financial system, caused new austerity measures to be implemented, which amongst others meant the upping of the age of the AOW in 2009, 2012 and again in 2014, a change in Unemployment Benefits (Wet op de Werkloosheids- uitkering (WW), and a change in the Bijstandswet (SER, 2016).

Meanwhile, after a rejection of the 2005 European In 2010 new banking rules Constitution by the people of France and the Netherlands, were introduced (Basel III), the Treaty of Lisbon of 2007 still gave way to the which forced banks to hold formation of the European Union in 2009. In 2010 new larger capital reserves, international banking rules were introduced (Basel III), leading to a smaller amount of money being lent to which forced banks to hold larger capital reserves, leading companies. to a smaller amount of money being lent to companies. In 2009 a large Eurocrisis emerged after Greece couldn’t get public financing anymore, partly due to wrongdoings by former Greek governments with regards to their financial situation, which in turn caused a distrust in especially Southern-European governments. This crisis was finally averted in 2012 after Mario Draghi, president of the European Central Bank (ECB), assured the world that the ECB would do ‘whatever it takes to save the Euro’. In the last years, the lending of the banks to companies still hasn’t improved, especially after the Basel III-rules set in and after the formation of a Banking Union in 2014. The ECB therefore decided – next to buying up government bonds, to also start buying corporate bonds (Encyclopaedia Britannica, 2016).

4.2 Enacted I&I-Policies from 1945-2016 4.2.1 The Industrialisation-Period 1945-1970 As stated, after the Second World War the industry had to be rebuilt. The most important goals in the initial stage of the industrialisation policy were to get rid of structural unemployment and to boost national production (Rijksoverheid, 1949: p.6). An important policy issue of the government at first was the moderation of wages. Therefore a law was introduced that regulated the maximum increases of wages across the Dutch economy. This meant that labour in the first years after the Second World War was relatively cheap (SER, 2016). The structural unemployment was estimated at around 360.000, and around 10 percent of this number was due to de-militarisation. From this 360.000, 150.000 were to be employed in other sectors and 210.000 were to be employed in industry. 60.000 of these jobs were to be created by an intensified usage of machines and 150.000 by new investments. Secondly, the labour productivity needed to go up by using machines more efficiently and by modernising them. In total, an increase of the production with 2,8 billion guilders was needed in 5 years, and of that total package 1,5 billion was the responsibility of industry. This was to be realised partly by higher exports, but foremost extra investments were needed (Rijksoverheid, 1949: p.20-6). These investments were made using the assistance provided by the U.S. Economic Cooperation Act of 1948, often described as the Marshal Assistance.

The Marshal Assistance had three main goals: a) To achieve maximum economic recovery by (1) adopting measures to ensure efficient and practical use of all the resource available, (2) ensuring the development of industrial and agricultural production on a solid economic base, (3) stabilizing the national currency and (4) cooperating with other participating countries to stimulate trade. Secondly, b) to take Article 8 of the Convention for European Economic Cooperation (CEEC) into account, in ensuring that the entirety of the labour force of participating countries was used in order to achieve aforementioned goals, and thirdly c) to promote free competition on the markets of the participating countries and thus to get rid of trade barriers (Rijksoverheid, 1948b: p.3-4).

The aforementioned CEEC was a central goal amidst the Working on European reconstruction goals. Working on European economic economic recovery was recovery was seen as the best way to achieve peace and seen as the best way to achieve peace and prosperity (ibid.: p.3). Economic co-operation was seen prosperity. Economic co- as the only way to achieve new economic growth. This operation was seen as the economic policy should focus on removing trade barriers, only way to achieve new economic growth. full employment, increasing national production, agreeing on a common system of payment, and lastly on solid and fair exchange rates (Rijksoverheid, 1948a: p.2-3). Part of the interaction between both the Marshal Assistance and the CEEC, was that the U.S. would like to get access to the European markets and, within reason, would like repayment in the form of natural resources or products it needed to increase its own national production (Rijksoverheid, 1948b: p.5).

In 1949, the industrialization policy was aimed at ensuring an industrial climate in which risks were taken and in which chances were taken to position the industry within the right European markets. In order to achieve that, more capital had to flow into the system. This capital came from the government via direct investments (using the National Investment Bank (NIB)) and secondly government also expressed the wish for companies to attract more risk-bearing capital. This could come from U.S. companies wanting to invest in the Netherlands (with an added bonus of knowledge capital as well)(Rijksoverheid, 1949: p.32), and in normal conditions it should be provided by individuals and companies with capital as well. Since this wasn’t the case and the need for more investments was deemed high by the government, it decided to set up an Industrial Guarantee Fund in 1955, aimed at providing risk bearing capital. Until then, Dutch businesses were traditionally financed: investments were made either by taking out a bank loan or by re-investing profits (Rijksoverheid, 1955: p.6-7).

In 1963, the first conclusions could be drawn from the industrialisation policies. In 1959, the moderation of wages was halted (SER, 2016) and by 1963 wages had increased by 60% over the period 1949-1962. Furthermore, investments had increased to twice the amount of 1949 (even with the Indonesian independence) and exports had grown to five times the amount of 1949 (Rijksoverheid, 1963: p. 4). Employment in both the service sector as well as the industrial sector was up, with a big share for maintenance related employment, covering both sectors. Lastly the introduction of the two-day week-end meant an increase in recreational spending, which also partly influenced industrial production (ibid.: p.6).

With regards to the original industrialisation policy goals, concluded was that structural employment had disappeared, but structural economic policy had given way to cyclical economic policy. Therefore, a focus was needed on structural “economic growth”. This economic growth should be aimed at getting rid of unemployment altogether and at upping the level of welfare. At the heart of the economic growth were nine policy areas: (1) Providing capable entrepreneurs, (2) ensuring powerful purchasing power, (3) upping the level of supply, (4) ensuring a quick increase in exports, ensuring an increase in the level of (5) business investments, as well as (6) government investments (infrastructure and education), (7) upping the quality of labour, (8) increasing the amount of research and development, and (9) increase the nation’s saving power (ibid.: p.88-99).

4.2.2 The Bumpy Road 1970-1979 Already in 1959 the moderation of wages was halted, which in 1963 gave way to a so called wage explosion. Although in 1959 it was agreed that wages could rise to a maximum of 10 percent a year, in some sectors wages grew with 15-20 percent. Also, in 1972, the report from the Club of Rome for the first time put emphasis on the consequences of industrialisation on the environment (SER, 2016). In 1971 the Arrangement for Specific Financing was formally presented to the Second Chamber, after it had already been giving out loans since the creation of the National Investment Bank in 1945. This Arrangement sought to provide loans to companies either for very specific investments or for situations of distress (Rijksoverheid, 1971a). The budgets of 1971 and 1972 – for the first time – called for sectoral policies; instead of individual loans to companies, entire sectors needed to be restructured as a whole with governmental support for Instead of individual loans all involved companies (Rijksoverheid 1970: p.3 & to companies, entire sectors needed to be restructured as Rijksoverheid, 1971b: p.5). This gave way to the a whole with governmental establishment of the Dutch Restructuring Society support for all involved NEHEM (Nederlandse Herstructureringsmaatschappij) companies aimed at supporting research into restructuring plans and assisting with the follow up (Rijksoverheid, 1972: p.2).

In 1976 the wish to aim policies specifically at business sectors was finally formalized and put into law with the Memorandum on Selective Growth (also called the Economic Structure Memorandum). The main goals of this memorandum were to again counter unemployment (and at the same time further equal opportunities, proper working conditions and inclusiveness) and

44 to conserve the environment, including taking the scarcity of resources into account. This memorandum was written after the First Oil Crisis, which together with problems that arose beforehand, caused a return of structural employment (Rijksoverheid, 1976: p.7-8). 100.000 jobs needed to be created and there was a strong wish to stop investing in individual firms: instead sectoral policies needed to be developed (ibid.: p.17 & p.29). Although there was a high number of unemployed people, wages were still 2 percent higher compared to surrounding countries. This was also influenced by the increased age-limit of compulsory education as well as a high usage of arrangements under the Disability Law, upping the total wage-taxe-pressure. Lastly there was also a high valuation of the guilder, mostly based on the availability of natural resources (the combination of a low business cycle but a high currency valuation would later be called the “Dutch disease”)(ibid.: p.13-5).

In 1979 the first evaluation of the structural policy introduced in 1979, was published. In the Sector Memorandum (also known as the report on the Progress of the Economic Structure Policy), a more realistic tone was struck in the formulation of the goals. More emphasis should be put on research and development, more risk bearing capital should be available on the market, the NEHEM was deemed as a failure and would be given a different mandate, but most of all more emphasis should be put on exports. Only 710 out of 10.000 industrial companies took up 90 percent of the total exports and 50 percent of the total employment (Rijksoverheid, 1979a: p.7-11). The most realistic policy however was that large companies, even with a high amount of jobs, should be allowed to go bankrupt, since the international labour ratios were changing and keeping such companies afloat, would in the long run damage the competitive position of the Netherlands (ibid.: 14).

The Memorandum on Technological Innovation of 1979 further emphasized the need for research and development and the need for human/knowledge capital. The competitive position of the Netherlands could be drastically improved by the focus on and the anticipation of high end, knowledge-intensive production. As a matter of fact, technological innovation had become a structural factor in the economy as a whole and thus in public economics (Rijksoverheid, 1979b: p.6-7). In this memorandum the conclusion that companies should be allowed to go bankrupt was confirmed, and added to the reasons of international labour ratios and competitive position, was a too high dependence on energy and/or resources that was unsustainable in the long term for the Netherlands (ibid.: p.8).

The last report of 1979 was the Report on Individual Support for Companies. The main conclusions of the report were that although there had already been a call to end individual support for companies since the start of the Seventies, this hadn’t stopped at all. The three biggest instruments to provide the individual support were the Arrangement for Specific Financing (SF)(Regeling Bijzondere Financiering), the Arrangement Support from the Employment Budget (SEB)(Steun Werkgelegenheidsgelden), and the Regional Investment Premium (RIP)(Regionale Investeringspremie). In total the SF-budget, which was aimed at providing capital to companies in need for capital for the renewal of machines or to prevent large lay-offs, was 3 billion guilders over the period 1973-1978. The SEB budget, aimed at the preservation of jobs and profitability recovery, was 2,9 billion guilders over the same period and lastly the RIP-budget, aimed at spreading employment over regions with high existing unemployment, was 1 billion guilders over the period 1973-1978. The losses for the provided support from the Specific Financing budget were 111 million guilders in total for 1978, with a total budget for 1978 of 800 million guilders.

Both the SEB and the RIP budgets were also split into To support maintaining money invested per job. In the case of the SEB the ceiling jobs, some companies were was informally set between 15.000 and 30.000 guilders. supported with 70.000 In practice cases up to 70.000 guilders were known guilders per job. To however. With regards to the RIP, there was a ceiling of support the regional spreading of jobs, 19.000 guilders and cases of 120.000 guilders per job companies were paid up to were known for new placement of a job in a region and 120.000 guilders per job cases of 79.000 guilders (original ceiling of 17.000 for new placement in a region and/or 79.000 guilders) were known for the creation of jobs in a guilders per job for the company, per job (Rijksoverheid, 1979c: p. 13, p.15 & creation of a job p.22). The effectiveness of especially the SEB-policy was also questioned, since 1/3 of the companies that received funds from this budget had already gone bankrupt and 20 percent were in a dire state (ibid.: p.16). Lastly with regards to the NEHEM, firm conclusions were drawn as well: So far it had only helped in restructuring 6 sectors. The optional character, the complexity of bringing together all producers and the lack of specific policy instruments were named as the primary reasons (ibid.: p.17 & p.29).

4.2.3 Crashing and Recovering 1980-1985 With the report of the Commission Wagner (former CEO of Shell), called A New Industrial Momentum (Een Nieuw Industrieel Elan), a new dawn was rising in the field of Industrial & Innovation-policy. The commission concluded the discussion in the former years was too much on how to split the pie, and not enough on increasing the amount of pie. The amount of gathered welfare has led to a national attitude of – by all means – wanting to maintain the status quo. In the last years, multiple cabinets tried to control public spending, but every cabinet increased social security and handed out specific subsidies/loans, with a rising national debt as a result. The commission concluded this had to stop. Instead of a support policy, a stimulation policy should be introduced. Companies without long-term perspective shouldn’t be assisted anymore. Secondly wages should be moderated again, and thirdly the energy- and environmental policies should focus on the long term to keep the policies themselves sustainable in the long term (Rijksoverheid, 1981: p.6-9). Lastly, the new focus to achieve economic growth should be put on innovation in general. In to-be-formed partnerships a joined effort should be made to come to an innovation-friendly economy (ibid.: p.13).

One way to come to new industrial innovation, was by a state-supported venture capital fund, called the Society for Industrial Projects (SIP). This society was to specifically focus on innovative new businesses and if there was an outlook on long-term profitability, it could invest in such businesses. The government deemed it important to provide this capital, since existing arrangements like the Industrial Guarantee Fund and the Arrangement for Specific Financing mostly focused on existing businesses. Secondly, instead of providing loans or guarantees on loans, this SIP could directly participate in a company’s stock. The main goal of the SIP was to participate in young innovative, long-term viable businesses, and try to exit as soon as these companies were mature enough to stand on their own two feet (Rijksoverheid, 1982: p.5 & p.11). Another wish of the Commission Wagner came true in 1982: The moderation of wages, via the Agreement of Wassenaar. The document itself was only two pages, but included a commitment from both the employers unions, but more important from the workers unions that wages could again be moderated (Stichting van de Arbeid, 1982: p.1).

In 1984, the follow-up of the Technological Innovation Memorandum of 1979 was published, called the Memorandum on Market-Based Technology Policy. This report again emphasized the importance to come to a joint effort to – from a position in the bottom part of the list – become competitive and forward-looking again (Rijksoverheid, 1984a: p.13).

The report that had the highest effect on industrialisation policy however, was the report from the Parliamentary Enquiry into Rijn-Shelde-Verolme (RSV, a merger of the country’s biggest shipbuilding companies). In the Economic Sector Memorandum from 1979, the conclusion is already drawn that a lot of state support is used defensively, to hold up national production and to prevent large lay-offs. In the case of RSV this was definitely the case. The Parliamentary Enquiry speaks of an ‘agony’ and a ‘drama’ when discussing the history of RSV since the formation of the company in 1971. The government forced the separate companies into a merger in 1971. It didn’t state conditions however in the beginning regarding technological or capacity-related adjustments, basically all the separate companies had to merge into one and lay-offs had to be prevented. Stronger companies within the larger concern had to take care of the weaker ones, which – without any adjustments – worked out only for a little while. On the global market it had to compete with shipbuilding companies from the United Kingdom, South- Korea and Japan, which all had a so called national ‘captive demand’. The Dutch shipbuilding companies were dependent on the international export market and were drastically overpriced in that market, especially compared to the quality, the innovativeness and the time to delivery of ships (Rijksoverheid, 1984b: p.451-3).

The problems accumulated and in 1979 the Ministry of Finance decided the amount of money that was exposed to one concern was too much and forced the Ministry of Economic Affairs to halt its support. The shipbuilding-part of RSV was then split-off from the rest of the businesses. The Ministry of Defence however, then leaped into the opening left by Economic Affairs and supported the marine-related businesses of RSV by ordering submarines. Secondly, the RSV tried to re-invent itself by refocusing their machine-related businesses, amongst others by trying to sell coal diggers in the United States and by trying to build an energy plant in Algeria, but again amateur mistakes were made and in 1983 the entire concern went bankrupt. In total, government spend more than 2,2 billion guilders (1,8 billion euros in current purchasing power) on state support for the concern. The used supporting-arrangements all stated possible support should be focused towards profitability recovery, should be one-off, and only a certain amount of support per job should be given. All these conditions The Parliamentary Enquiry were ignored however. There was even one case in the in the end concluded ‘the company where 400.000 guilders was paid to retain one concern was the unloved job. The Parliamentary Enquiry in the end concluded ‘the fruit of artificial concern was the unloved fruit of artificial insemination insemination without proper genetic research’ without proper genetic research’ (ibid.: p.455 & p.461-3).

In the report on the Reconsideration of State Participations, government discusses all individual participations it has under its umbrella, and at the same time holds those participations against the background of a changed public economic view. The overall consensus is that government should no longer try to act as an entrepreneur or investor, unless the market mechanism forces it to (Rijksoverheid, 1985: p.1 & p.6).

4.2.4 Innovation, Innovation, Focused Innovation 1990-2005 The main points of economic policy that the government focuses on in the 1990 Memorandum on the Economy With Open Borders, should from now on be: focusing on encouraging the entrepreneurial climate, encouraging competition and cooperation, and on continuous innovation. Sectoral policies were deemed outdated due to the – in some cases – fading lines and in some cases intertwining lines. Secondly, due to the ever unifying European Community, companies must quickly adapt to the new reality of a big European market and must make strategic decisions accordingly (Rijksoverheid, 1990: p.5-7). The wage moderation of 1982 hadn’t missed its effect and the economy started growing again. There were still big problems with the claims on social security however, and especially with the claims on the Disability Law: out of roughly 15 million Dutch people in 1990, 1 million were in some way classified as disabled (ibid.: p.8). Special attention needed to be given to the growth of the service sector, and especially the transport-, media, and financial services sectors (ibid.: p.13).

The Natural Gas Revenues Fund (Aardgasbatenfonds) The Natural Gas Revenues was established, in order to convert subterranean assets Fund was established, in order to convert into above-ground assets. This in order to invest into the subterranean assets into future, by stimulating projects of national significance. above-ground assets. This The choice was made to use the fund completely and in order to invest into the future, by stimulating directly and not to have it hold capital reserves, since the projects of national urgency to realise structure improving investments was significance. deemed too high (Rijksoverheid, 1993: p.1-2).

The Letter on Clusters emphasizes the importance of strategic cooperation and the formation of networks between the private sector and the research institutions, in order to come to so called clusters. These are networks and chains of suppliers, customers and/or knowledge providers focused on innovative value creation. The clusters need to be formed in order achieve higher economic returns from public research efforts (subsidies)(Rijksoverheid, 1997: p.2-6).

The Letter on Industry from 1999 claims industry still is of the utmost importance to the structure of the Dutch economy, albeit its share in the economy has shrunken. The fact is that every job in industry, provides at least one job in another sector. The importance of the role of government in industrial policy has changed however. Government creates the framework in which the industry operates and acts against market distortions. The framework consists of (1) infrastructure, (2) sustainable living and working conditions, (3) empowering rules and regulations and (4) low public spending. The Dutch industry must focus on moving towards a growth pattern based on private investments, knowledge, and innovation (Rijksoverheid, 1999: p.8, p.13 & p.16).

The First Letter on Innovation from 2001 discusses the outcome of accepting the European Lissabon Agenda. Europe is to become the most dynamic and Europe is to become the most dynamic and competitive competitive region in the region in the world, characterised by long-term world, characterised by sustainable economic growth, growing employment and long-term sustainable economic growth, growing social cohesion (Rijksoverheid, 2001: p.3). Only in an employment and social environment where there are no unnecessary obstacles for cohesion starting, expanding, stopping and restarting a business, a national attitude of innovativity and adaptability can be fully developed. The modern economy is characterised by dynamic knowledge: knowledge is developed, acquired and applied more rapidly. Secondly knowledge ages faster and is overtaken by “new” knowledge. It is therefore of great importance to use all possible available knowledge in society (ibid.: p.7).

Government deems it therefore of great importance to activate all knowledge in society and thus to get all possible employees on the labour market. Usage of the Disability Law is still deemed too high, especially in healthcare, in education and within the police. The reintegration of diseased and (partly) disabled possible employees must therefore become a direct responsibility of both employers and workers unions. Lastly, women still need to become more active on the labour market. The availability and accessibility of both leave-policies as well as childcare facilities therefore needs to be upped (ibid.: p.22-4).

‘In the Netherlands acting normally is crazy enough already. Who stands out from the crowd and fails, should above all not try again. It is due to that reason that companies abroad profit more from “our” knowledge than we ourselves do. We must move towards a knowledge

50 environment in which guts and entrepreneurship are appreciated.’(Rijksoverheid, 2003: p.5). It is with this statement the Second Letter on Innovation sets its agenda. The Netherlands loses momentum. All the puzzle pieces to make a great puzzle are available, but all indicators point in the other direction. At the same time, reaching higher economic growth by a higher labour- participation is becoming more and more difficult. To solve the puzzle, a new platform is set up: The Innovation Platform. It’s goal is not only to express ambitions and develop initiatives, but most of all to provide a clear picture of what research institutions, the private sector and the public sector would want to achieve over the next years (ibid.: p.6, p.9 & p.13).

The conclusions of this platform were presented in the Note on Renewed Economic Instruments for Entrepreneurs. In these conclusions, the so called “innovation paradox” is again emphasized. All the knowledge to make a great puzzle is available, but the necessary clout is missing. Therefore a clear focus should be introduced: From now on innovation policy should focus on ten so called “key areas”. These key areas all consist of a programmatic package to achieve high performances in areas in which the Netherlands can excel in the coming years (Rijksoverheid, 2005a: p.2, p.9 & p.13). The Report on Organizational Capability shows the first results of the announced policy and concluded it already led to a lot of dynamic: parties have been active in formulating specific goals and means, know how to find their way to instruments from the Ministry of Economic Affairs, and the cooperation between the private sector and the research institutions is improving a lot as well (Rijksoverheid, 2005b: p.7).

4.2.5 Mediator, Consultancy and/or Bank? 2007-2015 In 2007, the cabinet wrote a specific Letter on Entrepreneurship to parliament. In the new coalition agreement, promoting entrepreneurship had actually become a goal on its own, due to its important contribution to the growth of productivity, its direct employment effects and its power to innovate (Rijksoverheid, 2007: p.1-2). To support, as much as possible, for people to at least consider the step to become an entrepreneur, a Microfinancing Pilot was also set up. Initially the pilot was primarily focused at people living from social security benefits, but it was quickly extended to make it available to all possible entrepreneurs. Micro-financing enables a person to take out a small commercial loan (initially up to 35.000 euros was possible) to enable that person to set up small businesses. Examples are a scooter workshop as well as a local bakery or hairdressing salon. Included in the micro-financing package is extensive coaching, beforehand but – often forgotten but maybe even more important – also after starting up (Rijksoverheid, 2008a: p.2-3).

The main goal of the Letter on Industry from 2008 was to come to an innovative industry that excels internationally, produces sustainably, and one that contributes to societal challenges. With over 825.000 jobs, the industrial sector isn’t the biggest employer anymore, but it remains a big one. The sector should also get involved in the key area policy in order to focus it towards areas in which it could excel internationally (Rijksoverheid, 2008b: p.1, p.5 & p.15).

The Key Sector Policy (Topsectorenbeleid) was introduced only after the full effects of the Financial Crisis of 2007/2008 were surfacing. There was a desperate need to reduce the national debt and restore order to the public finances (Rijksoverheid, 2011: p.6). Therefore, less subsidies will be handed out and policy will be aimed at collaboration in the so called “Golden Triangle” between the private sector, research institutions and government (ibid.: p.3 & p.8-9). Not handing out as much subsidies as before, doesn’t mean government doesn’t have a role to fulfil in the economic sphere: it must provide an excellent framework and infrastructure, and at the same time it should put more effort into the valorisation of knowledge and it must do so by focussing research into certain promising sectors. The key sectors will be the follow-up of the key areas, and even more effort will be put into bringing them to fruition (the so called knowledge-ability-cash ambition (kennis-kunde-kassa). That effort will also focus more on the joining of hands between the public and private sphere in so called public-private partnerships (ibid.: p.6 & 8-10).

In 2011 Mitsubishi announced it would stop the production of cars at the NedCar-factory in Born, in the southern part of the Netherlands. This meant 1500 jobs were to be lost in a region with already high unemployment numbers. Due to the high importance of the factory for employment in the region, parliament adopted a motion asking the cabinet to do its utmost to retain the employment at NedCar. Economic Affairs VDL agreed to buy therefore decided to initiate negotiations with possible NedCar to start the production of MINI’s, and take-over candidates, as well as with Mitsubishi to was assisted to do so by negotiate advantageous selling terms. In the end an Economic Affairs as well industrial company from Eindhoven called VDL, agreed as the Province of to buy NedCar to start the production of MINIs, and was Limburg, in the process saving the jobs of 1500 assisted to do so by Economic Affairs as well as the employees and Province of Limburg, in the process saving the jobs of redeveloping the car 1500 employees and redeveloping the car factory for it to factory for it to be future- be future-proof (Rijksoverheid, 2012: p.2-4). proof.

In 2014, the cabinet published a specific action plan focused on SME-financing. In the years since the financial crisis, the market for loans under 250.000 euros started to dry up, and lending by banks in this particular segment went down with 12 percent between 2010 and 2012. The economy was slowly starting to grow again, and a properly functioning credit market was essential to the workings of that market. Government therefore had to step in and increase its efforts to ensure the proper working of the credit market. It did so by increasing its instruments financial power with another 1,155 billion euros, which would ensure another 2,5 billion euros of loans, on top of the 8 billion euros already made available on the market by instruments of Economic Affairs. The largest part of this 1,155 billion was given in the form of guarantees, for example 500 million euros in guarantees to a new fund to be set up for subordinated debt participations in companies, and 400 million euros in guarantees to support the development of new types of credit lending platforms, like crowdfunding or the SME stock market (Rijksoverheid, 2014: p.1-3).

In 2015, following a motion from parliament, a new natural gas revenue fund was to be set up. After the former fund (Natural Gas Revenue Fund/FES) was abolished in 2011, the revenues from the natural gas should start flowing directly into the treasury again after the last obligations were fulfilled (which was planned to be after the end of 2016). The new fund, called the Future Fund was to have a different set-up though, based on a similar fund from the Norwegian government. The idea was that the fund would be revolving, meaning it would only lend out money with the expressed guarantee that it would flow back into the fund in the form of repayment plus interest. This means that the fund will build up its own capital reserves and will become bigger and bigger as it ages, ensuring a proper capital reserve for future generations to live off, once the natural gas field has fully run out (Rijksoverheid, 2014b: p.1-2).

The budget of 2015 mostly supported policies already set in motion. The internal market needed to be further improved during the Presidency of the European Council the Netherlands would be holding in the first half of 2016. Secondly, initiatives to further technological education (the so called Technological Pact) as well as StartUp Delta – to improve the collaboration between the private sector, research institutions and start-ups in regional hotpots – would be continued with a strong and powerful pace (Rijksoverheid, 2015: p.10-2).

4.3 Usage of Public-Economy Theories in I&I-Policy 4.3.1 The Industrialisation-Period 1945-1970 The most used economic theory in the Agreement on Marshal Assistance was the (neo-) classical theory of the free market (code 4.4). The United States wanted to emphasize that economic co-operation within Europe was only possible on a market without trade barriers. Secondly also the barriers for people as well as businesses to move within the European market should be eliminated (code 4.6.7, Rijksoverheid, 1948b: p.6). This was also the case in the First Industrialisation Memorandum. After policies aiming at achieving full employment (code 6.2) and ‘Industrialisation should be the fruit of private human/knowledge capital increases (code 5.2), the free economic decisions’ and market reasoning was predominantly used (frequency of ‘although government 6). This can best be illustrated by the following quotes: exploitation could be seen as most effective, ‘Industrialisation should be the fruit of private economic government bodies mostly decisions’ (Rijksoverheid, 1949: p.4) and ‘although are not suited for government exploitation could be seen as most effective, exploiting private companies in a productive government bodies mostly are not suited for exploiting way’ private companies in a productive way’ (code 4.7.3, ibid.: p.22).

The free market reasoning was however put into perspective in 1949. Although a policy of little boundaries was seen as worth pursuing, striving for unlimited market-freedom was a bridge too far. Furthermore, both individual support of companies was initiated aimed at getting companies into the right business (1.2.2, ibid.: p.30), aimed at a regional spread of labour over disadvantaged regions (code 6.2, ibid.:p.35), as well as support for international mergers was given in order to attract more capital and knowledge capital (code 1.1, ibid.: p.32). All this was done to invest in the future. Government money shouldn’t be used to fill a consumptive demand, but to up national production and labour productivity in the long run (code neg. 3.1 and code 6.3.2, ibid.: p.27 & p.39).

With the introduction of the Industrial Guarantee Fund, government furthered their presence in the capital market, since the government started providing capital for companies to up their production (code 1.3.1, with a frequency of 5). These investments were made through the National Investment Bank and an investment from the Fund also meant influence from the Fund in strategic decisions (Rijksoverheid, 1955: p.9). The Fund was only accessible through the

National Investment Bank and could only be called upon by financial specialists, not by the companies themselves (ibid.: p.12). It did however aim to incentivize individuals as well if they wanted to make personal investments using a central financing fund (code 4.3, ibid: p.9).

The Eighth Industrialisation Memorandum showed a rise in human/knowledge-capital reasoning, with codes 5.2 and 5.3.2 being used most often (with frequencies of 18 and 10). ‘Research and development is the driving force behind the quick technical and industrial development’ (Rijksoverheid, 1963: p.45). Research was primarily useful for increasing exports (code 2.1), which again took a lift due to our geographical location and the workings of world class ports (code 4.6.6, ibid.: p.36). Next to benefitting from our geographical location, infrastructural projects like the Delta Works and the reclamation of Flevoland, also added to our national knowledge capital (code 5.3.4, ibid.: p.95). More focus is now needed to benefit from not only the skills learnt, but also from the knowledge-intensive technical research that was done to realise those projects. Government can and must support that by handing out subsidies and launch programmes aimed at cooperation between research institutions and companies in specific sectors (codes 5.2 and 5.3.2, ibid.: p.37-42), especially since the costs for companies to perform R&D are high and the short-term application prospects are low (code 4.6.9, ibid.: p.44).

The further liberalisation of markets prove threats, but also challenges to the Dutch industry: to stay competitive, there is a strict need for companies to up collaboration and/or merge, either nationally or internationally (code 1.1, ibid.: p.37 & 111). Furthermore, since government consumption is low, there is space for policies aimed at the cyclical influencing of demand (code 3.1.1, ibid.: p.100-4). This space could also be used to lower corporation taxes, which will have its influence on the investing climate, which could still use a boost since risk bearing capital is still underutilized (code 4.3, ibid: p.106 & p.108). Lastly it could be used to individually invest in projects that without government support wouldn’t be realised (code 1.2, ibid.: p.109). In conclusion, industrialisation should start focusing on economic growth and shift its focus from structural unemployment to – amongst others – regional unemployment (code 6.2, ibid.: p.117).

4.3.2 The Bumpy Road 1970-1979 The reports in the early Seventies had both (neo-)classic theories as well as dirigisme theories as the biggest influence. The budgets for 1971 and 1972 were aimed at free markets (1971, code 4.4, frequency of 4) and at policies aimed at compensating for externalities arising from environmental regulation (code 4.6.5, frequency of 2)(Rijksoverheid, 1970 & Rijksoverheid, 1971b), whereas the Arrangement for Specific Financing was aimed at supporting companies with direct investments (codes 1.2.1 and 1.2.2, frequencies of 2) and the NEHEM was established to focus on getting companies in the right business with both direct incentives and subsidies (code 1.3.2, frequency of 7)(Rijksoverheid, 1971a & Rijksoverheid 1972).

The budget of 1971 acknowledged the need to stop the increase in wages, that already was and still was happening (neg. 4.2.1, Rijksoverheid 1970: p.2). Secondly the government wanted to persuade firms to collaborate or merge in order to match financial, commercial and technical knowledge (code 1.1, ibid.: p.4). This collaboration was also emphasized with regards to possible government support, but it needed to happen on a sectoral level (1.3.2, ibid.: p.6-7). Lastly the budget called for international cooperation to get rid of trade barriers and other obstacles (like extensive state support for certain sectors in other EU-countries) in order to create a free market as well as become a trade partner for non-EU-countries (code 4.4, ibid.: p.7).

The Arrangement for Specific Financing was an arrangement that was already in place since 1945, but the characteristics weren’t formally put into law. In this arrangement they were, and companies could ask for Specific Financing in case they wanted to do big investments that banks couldn’t do, in case they wanted to start collaborating/merge with another company but couldn’t find the capital for it, or in case the capital could be used to prevent large layoffs (codes 1.2.1 and 6.2, Rijksoverheid, 1971a: p.2).

The budget for 1972 still acknowledged wages were to high (code neg. 4.2.1, Rijksoverheid 1971b: p.2) and secondly it stated there was still a negative balance between import and export: more should be done to increase the exports (code 2.1, ibid.: p.7). Just as with the Industrial Guarantee Fund, the government decided it could no longer stand on the sidelines when it came to sectoral policy. It had to act and therefore decided to establish the NEHEM, alongside with its mandate to assist in restructuring processes (research and follow up)(code 1.3.2, Rijksoverheid, 1972: p.7).

The thinking in the Economic Structure Memorandum was influenced in large part by the liberalisation of markets: developing countries were posing a threat to existing sectors (like textile) and therefore a higher emphasis on knowledge capital was needed (codes 4.4 and 5.2). Sectors were to be restructured such that they would provide high quality jobs (combined with a low effect on the environment)(6.2 and 6.3.2. Rijksoverheid, 1976: p.36 & p.42). Mostly used in this memorandum was the full employment reasoning (code 6.2, frequency of 18), shortly followed by direct incentives to get into the right business (code 1.3.2, frequency of 7) and preventing too much of a focus on the short-term and the scarcity of resources (6.3.2, frequency of 7).

Structural unemployment needed to be lowered and therefore the government introduced a new instrument: Over the course of 5 years, 2,5 billion guilders would The Law on the Investment Account (Wet op de be made available (3 Investeringsregeling). Over the course of 5 years, 2,5 billion euros in current billion guilders would be made available (3 billion euros purchasing power) to support business in current purchasing power) to support business investments in order to investments – and for 30 percent (1 billion guilders) to reduce unemployment, reduce the costs of labour using a wage subsidy (code improve the environment, save energy, and to support 4.2.1) – in order to reduce unemployment, improve the research and development environment, save energy, and to support research and development (codes 1.3.2, 6.2, 6.3.2 and 5.2, ibid.: p.20 & p.24). The funding for this law was found by increasing the deficit with 1 percent – these costs would be earned back (inverdieneffecten) with the Investment Account-measures – and by using natural gas revenues (code 3.2.1, ibid: p.20).

Two observations were made regarding the structural policy as well as the Investment Account: first of all striving for and investing in more national production wasn’t seen as always effective anymore. Due to the openness of markets, importing became easy and trying to outprice countries with for example a big amount of natural resources was a very ineffective policy (code neg. 1.3.1, ibid.: p.12). Secondly the need to focus on restructuring as well as on the conservation of the environment and the natural resources (so called facettenbeleid) could in the short term cause an increase in unemployment, since higher regulations could influence companies’ profits (neg. 6.2, ibid.: p.30).

For the reports of 1979, the highest frequencies were the export-based reasoning for Economic Sector Memorandum (code 2.1, frequency of 6), the free flow of ideas reasoning for the Technological Innovation Memorandum (code 5.3.2, frequency of 15) and the full employment reasoning (code 6.2, frequency of 9). The focus on export in the Economic Sector Memorandum also shows in its wish to stop using money for defensive purposes, but start spending it on renewal and modernisation (codes neg. 1.2.1, and 1.2.2, Rijksoverheid 1979a: p.6). Secondly too much money is spent on employment benefits in the short term instead of strategic long- term benefits in the long run, which includes stronger dependency on companies compared to the government (codes 6.3.2 and 4.4, ibid.: p.7). The need to focus on renewal and modernization was also there, because wages still were high and in the long run were not sustainable if the quality of the products didn’t equally increase (codes neg 4.2.1 and 5.2, ibid.: p.13). That was also the reason that companies or even entire sectors could cease to exist in the Netherlands in the longer run. If they were unsustainable, the government was willing to help with restructuring (companies/sectors must follow the government’s plan in that case, “my way or the highway”), but there must be a willingness to let companies or sectors cease to exist as well (code 4.4 & neg 2.3, ibid.: p.16).

Central to the Technological Innovation Memorandum was the importance of creating partnerships between the private sector and research institutions. So far there wasn’t enough focus from both sides on the application of research and this needed to improve (code 5.3.2 and neg. 5.3.2, ibid.: p.16). Government could also take over that role of business in its procurement, especially with regards to its ambitions towards the conservation of the environment (code 5.3.4 and 6.3.2, ibid.: p.21). Lastly the framework for successful innovation should be laid, with supporting entrepreneurship (‘New companies are of vital importance in the application of new technologies and in the creation of knowledge-intensive ‘New companies are of vital importance in the jobs’), creating an environment in which failure is application of new allowed (‘if an entrepreneur is willing to take on risk, he technologies and in the shouldn’t be completely disqualified if he fails’) and in creation of knowledge- making rules and regulations innovation-friendly (codes intensive jobs’ 5.1, 6.2, 5.4 and 5.5, ibid.: p.13, p.9 & p.23).

With regards to the Report on Individual Support for Companies, most instruments were aimed at supporting full employment or at encouraging domestic supply on an individual level. An example is the Budget for Guidelines concerning Restructuring (Kaderregeling Herstructurering). Albeit this was intended to support restructuring of sectors, 10 percent of the total budget of 687 million guilders was also used to support individual companies. Furthermore there are some specific budgets available: for the shipbuilding industry (amongst others export capital), for the tourism industry (19 million guilders to support new ventures), and for the development and rehabilitation of the agriculture sector (improve the structure and to support the outflow of the number of farmers (codes 2.1, 1.2.1 and 1.1, ibid.: p.18-9). Lastly there is a budget to counter disruptions caused by international politics (in the form of government support for individual companies/sectors)(code 4.7.3, ibid.: p.24).

4.3.3 Crashing and Recovering 1980-1985 The main economic reasoning used by the Commission Wagner was preventing too much of a focus on the short-term and the scarcity of resources (code 6.3.2, frequency of 10), closely followed by the need for human/knowledge capital (code 5.2, frequency of 9) and thirdly the discouragement of direct investment in individual companies (code neg. 1.2, frequency of 7). With regards to the prevention of short-term benefits, the commission points towards the former employment programmes the government laid out. These were all focused on short term effects, where long term structural effects should’ve been the norm (Rijksoverheid, 1981: p.15). Secondly, with regards to its former policy: Using natural gas revenues, an energy-intensive industry was fuelled, but when energy prices went up due to the Oil Crises, these were passed on to the same energy-intensive industry, that faced dire problems due to those decisions (a negative 6.3.2 in hindsight, ibid.: p.12). Lastly more focus should be put on energy generation from renewable sources, like solar power, photochemistry and photo electricity (ibid.: p.26).

In former years individual investments were mostly handed out by either the cabinet or parliament on reasons that had very few to do with viability (code 4.7.2, ibid.: p.11) Individual support for companies is still allowed, but only if there is a reasonable long-term outlook on a return to profitability. Secondly, capital will only be provided by the Special Financing Committee, that needs to agree on giving the support in unanimity (code 5.3.1, ibid.: p.43). Direct participation is also better in that case, since (interest bearing) loans are often counter- productive since the value of the company is further decreased by high loans (neg. 1.3, ibid.: p.44).

With regards to social policy, wage moderation should again become the norm and government should allow for more flexible wage formation, since wage increases or decreases now are given throughout the economy, without the possibility of certain sectors to opt out due to economic circumstances (code neg. 6.1, ibid.: 21). The need to moderate wages was also high in the research and development sphere, in which high wages raise the costs of R&D and therefore make it less interesting for companies to perform R&D (code 4.2.1, ibid: p.30). This is especially disadvantageous since in the coming years effort needs to be put into connecting business and research institutions in order to make knowledge more applicable and secondly, and perhaps most importantly, to let students start their own companies by bringing their/the institutions’ knowledge into practice (codes 5.3.1 and 5.1, ibid.: p.30).

Lastly, there is still a high need for more risk bearing capital to be made available on the capital market. Government should therefore put effort into increasing the business investments, and should make investments into infrastructure to make profitable investments possible (code 4.6.6, ibid.: p.16). Individual investors should be encouraged to provide capital as well, via specific fiscal policy (code 4.3, ibid.: p.28).

Targeted resourcing was the most used reasoning to justify setting up the Society for Industrial Projects (SIP)(code 5.3.1, frequency of 6). This was since the SIP should convince new entrepreneurs to bring innovations to the market. Also suggested was for certain bigger firms to spin off successful departments that weren’t in the main companies’ strategic plans. Those spin offs could then attract capital as well as create extra jobs (code 5.1, Rijksoverheid, 1982: p.6). The Agreement of Wassenaar was focused towards full employment (code 6.2, with a frequency of 2). Important was that employers and workers together would strive for a long- term policy aimed at a better distribution of existing employment, with options as part-time contracts and shortening working hours (code 6.2, Stichting van de Arbeid, 1982: p.1). Most importantly was – as previous stated – the moderation of wages (code 4.2.1, ibid.: p.1).

The emphasis on innovativity and entrepreneurship was also the main focus of the Memorandum on Market-Based Technology Policy. Bringing knowledge together and increasing human/knowledge capital were the most frequently used arguments (codes 5.3.2 and 5.2, frequencies of 7). ‘The technology policy has as its aim to positively add to the competitive position of the Netherlands by developing technological knowledge, and by creating the conditions to do so’ (code 5.2, Rijksoverheid, 1984a: p.17).

It was also time to introduce certain areas of attention for It was also time to the research institutions to focus on. These certain areas introduce certain areas of could then build a network around them and thus upping attention for the research institutions to focus on. knowledge for the use of commercial application to These certain areas could society’s benefit (codes 5.6 and 5.3.2, ibid.: p.21-5). then build a network Furthermore, government should both create a financial around them and thus upping knowledge for the and psychological climate that supported risk-taking and use of commercial innovative entrepreneurship, and it should support it by application to society’s an innovative procurement and innovation-based rules benefit and regulations (codes 5.4, 5.3.4 and 5.5, ibid.: p.19-22).

The Parliamentary Enquiry of RSV was very critical of the governmental involvement in the particular case of RSV. Therefore, the government failure reasoning was most used, in this case the specific reasoning that it isn’t capable at running a company (code 4.7.2, frequency of 8). Amongst others, it concluded that ‘the downfall of the company was a direct result of the government’s specific policy towards the concern’(code 4.7.2, Rijksoverheid, 1984b: p.452) and that ‘vital company decisions were pseudo-collectivised, while the responsibility remained with the company. The borders between the company, government and the parliamentary commission (responsible for specifically the shipbuilding industry) faded entirely.’(code 4.7.2, ibid.: p.454).

The final problems of the RSV-problem were the power of unions and the absence of trustworthy long-term outlooks. The concern wasn’t kept alive due to social reasons, but due to political reasons: industry-strategic, national prestige, and local interests. There were a lot of pressure groups – amongst others the large working unions – that pressurised government and the parliamentary commission to hand out support, without for example any conditions related to capacity changes (i.e. lay-offs). There weren’t any plans that showed whether support was actually economically responsible either, since plans for 1978 that were made in early 1977, were already outdated by the end of 1977. The combination of these pressures and the absence of a sensible outlook, made that government and the parliamentary commission were responsive towards multiple requests for support (codes 2.3.1, neg. 6.2, neg. 6.3.2 and 4.7.1, ibid.: p.459- 62).

In the Report on the Reconsideration of State Participations, government concluded it could only intervene in case the market mechanism wasn’t functioning. This could only be the case in three instances: If a company delivers public goods, if it (partly) delivers a public service or if a monopoly is exploited (codes 4.6.6 and 4.6.8, Rijksoverheid, 1985: p.7). The code for the market failure public goods is also used most frequently in this report (code 4.6.6, frequency of 11). Next to that the market failure of the support motive is also often used, for example in the case of the National Investment Bank. Since the Arrangement for Specific Financing was given a new policy goal and policy execution, the bank could now solely focus on handing out medium- to long-term capital to businesses, since the market wasn’t giving them out due to the high uncertainties involved. The National Investment Bank could give out these loans, since it was less under pressure from short-term-results-focused shareholders, since the state was its sole shareholder (code 4.6.2, ibid.: p.11).

There was still room for There was still room for strategic state ownership in the strategic state ownership in cases of defence-related businesses – one for ammunition the cases of defence- and one for gunpowder – and in the case of the one natural related businesses – one for ammunition and one resource that the Netherlands has: the natural gas fields in for gunpowder – and in the the North (code 1.2.1, ibid.: p.13 & p.18). In the case of case of the one natural the defence-related businesses, the aim was to not be resource that the dependent on other countries for the supply of those Netherlands has: the natural gas fields in the specific products and in the case of the natural gas fields North to be able to ‘exert appropriate clout’ if needed.

Three specific companies that were named that were already fully competing on a free market, but which still had a partial state participation were KLM (an airline), DSM (a then-chemical company) and Hoogovens (a steel producer). In the case of Hoogovens, the original state participation was taken due to the strategic need for a steel producer in the Netherlands and the high start-up costs of such a facility. The state only had a two percent stake in the company left, but since the global steel market was opening up, it was decided the shares in Hoogovens could be sold to conform to that openness (code 4.4, ibid.: p.20). With regards to DSM, the company had undergone a major change from a coal producing company to a chemical company and had a strategic function to fulfil in being the government’s trustee for its share in the company exploiting the natural gas fields (Dutch Petroleum Company. After the split-off of that trustee

62 function and a couple of years of fully operating as a chemicals company with acceptable profit- and dividend-levels, shares in DSM could be sold (code 1.2.2, ibid.: p.18). With regards to KLM however, due to the importance of its aerial transport services to the Netherlands, and its connectedness to Schiphol Airport, it was deemed important to maintain the position in KLM, unless there was another way to maintain ‘its traditional Dutch character’ and sell the shares at the same time (code 4.6.3, ibid.: p.14-5).

4.3.4 Innovation, Innovation, Focused Innovation 1990-2005 With the start of a new decennium, the main focus was renewed as well. The new focus lay on innovation. The Memorandum on the Economy with Open Borders from 1990, as well as the Letter on Clusters from 1997, the Letter on Industry from 1999, the Letters on Innovation from 2001 and 2003 and the Note on Renewed Economic Instruments for Entrepreneurs from 2005 all had either the code for improving human/knowledge capital or creating a free flow of ideas as their most frequent ideational reasoning.

In the case of the Memorandum on the Economy with Open Borders, the human/knowledge capital reasoning was most used (code 5.2, frequency of 15). This showed in its seven central goals on how to stimulate continuous innovation: (1) keeping up on a technological level, (2) utilize the nation’s human capital as much as possible, (3) make decisions based on broad public support, (4) promote operational flexibility, (5) promote integral quality control, (6) internalize care for the environment, and (7) promote an entrepreneurial spirit and entrepreneurship in general (codes 5.2, 6.3.2 and 5.1, Rijksoverheid, 1990: p.10). Next to that, the value of remaining small and specialise was also emphasized, instead of expressing the wish for companies to always become bigger (code neg. 1.1, ibid.: p.11), as well as the dangers of too strict protective clauses, since they impair the proper workings of a free market, and the free market is indispensable for a prosperous economic development (code 4.4, ibid.:p.11)(code 4.4 is used with a frequency of 11 in the entire memorandum). Following from that emphasis should be put on opening up to Eastern European countries as well, since the fall of the Soviet Union opened up those countries for trade (code 4.4, ibid.: p.19).

The ambition was also expressed for consumption and production to, within one generation, meet the requirements of a sustainable development (code 6.3.2, ibid.: p.9). The need to reduce the administrative burden was expressed, as well as the need to regulate the introduction of flexible labour relations, but not hinder them (codes 4.6.7 and 4.2.2, ibid.: p.9 & p.17).

With regards to European co-operation, the need to regulate the national frameworks for state support should be regulated on a European level, amongst which the one for shipbuilding, which even in the Netherlands was still supported with 140 million guilders a year. The Netherlands was deemed too small to undertake very specific state support to help develop new high capital innovations (like Minitel and the TGV in France), but it should have the option to develop projects for example when it comes to infrastructure, without obstruction from either a cartel or from the misuse of a more economically powerful state (codes 4.7.3, 4.6.8 and neg. 1.2, ibid.: p.13, p.19 & p.25).

The Natural Gas Fund was established primarily to invest into structure improving projects. These projects would be mostly infrastructural: the Betuwelijn (a train route from the Port of Rotterdam to the boarder with Germany), as well as the Hogesnelheidslijn (High speed train route from Belgium to Amsterdam) were named as possible projects, but also an investment into the telecommunication infrastructure was discussed (code 4.6.6, Rijksoverheid, 1993: p.2). Most importantly however was that the funds were only to be used to invest into projects that could be exploited by market parties, since it shouldn’t be used to cover ongoing costs like salaries (code 5.3.1, ibid.: p.4).

The Letter on Clusters emphasizes that the cluster-initiatives should happen in independent, private constellations (code 4.4., Rijksoverheid, 1997: p.6). The government only plays a role as the creator of a framework, but has a place in that framework as well as a broker between parties as well as as a demanding customer (code 5.3.2, also used with the highest frequency of 10, ibid.: p.6). Part of the framework creation is getting rid of rules and regulation that form a hindrance and in its role as a broker, it has a strategic position in which it can provide independent information (codes 5.5 and 4.6.10, ibid.: p.23). Lastly in its role as demanding customer it can actively try to combine knowledge in order to develop technical development and at the same time it can improve companies’ price/quality ratio by acting as a launching customer that can afford to spend more than other parties might (code 5.3.4, ibid.: p.16).

The Letter on Industry from 1999 starts with the quote that ‘knowledge has become a key factor in the international competitive flight forward’. This can be seen in this letter by the very high frequency of the reasoning to improve human/knowledge capital (code 5.2, frequency of 22, Rijksoverheid, 1999: p.3). In order to stimulate this attitude towards knowledge, more

64 knowledge concerning patents and licensing can be provided, the programme to stimulate more technological starting entrepreneurs (so called TechnoStarters) must be further promoted and there should be an attitude change towards possible research spillovers, since in the long-term they mostly tend to create higher economic growth overall (codes 4.6.10, 5.1 and neg. 4.6.9, ibid.: p.17 & p.26-8). In order to make research subsidies more economically viable however, in collaboration with the private sector, research should be made more applicable and easier applicable. If that were to be the case, the private sector could also start contributing more to the research infrastructure in the Netherlands (code 5.3.1, ibid.: p.32).

Lastly the letter concludes the Netherlands is also very dependent on export for future welfare increase. In the period 1985-1999, exports have grown by 10 percent (code 2.1, ibid.: p.11). In its competitive position it should therefore not be disproportionately disadvantaged by tougher regulations regarding their energy use and environmental footprint (code neg. 6.3.2). These regulations however should be formulated on a long-term to make sure business is and will be able to fully take the regulations into account in its long-term strategic goals (code 6.3.2, ibid.: p.23).

The most used reasoning for economic policy in the First Letter on Innovation is the need for human/knowledge capital (code 5.2, frequency of 22), followed by striving for full employment (code 6.2, frequency of 20). Labour is seen as the most effective way to counter social exclusion and still the best guarantee against poverty. Striving for full employment is therefore first and foremost social policy (code 6.2, Rijksoverheid, 2001: p.8 & p.26). More people need to be activated to join the labour market, but social security has too comfortable benefits compared to low wage jobs. This needs to be adjusted to allow work to pay-off better compared to receiving benefits (code neg. 6.1, ibid: p.8). Secondly, since knowledge is becoming more and more important, life-long learning needs to be promoted. A basic or one qualification often isn’t enough anymore. This also needs to be addressed with regards to the unemployed. The social security administration should become more pro-active in combating unemployment by, within one year, offering newly unemployed schooling, a work experience placement, or job training with an employment agency (code 5.2, ibid.: p.21-2).

The strive for a higher educated society shouldn’t start with employees or the unemployed however. In a knowledge economy, human capital is the most important competitive factor.

Therefore 1,3 billion guilders is structurally added to the budget of the Ministry of Education. Secondly, the ambition was outed to, before the end of 2001, connect every school to the internet in order to fully implement the use of ICT in primary as well as secondary education (code 5.2, ibid.: p.15 & p.19).

Next to upping the level of knowledge in the nation, the European internal market should also be further improved. The framework for a flourishing online commercial market should be laid: In the areas of security, privacy and in the harmonization of technical conditions (code 5.5, ibid.: p.6). Secondly the liberalisation of markets should go on, specifically the telecom market and the financial services market. Market forces should also be introduced to the utilities, the operating networks, postal services and to airspace sectors (code 4.4, ibid.: p.10-4).

In the Second Letter of Innovation, the free flow of ideas is the most used reason for government intervention in the ‘Innovation takes place in a constant interaction economy (code 5.3.2, frequency of 15). ‘Innovation takes between different players: place in a constant interaction between different players: research institutions, research institutions, businesses, customers, intermediary businesses, customers, intermediary organisations organisations and government. All these together form the and government. All these Innovation System. This System hinges on exchange, together form the interaction and cooperation between all parts of the same Innovation System. This System hinges on system.’(code 5.3.2, Rijksoverheid, 2003: p.13). In order exchange, interaction and to let this exchange happen hotspots need to be created, cooperation between all attractive enough for (foreign) knowledge-intensive parts of the same system.’ businesses to settle in that particular region. One way to specifically attract foreign businesses is the so called technological match-making in which foreign businesses are connected to Dutch knowledge in a pro-active manner (code 5.3.2, ibid.: p.22). Research institutions also need to be focused more on the long-term global goals set with regards to knowledge expansion. In order to support the institutions in doing so, 802 million euro is made available from the Fund for Economic Structure Improvement (Fonds Economische Structuurversterking (FES), a new name for the Natural Gas Revenue Fund).

In the Note on Renewed Economic Instruments for Entrepreneurs, the most used reasoning is coming to a free flow of ideas (code 5.3.2, frequency of 7), shortly followed by the backing

66 winners reasoning (code 5.6, frequency of 6). Entrepreneurs are seen as the new motor of the new key-area policy: They should be the ones that bring innovations and knowledge into practice and not only nationally: businesses should be doing business more internationally as well, since it will make sure those companies are exposed to new production methods, techniques and knowledge (code 5.1 and 2.1, Rijksoverheid, 2005a: p.1 & p.14). To promote these entrepreneurs, as well as to promote the execution of the key area-policy, a new “FES- impulse” (an investment by the Fund for Economic Structure Improvement) is made available, to the sum of 500 million euros (code 5.3.1, ibid.: p.20) The key-area policy is summed up in the Note on Organizational Capability: ‘To, together with research institutions, the private sector and other governmental bodies, develop innovation programmes on promising areas and to execute those programmes, in order to get rid of possible innovation barriers and to cash in on (international) opportunities’ (code 5.3.2, Rijksoverheid, 2005b: p.7).

4.3.5 Mediator, Consultancy and/or Bank? 2007-2015 The Letter on Entrepreneurship put the entrepreneur in a central spot (code 5.1, frequency of 8). Entrepreneurship was to be promoted by making it fiscally attractive to become an entrepreneur and entrepreneurship was seen as thé best way to combat unemployment problems within disadvantaged groups, due to the flexibility in working hours and working locations (codes 5.1 and 6.2, Rijksoverheid, 2007: p.3, p.13). Important was that the self-employed could operate on a free market as much as possible. Therefore, mandatory insurance programmes were abolished in favour of giving the entrepreneur as much space as possible to make his/her own choices (code 4.4, ibid.: p.11).

With regards to their financing, it was deemed appropriate to help the free market, by the introduction of the Micro Financing Pilot. Since banks were wary of very small loans due to the low margins and the disproportionate high administrative costs involved, as well as the higher risk of defaults, government decided to step in. At first to help the disadvantaged (as part of the Empowered Neighbourhoods-policy (krachtwijken), but also as part of integration- and naturalization-policies)(code 6.2, Rijksoverheid, 2008a: p.3). The financing should be very accessible and especially be offered locally, in order to reach as much potential entrepreneurs as possible (code 5.1, ibid.: p.3). Vital to the entire programme was the assistance of coaches that would help people/companies to start standing on their own two feet, since investments could only be made in people/companies that could reasonably be expected to make a profit with initial guidance (code 5.3.1, ibid.: p.1).

To further the main goals set out in the Letter of Industry from 2008 (to come to an innovative industry that excels internationally, produces sustainably, and one that contributes to societal challenges)(codes 5.2 and 6.3.2, Rijksoverheid, 2008b: p.1), specific means were offered as well: government should make sure (1) sufficient human capital was available (code 5.2), (2) further improve infrastructural accessibility (code 4.6.6), (3) promote higher private research investments (codes 5.2 and 5.3.2), (4) ensure more dynamic through start-ups and the attraction of foreign companies (code 5.1), (5) make a higher internationalization possible (code 4.7.3), (6) promote sustainability (code 6.3.2), and (7) should act as launching customer (code 5.3.4, ibid.: p.9-10).

In order to stimulate In order to stimulate strong growth, a special facility was strong growth, a special to be set up by government to specifically back 100 facility was to be set up by companies that have the potential to quickly reach a government to specifically revenue of 20 million euros (code 5.6, ibid.: p.29). In back 100 companies that have the potential to order to counter possible credit lending problems, the quickly reach a revenue of Financial Guarantee Credit for Small and Medium 20 million euros Entereprises (Borgstellingskrediet MKB) was upped, the availability of micro credits was further improved and it was made fiscally more interesting for so called “informal investors” (individuals) to invest in companies (code 5.3.1, ibid.: p.31). Lastly a matching fund was made available to help businesses in border regions to cope with across-the-border competition (code neg. 4.4, ibid.: p.24).

Furthermore, excessive regulation should be countered, first and foremost by looking at 22 specific dossiers and by bundling specific licenses into bigger single licences, and by the introduction of lex silencio, meaning that if government does not respond to a request for a license within a certain time period, it would be automatically approved. A very innovative way of countering excessive regulation was by the introduction of a system of so called “High Trust”. In this system government gets rid of certain regulation and puts it trust into companies or citizens to be responsible and take care of an issue without it being regulated (code 4.6.7, ibid.: p.19 & p.30). Also with regards to regulation, the issue of intellectual property and the coinciding dispute settlement should be further improved, in order to come to a fully functioning European intellectual property system (code 4.5, ibid.: p.26).

The Key Sector Policy furthered on the Letter on Industry. The focus on a free flow was most dominant, especially with regards to cooperation in the Golden Triangle (code 5.3.2, Rijksoverheid, 2011: p.8-9). The collaboration in Key Sectors was deemed as most effective, due to (1) the possibility to deepen and intensify knowledge, (2) to further exports in strategic sectors, (3) the possibility of sector-specific rules and regulations to be introduced and (4) the possibility to cooperatively come to solutions for societal challenges.

New instruments to support economic growth and innovation were put forward, for example with regards to the framework for start-ups. The minimum capital to start a limited liability company was abolished, the throughput time of bankruptcies should be shortened and too rigid discharge policies needed to be loosened, in order to let people start a business quicker after they’ve left another company (code 5.1, ibid.: p.17). Doing business internationally was again promoted: a public branding programme needed to be set up in order to sell the brand “The Netherlands” to the world and money was made available to develop some of the developmental relationships the Netherlands had with so called “second-world countries” into full economic relationships (countries like South-Africa, Colombia and Vietnam)(code 2.1, ibid.: p.31).

New measures with regards to education and the labour market were also introduced: The climate in education needed to change. A tougher and more ambitious study climate was needed, along with stronger ties and focus on the labour market (code 5.2, ibid.: p.22). On the labour market itself, too often people got stuck after serving out three part-time contracts, since companies were not willing to offer them a contract for unlimited time. A hybrid form needed to be introduced, in order to answer this issue as well as in order to improve flexibility on the labour market without abolishing security. The hybrid form needed to be part-time contracts for over a longer amount of years (code 4.2.2, ibid.: p.25). With regards to financing start-ups two new measures were introduced: A new innovation fund would be introduced, with an obligation for companies to pay back the loan when profits were made. Secondly a stimulus was introduced to have institutional investors invest more in innovation (code 5.3.1, ibid.: p.18- 20).

The reboot of NedCar marked a new approach in industry policy. Government acted as a facilitator and a catalyst, and the investment was only a part of a larger total capital package

(Rijksoverheid, 2012: p.4). 3,25 million euros were 3,25 million euros were provided as a direct loan under “regional support”- provided as a direct loan under “regional support”- policies (and another 3,25 million euros came from the policies, with the goal of Province of Limburg), with the goal of having the car having the car factory factory make a transition to a factory that was capable of make a transition to a factory that was capable of handling different supply chains of different handling different supply brands/models at the same time. A guarantee of 25 chains at the same time. A million euros was given on a loan VDL had to take out guarantee of 25 million to complete the purchase of the factory from Mitsubishi euros was given on a loan VDL had to take out to (together with a guarantee of 25 million euros from the complete the purchase of Province of Limburg)(code 1.3.2, ibid.: p.2). This was all the factory from done to prevent a large lay-off from happening in a Mitsubishi region with already high unemployment numbers (code 6.2, ibid.: p.2).

With regards to the Action Plan on SME-Funding, the most important reasoning used was the targeted resourcing-argument (code 5.3.1, frequency of 8). The same goes for the Future Fund (frequency of 3). With regards to the action plan, announced was as well that Qredits (the microfinancing agency), was asked to start to provide current account loans as well, next to the elevation of the ceiling for loans from 100.000 euros to 250.000 euros. This meant the agency was taking over another task that banks used to primarily perform (code 5.3.1, Rijksoverheid, 2014b: p.11). In the budget for 2015, the most used reasoning was the need to prevent too much of a focus on the short-term and the scarcity of resources (code 6.3.2, frequency of 9). A new policy introduced was an awareness campaign to point household towards their energy-use and the need for energy efficiency, as well as with regards to countering food waste (code 6.3.2, Rijksoverheid, 2015: p.20). Secondly a new innovative infrastructure was also taken care of, with the appointment of TenneT (the company in charge of the electrical operating network) as the company responsible for the infrastructure on sea with regards to windmills (code 4.6.6, ibid.: p.15).

4.4 Usage of Managerial Public Administration Theories in I&I-Policy 4.4.1 The Industrialisation-Period 1945-1970 Albeit the European Economic Community formally came into practice in 1958, its predecessor was the Convention for European Economic Cooperation from 1948. This convention was already focused towards cooperating government that decided upon policy within networks of deliberation, in which every member had to participate and with decision making methods based on unanimity (code Z1, used with a frequency of 7, Rijksoverheid, 1948a: p.6)). At the same time the convention had strong TPA and NPM reasoning as well. For example with regards to its funding, it had to make up a strict plan based on a pre-formulated budget and had to stick exactly to that budget, without any possible transfers of money between policy fields (codes X2 and Y1, ibid.: p.13).

The same strict planning methods were used in the First Industrialisation Memorandum. As stated in paragraph 4.2.1, a strict planning was made to initiate the industrialisation of the Netherlands, with a strict goal for the industry from the government (code X1, Rijksoverheid, 1949: p.13-5). The need for international cooperation was also expressed however, with a wish to prevent overinvestments in country A with respect to country B, as well as breaking down European trade barriers, since the pre-war bilateral trade agreements hadn’t worked (code Z1, ibid.: p.29-30). The Industrial Guarantee Fund already saw an introduction of putting the execution of a government instrument at a distance. The execution of the policy is to be done by the Main Commission on Industrialisation (experts from the field) and the issuing of the loans is to be done by a limited company (codes Y1 & Y4, Rijksoverheid, 1955: p.8).

The Eighth Industrialisation Memorandum again saw a wish to perform the goal-setting in a network of deliberation (code Z1, frequency of 6) and a deviation from the main reason why to be involved in the industrialisation. Government still had a role to fulfil in the industrialisation policy, even though the original goals were met (neg. X3, Rijksoverheid, 1963: p.113). Also, to support the increasing focus on knowledge in favour of – amongst others – export, technical attaches were introduced to the embassies in Washington D.C and Tokio. These attached should in collaboration with companies look for opportunities and usable knowledge (code Z4, ibid.: p.47).

4.4.2 The Bumpy Road 1970-1979 With the introduction of environmental aspects into industrialisation policy, a new need for international cooperation rose within Europe as well. In the budget for 1971, the government calls for international action with regards to environmental rules, because too strict rules in country A, could lead to an increase in competitive position for country B and thus for country A to become less popular for businesses to be seated (code Z1, Rijksoverheid, 1970: p.9). With regards to the establishment of NEHEM, government took a strict TPA line. The specific sectors were to take the wishes of the government into account with regards to the restructuring (code X3, Rijksoverheid, 1972: p.8) and the policy of restructuring should be centralised into one body, since bodies working next to each other would be less efficient (neg. Z4, ibid.: p.4).

The Economic Structure Memorandum saw the introduction of a new policy instrument called the Law on the Investment Account. The execution of this law went via fiscal policy, but the selection of projects was done within a Ministerial department, specifically established for the execution of this law (code X4, Rijksoverheid, 1976: p.26 & p.25). In order to successfully execute the sectoral policies, an Advisory Committee would be introduced with members from both the employment side as well as the workers side. (code Z1 & Z4, ibid: p.38) Secondly policy needed to be anticipating on an EU-level instead of protectionist, since the global liberalisation of markets was unstoppable. If this anticipation wouldn’t happen a lot of countries could potentially lose their energy-intensive industry (and thus environment-intensive) to developing countries with lower energy prices and fewer regulations. This international cooperation also needed to be used to stop multinationals from cherry-picking regulations to circumvent certain national regulations (code Z1, ibid.: p.33-6 & p.46).

In the Report on Individual Support for Companies, both the public service delivery by bureaucrats or politicised structures, and the negative reasoning of selecting an instrument with a strict goal-mean ratio are mostly used (codes X4 and neg. X3, frequencies of 9 and 7). The negative reasoning is also used in the Economic Sector Memorandum, in which the blueprint approach towards restructuring is discouraged, since amongst other technological advancement causes great disruption in a different way in different sectors (Rijksoverheid, 1979a: p.12-3). In the Report on Individual Support for Companies this reasoning is also used, since there is apparently is no system in place which considers all the different public economic instruments in its entirety (including the public service delivery), and a lot of support is given without a proper formal law at the basis (Rijksoverheid, 1979c: p.7 & p.15).

The accountability of the different instruments and thus Between 1974 and 1978 their executors should mostly be taken care of by 240 million guilders were spent on specific R&D parliament (code X2), but in practice this isn’t the case. Development Funds – and For example, between 1974 and 1978 240 million guilders these type of funds were were spent on specific R&D Development Funds – and already being handed out since the 1950s – but still these type of funds were already being handed out since (after 25 years) an the 1950s – but still (after 25 years) an evaluation of the evaluation of the results results couldn’t be given by the cabinet (code neg. X2: couldn’t be given by the p.21). Lastly, part of the execution of one of the bigger cabinet budgets, the Agreement for Specific Financing, is completely done by bureaucrats, without parliamentary accountability. For normal use, there is a parliamentary committee, but a large chunk (111 million out of 168 million) is handed out classified as unconventional (oneigenlijk) and that is decided upon by civil servants from the Ministries of Finance and Economic Affairs, and by employees of the National Investment Bank (code neg. X2 and X4, ibid.: p.13).

4.4.3 Crashing and Recovering 1980-1985 In the years before the report of the Commission Wagner, the public opinion was deemed most important, but it was very negative and a lot of vetoes were made against possible developments. This ensured a lot of ad-rem decisions since depoliticized targets weren’t put into place (neg Y2, Rijksoverheid, 1981: p.8). New policy should from now on be based on experiences and results from the past and shouldn’t already take possible future earnings into account when making policy (which marked the end of the so called inverdieneffecten)(code Y2, ibid.: p.18). New public management reasoning was used in the advice for execution of the new policies. In the future, 1 window should be responsible for handing out loans and subsidies, instead of the multiple windows that already exist (code Y4, ibid.: p.34). Lastly in the future, the goal setting and evaluation of the future I&I-policy should be done by an independent Advisory Board (code Y1, ibid.: p.41).

The strive for independent bodies was also used in coming to the Society for Industrial Projects (SIP). The SIP needed to be independent from government, because searching for specific new perspectives needed independent expertise and that wasn’t to be found in government (code Y4, Rijksoverheid 1982: p.9-11). The estimations for the SIP were set in stone in a very TPA- way. 4 billion guilders were needed in total and 1 billion could be supported by the SIP, without any flexibility (code X3, ibid.: p.12).

The Report on Market-Based Technology Policy showed a strong PVM-influence. Amongst others, there was a call for continuous goal-setting throughout the implementation of the policy to see whether the initially proposed measures were effective enough (code Z1, Rijksoverheid, 1984a: p.14-5). Secondly the policy wasn’t made based on citizen-demand. Instead, a programme had to be set up to inform the public of the effects and possibilities of technology and of technology policy (neg. Y1, ibid.: p.25).

The Report of the Parliamentary Enquiry into RSV was mostly retrospective and about a lot of things that weren’t done or done wrongfully. For example, the Enquiry Committee concluded that independent expertise was never called in to review the requests for state support. The responsible parliamentary committee, the government directorate-general (DG Industry) and RSV were completely intertwined. It took an intervention from the Ministry of Finance to get Economic Affairs to stop with the support (neg Y1, Rijksoverheid 1984b: p.455). A lot of supporting Arrangements that were used, were without any internal characteristics or were handed out conditionally. Secondly, outside of the special committee, parliament wasn’t given extra information on the support that was handed out, nor by the results it was effecting. ‘It must be said that it didn’t ask for it either’ (neg. X3 and neg. X2, ibid.: p.458). What was needed according to the parliamentary enquiry committee were strict procedures for handing out support, including a mandatory parliamentary supply of information and a periodic report and evaluation (codes X3, X2 and Z2, ibid.: p.467).

4.4.4 Innovation, Innovation, Focused Innovation 1990-2005 The Memorandum on the Economy with Open Borders was NPM-laden, but had remarks on European cooperation as well. Almost all policy discourses have become European by nature, there are little to none policy issues that don’t have a European dimension to it (code Z1, Rijksoverheid, 1990: p.18). With regards to the role of the government with regards to business, government sees itself as a business partner of business and therefore should ask itself what its customer wants. It should also focus on the quality of their public service delivery, amongst others by getting rid of needless hierarchy, and by the decentralisation of decision making procedures, of responsibilities and of the execution of policies (codes Y1 and Y4, ibid.: p.16).

The Natural Gas Revenue Fund saw a small return to TPA in its public service delivery, since the decision on investments was to be made by a governmental committee, made up by several ministers and civil servants (code X4, Rijksoverheid, 1993: p.8).

In the Letter on Clusters, government on multiple occasions stresses the fact that it is not the actor that points in which direction the economy should develop, but it is the initiator in the discussion on long-term strategic economic development, since it can be the independent party above all other parties: sector experts, policy makers, market parties and researchers (code Z1, Rijksoverheid, 1997: p.8). With regards to the writing of rules and regulations, the Letter on Industry from 1999 concludes this can also best be done in a discussion with people from the field. An Entrepreneur Panel will be set up to support the strive for more effective and efficient rules and regulations (code Z1 and Y3, Rijksoverheid, 1999: p.38). Secondly government’s instrumentarium should be made more accessible using for example the internet more strategically and by making the windows that hand out those instruments more effective (code Y3 and Y4, ibid.: p.38).

To fully bring the available knowledge to fruition, the To fully bring the available strive for applicability of research must really permeate knowledge to fruition, the through all research institutions. Therefore research strive for applicability of institutions that are dependent on public funding, will be research must really held accountable to the knowledge needs of society in permeate through all research institutions. their funding (code Y2, Rijksoverheid, 2001: p.17). In Therefore research coming to a choice on where – from now on – to put the institutions that are focus and mass of our competitive strength, there will be dependent on public funding, will be held a strong collaboration with stakeholders (code Z1, accountable to the Rijksoverheid, 2003: p.23). Also, the amount of knowledge needs of society instruments will be brought back from 30 to 6 in total, in in their funding order to come to more accessible instruments (code Y3, ibid.: p.30).

The key areas announced in 2005 were indeed chosen in strong collaboration with the so called Innovation Platform. They chose the themes and in collaboration with the private sector, the innovation programmes and the broad goals per key area will be made up. The creation of specific means to get to those goals, the framework as well as the budget per programme will be done by the civil service however (code Y1 and X3, Rijksoverheid, 2005a: p.10). The administrative unit responsible for the execution of the instruments supporting the key area policy, will however have to operate on the field. It needs to take initiative and needs to broker

75 in that field to, together with the research institutions and the private sector, come to the best solutions (code Y4, ibid.: p.16). The instruments will indeed have a more streamlined setup and secondly, the costs of obtaining funds from a specific instrument needs to be brought down, since it is currently at 2,1 percent of the entire available budget. This needs to be done by digitalisation, standardization and simplification (code Y3, ibid.: p.5 & p.18).

4.4.5 Mediator, Consultancy and/or Bank? 2007-2015 With regards to regulation, the Letter on Entrepreneurship expressed the need to reduce the amount of excessive regulation. It wants to do so by starting a consultation with entrepreneurs themselves to see what types of regulation unnecessary hinder them in their day to day operation (code Z1, Rijksoverheid, 2007: p.16). The Letter on Industry from 2008 agrees the need to involve businesses in policy and regulation. A consultation was held with the private sector to come to this Industry Letter and should therefore evoke trust in the policies introduced in this letter (code Z1, Rijksoverheid, 2008b: p.6). That is also the most important characteristic of the policy: It should be trustworthy and consistent, in order for companies to be able to adapt to it with regards to their long-term strategic goals, and it should only be altered in case it is really necessary (code Y1, ibid.: p.13). Secondly it is really important that all ministries and lower bodies of government commit to this industry policy, since differences in communication or execution of policies related to industry can form a hindrance on the working of that same industry (code Z4, ibid.: p.12).

In the Key Sector Policy, In the Key Sector Policy, one of the examples given of one of the examples given successful collaboration was the Brainport region around of successful collaboration Eindhoven. In this region, private companies like Philips, was the Brainport region ASML and NXP strongly collaborate with research around Eindhoven. In this region, private companies institutions as the Technical University Eindhoven and like Philips, ASML and governmental agencies like the regional investment NXP strongly collaborate agency in order to specialise themselves and further with research institutions knowledge and valorisation. This project was deemed as the Technical University Eindhoven and worthy of a follow-up by other regions like the various governmental agencies like “greenports” (aimed at agriculture and food) and the the regional investment mainports like the Port of Rotterdam (code Z4, agency in order to Rijksoverheid 2011: p.56). Part of the policy was also to specialise themselves and experiment with a pilot to ask businesses to come up with further knowledge and valorisation. their own alternative regulation (code Z1, ibid.: p.5), to

76 evaluate innovation policy on the bases of general international standards available (code Y2, ibid.: p.59), and to further streamline the execution of policy by only having two agencies responsible for innovation policies, with the merger of the Chamber of Commerce with Syntens (next to AgentschapNL, currently RVO (Rijksdienst voor Ondernemerschap).

In the process of supporting the reboot of NedCar, a “Commission of Experts” (Commissie van Wijzen) was involved, giving advice to the ministry from a local economic point of view (code Y1, Rijksoverheid, 2012: p.2)). In the Action Plan for SME-Funding a new tool was announced to further streamline the availability of the policy instruments available to RVO, called the Financing Shop. This tool has a step-by-step procedure to come to the right possible financing for start-ups and SMEs (code Y3, Rijksoverheid, 2014a: p.13). The budget for 2015 called for a thorough evaluation of the complete package of policies introduced by the Ministry of Economic Affairs, since it was merged with the Ministry for Agriculture. This evaluation was to be done to come to more effective and efficient policies (code Y2, Rijksoverheid, 2015: p.15).

4.5 Hypotheses and Paradigms 4.5.1 Overview of Total Coding Results In the last paragraphs, an overview has been given of the use of the codes in the empirical data. Important to emphasize is that the frequency of a certain code, doesn’t always necessarily proves that a certain Note or Memorandum was entirely focused towards the reasoning of or policies following from that specific code. In the case of the parliamentary enquiry into RSV for example, the most frequent used managerial public administration-reasoning was the collaboration with regards to goal-setting in networks of deliberation. However, in their conclusions the parliamentary enquiry committee emphasizes that the chosen network of deliberation was too small and that it gave way to fading lines between government and parliament on one side as the providers of capital and RSV on the other side as the receivers of the loans, and an unhealthy risk-ignoring attitude from the government and parliament (Rijksoverheid, 1984b: p.452 & p.455).

Secondly, when looking at the total frequency table (as can be seen in Appendix 5), the corporatist relation based on big corporations (code 2.3.2), the market failures intrinsic value (code 4.6.1) and demerit goods (code 4.6.4), and the counter-cyclical national debt policy received respectively 0 and three times 1 mentioning. It is therefore obvious that these aren’t popular policies in I&I-policy. The same also goes for, for example, the public value failure of the hoarding of benefits (code 6.3.1). This is especially interesting since nothing is done against this in the early 2000s, even though at the end of the 1990s there is a lot of outrage in the media and in society over so called TechnoLease constructions, provided by the government to big corporations (amongst others Philips and Fokker) to provide poorly performing companies with a big instant capital influx, classified as innovation capital. Especially in the case of Fokker this caused big consternation, since the company ended up in bankruptcy in 1996 (Banning & Meeus, 1998).

Next to government perhaps not wanting to confront themselves with possible wrongdoing (and therefore the frequency of for example 6.3.1 is low), it could also be the case that specific economic policy is discussed in other policy documents. This goes for example for demerit goods, which are often highly taxed (like petrol and cigarettes), but tax policy (in an isolated form) isn’t a focal issue of I&I-policy. The same goes for the Keynesian codes under 3.1 and 3.2. Over all 35 reports, the Keynesian codes have a total frequency of 24, with discouraging demand policies as the highest amongst them (code neg. 3.1), as can be seen in the table on the next page. The most important use of Keynesian theory may be the introduction of the Law on the Investment Account in 1976, that raised the national debt with 1 percent.

Table 4: Usage of Keynesian Demand Management Codes

1948a 1948b 1949 1955 1963 1970 1971b 1976 1981 1993 Total 3 1 1 3.1 3 3 Neg 2 1 1 4 3.1.1 1 1 1 3 Neg 2 2 3.1.2 1 2 3 3.2 1 1 2 Neg 0 3.2.1 2 1 3 Neg 1 1 2 3.2.2 1 1 24

When looking at the top 6 of the frequency table plotted together in a graph (see graph 1 below), there are also different conclusions to be drawn. The high frequency of code 5.2 (human/knowledge capital) for example is greatly influenced by five peaks (1963, 1990, 1999, 2001 and 2008), whereas code 4.4 (free market) has a much more even distribution. This may be due to the speciality of the reasoning regarding human/knowledge capital, compared to a more general reasoning regarding the free market.

Graph 1: Usage of Top 6 Public Economic Reasonings 25

15 5.2 5.3.2 6.2 Frequency 10 4.4 5.1 5 6.3.2

2007 1949 1955 1963 1970 1972 1976 1981 1985 1990 1993 1997 1999 2001 2003 2011 2012 2015

1948a 1971a 1979a 1979c 1982a 1984a 2005a 2008a 2014a

2005b 1948b 1971b 1979b 1982b 1984b 2008b 2014b Year

The selection as well as the length of the reports has its influence as well. If for example only the reports under 18 pages are included, codes like targeted resourcing get a higher position compared to when all reports are taken into account. With reports over 18 pages the order doesn’t change however. The selection however does matter. When a selection is made of reports, based on the time periods used in the empirical analysis, some types of reasoning were clearly more dominant in certain periods compared to others. The full employment argument for example, had an obvious peak in the Seventies, since this was the period in which a lot of policies were introduced aimed at countering the unemployment issue that had risen in those years. The same goes for the free flow of ideas reasoning. In the years 1990-2005, this argument definitely gained strength, since policy was focused on creating value out of collaboration. Relatively speaking, the free market reasoning had its surge in the Nineties as well, with a retracting government supplying only a framework to boost innovation as well as industry.

Graph 2: Usage of Public Economic Reasonings Timeperiods 90 80 70 60 5.2 50 5.3.2 40 6.2

Frequency 30 4.4 20 5.1 10 6.3.2 0 48-63 70-79 81-85 90-05 07-15 Timeperiod

Looking at the ten runner-ups, the same conclusion can be drawn (as the graph below shows):

Graph 3: Usage of Public Economic Reasoning Top 7-16 70 60 50 40 30

Frequency 20 10 0 2.1 5.3.1 4.6.6 4.6.10 5.6 4.6.7 5.3.4 4.7.3 1.3.2 5.5 Codes

48-63 70-79 81-85 90-05 07-15

In the first years after the Second World War, the focus was more on export (code 2.1) with regards to public economic policy, whereas for example backing winners (code 5.6) was used far more after the 1990s (due to specifically the Letter on Clusters (1997), the introduction of the key area policy (2005), and the Key Sector Policy (2011). With regards to the direct incentives, instructions or subsidies (code 1.3.2), a correlation can be found with the full employment argument, since both have peaks in the Seventies in the Nineties. Especially with regards to the Seventies this is obvious due to the fact that the employment programmes needed direct investment and this investment would partly only be handed out if companies would “get in the right business”. Lastly, the market failure public goods was used a lot specifically in the report on the Reconsiderations of State Participations, since most of the participations the government had at the time were due to the fact that the companies were delivering public goods and government wanted to make sure they would continue to do so.

With regards to the Managerial Public Administration theories, code X1 was only used with a total frequency of 5: The pure specific goal setting by politicians and execution by bureaucrats isn’t used very often (or isn’t explicitly mentioned, but logically understood). With regards to the top 6, the following graph shows the development over the 35 reports:

Graph 4: Usage of Top 6 Managerial Public Administration Reasoning 12

8 Z1 6 Z4 X4 Frequency 4 X3 2 Y1

0 Y4

1949 1955 1963 1970 1972 1976 1981 1985 1990 1993 1997 1999 2001 2003 2007 2011 2012 2015

1948a 1971a 1979a 1979c 1982a 1984a 2005a 2008a 2014a

1948b 1971b 1979b 1982b 1984b 2005b 2008b 2014b Year

What can clearly be derived from this graph is that the wish for collaboration in goal setting comes with peaks. This could be because reports like the First Industrial Memorandum and the Economy with Open Borders Memorandum were made after a big transition period and government wants the country to be involved in the policies that should point the way to go next. Secondly, the strict public service delivery by bureaucrats only had a peak in the early Fifties and in the Seventies. It was overtaken predominantly by the public service delivery in networks of actors, from the Public Value Management theory.

4.5.2 Hypotheses With regards to the hypotheses, the following results can be presented. For the graphs presented in this part, the negative frequency of codes isn’t included.

Hypotheses 1: In the period 1945-1970, dirigisme was the prevailing theory in I&I-policy In the period 1945-1970 there was a high usage of the dirigisme theory, but it wasn’t the prevailing one according to the frequency of ideational reasoning usage:

Graph 5: Usage of Theories from 1945-1970 70 60 50 40 30 20 10 0

Considering the evaluation of the policy outcome from the 1970s as well, mainly derived from the Report on Individual Support Companies, the conclusion can be drawn that companies indeed could act on a free market (code 4.4, frequency of 20 between 1945 and 1970), and they could use the available knowledge/human capital (code 5.2, frequency of 26) in order to focus on exports (code 2.1, frequency of 17). They were however assisted in that by direct incentives, instructions or subsidies aimed at encouraging domestic supply (code 1.3.1, frequency of 14), amongst others by the establishment of the Industrial Guarantee Fund (frequency of 5/14 of code 1.3.1 between 1945 and 1970). The dirigisme theory wasn’t the prevailing theory though and therefore, the hypotheses is rejected.

Hypotheses 2: In the period 1970-1979, corporatist-export and Keynesian economic theories were prevailing in I&I-policy The second hypotheses can be immediately rejected due to low usage of Keynesian theories and the corporatist theories overall. Looking at the frequencies, the export-based reasoning shows its peak in this period, but it is outshadowed by primarily the Schumpeterian-Renaissance theories (total frequency of 76). From all periods, the dirigisme theory has a high frequency in this period (46), as well as the full employment reasoning (41), both logically to be explained from the focus on governmental efforts to get rid of structural employment by investing heavily in industrial firms/sectors.

Hypotheses 3: In the period 1980-1984, NPM & Neo-Classical theories were prevailing compared to TPA & Dirigisme theories in the period 1945-1979. For this hypotheses, data from four theories and three periods is put together. The following graph follows from that:

Graph 6: Dirigisme & TPA vs. (Neo-)Classical & NPM 70

50 Dirigisme 40 Traditional Public Administration 30 (Neo-)Classical New Public Management 20

0 45-70 70-79 80-84

The conclusion from this graph is that indeed Dirigisme & TPA theories weren’t prevailing in the period 1980-1984 compared to (Neo-)classical & NPM theories, but Dirigisme & TPA weren’t completely prevailing in the period 1945-1979 either. Especially due to the strong focus in economic policy on the free market in the first period (1945-1970), the (neo-)classical theories were very dominant in that period as well. The hypotheses can therefore be partially accepted, for the period 1980-1984.

Hypotheses 4: In the conclusions of the RSV-enquiry committee and the Report on the Reconsideration of State Participations, NPM & Neo-Classical theories are expected to be the dominant theories. The part of the hypotheses concerning the dominance of NPM in the two reports can immediately be rejected, since there are no mentions op the NPM theory at all in the two reports. The (neo-)classical theory is used however and is clearly the dominant public economic theory. Keynesian Demand Management wasn’t used at all and usage of both the corporatist-export theories and Schumpeterian-Renaissance theories was low. As can be seen on the graph on the next page, usage of the dirigisme theory is particularly high in the state participations report due to strategic investments being made to keep up domestic supply and usage of the full employment reasoning is particularly high in the RSV-enquiry report due to all the policies that were aimed at keeping employment at the same level during all the years of support for RSV.

Graph 7: Theories Used Per Report

45 40 35 30 25 20 15 Frequency 10 5 0 RSV-Enquiry State Participations

Theories

Neo-classical induced reasoning is without a doubt mostly used in the two reports. In the case of the RSV enquiry, this is due to the high use of government failure reasoning, whereas in the case of the state participations, this is mostly because positions in companies are retained due to either the market failure support motive, or the market failure public goods. The hypotheses can therefore be partially accepted, regarding the dominance of (neo-)classical theory.

Hypotheses 5: From 1990, a drop in the usage of (neo-)classic theories is expected and a higher usage of Schumpeterian-Renaissance theories is expected in I&I-policy

Graph 8: Development of (Neo-)Classical and Schumpeterian- Renaissance induced policies 300 250 200 150 (Neo-)Classical

100 Frequency 50 Schumpeterian Renaissance 0 45-70 70-79 80-85 90-05 07-15 Periods

From the graph above, the conclusion can be drawn that there indeed was a drop in the usage of (neo-)classic theories. However, it wasn’t absolutely the highest used theory beforehand either and therefore the hypotheses must be rejected. The strive for higher human/knowledge capital (code 5.2) is the premier contributor to the high usage of Schumpeterian-Renaissance reasoning before 1990.

Hypotheses 6: From 2001, the PVM-theories are used more often compared to the other MPA theories in the period 1945-2000 in I&I-policy Using the graph below, the only conclusion can be to reject the hypotheses, since PVM-induced policies have been dominant ever since the Second World War. This is due to the fact that both goalsetting in a network of deliberation (code Z1) as well as public service delivery within a network of actors (code Z4) have been promoted by government ever since the Council for Economic European Cooperation from 1948. What is interesting about the graph below however, is the crossroads the frequencies of TPA and NPM reasoning form. NPM was especially on the rise in the Nineties, whereas TPA was really popular in the first three decades after the Second World War, but even reduced to zero usage of TPA-theories in policy formation during the years 2007-2015.

Graph 9: Development of MPA reasoning from 1945-2015 50 40 30 Traditional Public Administration 20

New Public Management Frequency 10 Public Value Management 0 45-70 70-79 80-85 90-05 07-15 Periods

Hypotheses 7: From 2007, a higher usage of dirigisme theories is expected in I&I-policy

Graph 10: Usage of Public Economic Theories from 1945-2010 300 250 200 150

Frequency 100 50 0

Public Economic Theories

45-70 70-79 80-85 90-05 07-15

As the graph on the previous page shows, the hypotheses has to be rejected. The usage of dirigisme theories in policy reasoning has been declining since the Seventies and hasn’t surfaced again. The only usage of dirigisme-induced reasoning in the period 2007-2015 was in the Letter on the Agreement for a Plan for NedCar. In that letter, it was mentioned that an investment into NedCar had been made, and a guarantee on a loan was handed out. This was categorized under “direct incentives, instructions or subsidies aimed at getting into the right business” (code 1.3.2). The fact that it still was possible for government to hand out loans to companies to help them get into the right business as part of so called “regional support”, means that certain instruments were left out of the reports and memorandums discussed in this study regarding economic policy. It could be that these instruments are only discussed in the original formal laws and that they aren’t part of the innovation instrumentarium and therefore weren’t discussed in the covered reports.

4.5.3 Possible Paradigms Now that all hypotheses are discussed and the policies and the usage of both public economic- and managerial public administration-reasoning in the formulation of the policies has been extensively covered, the question remains whether there are overarching paradigms to be found in the ideational reasoning of government when it comes to Innovation and Industrialisation policy. The graph on the next page has all theories plotted in one graph. Income Distribution (code 6.1) and Keynesian Demand Management (codes 3) have been left out, since the frequencies of those codes were too low to be significant.

Now in order for a paradigm to be distilled from the data, there must be a causal relationship between one public economic theory and a managerial public administration theory. This means one theory cannot be (highly) used, while the other isn’t. The pure frequencies (which can also be seen in the lines of the graphs of the next page) only show this kind of relationship between dirigisme and traditional public administration, which both go down to almost zero after a small climb throughout the Seventies. The only reason why the two theories don’t have a zero between 2007 and 2015 is due to the – previously mentioned – loan and guarantee to support the reboot of NedCar.

In order to come to a conclusion on whether there is a causal relationship between two theories, the policies themselves must be looked at and whether for example a traditional public administration induced policy actually has a dirigisme induced policy goal.

Graph 11: Public Economic Graph 12: Managerial Public Theories' Frequencies Administration Theories' 300 Frequencies 50

250 45

40 200 35

150 30

25 100 20

50 15

10 0 45-70 70-79 80-85 90-05 07-15 5 Dirigisme Corporatist Export-Based 0 (Neo-)Classical 45-70 70-79 80-85 90-05 07-15 Schumpeterian Renaissance Traditional Public Administration Full Employment New Public Management Public Value Failure Public Value Management

This was done for the first period (1948-1963) for Traditional Public Administration, but unfortunately a relation between TPA and dirigisme couldn’t be found. From the 29 times a policy was proposed or was expanded upon using TPA-reasoning, only in seven instances a connection could be made to dirigisme-induced policy goals. This means that the conclusion has to be drawn that there is no causal relationship between dirigisme and TPA and thus there are no paradigms to be distilled from Industrialisation and Innovation Policy.

Chapter 5 – Conclusion & Discussion 5.1 Conclusion The first and foremost conclusion that could be drawn from this study, is that already from an early start, Dutch industrialisation and innovation policy was focused towards innovation. New human/knowledge capital, as well as collaboration to obtain it, spread it and make it applicable, was seen as one of the most important governmental economic tasks, already since 1963. The Seventies showed the highest direct intervention in the economic sphere. Beforehand, government made it abundantly clear that government wasn’t suited at running an economy. Private actors needed to be responsible for running it, government needed to act like a shepherd: creating the right conditions and trying to steer it in the way with the greenest grass.

Another red line that ran throughout I&I-policy over the years, was the need for it to help create jobs. In the first years, government helped greatly by moderating wages, and together with other efforts it was very successful towards countering structural employment. These efforts as a matter of fact were so good, that they had a wage explosion as a result, since the amount of work created was so great, the population growth couldn’t keep up. The biggest hurdle that had to be taken however, were the Seventies. An oil crisis and rising energy prices, as well as a lower international demand, meant that the status quo was challenged. Since a system of welfare was built, and since a cabinet was elected that actively was working towards a more equal society – with the spread of knowledge, power and income – it made it even harder to accept the fact that the status quo indeed had changed and that the economy needed to follow, which implied bankruptcies and lay-offs galore.

The decision was therefore taken to directly invest in the economic system. First via special arrangements (like the Arrangement for Specific Financing and the Arrangement Support from the Employment Budget), specifically aimed at preserving jobs at existing firms and later aimed at upping the amount of business investments, via a large fiscal policy called the Law on the Investment Account, but which also had the final goal of improving employment numbers, with the added requirement that those jobs would (in part) be newly created, modern jobs focused on the long-term future.

It backfired however, and in hindsight a parliamentary enquiry committee devoted to a single case of state-support-gone-wrong (RSV), concluded government was inept at running businesses and at making business decisions. Holding on to the status quo meant stagnation,

88 since business wasn’t adapting to changing circumstances. And an old Dutch saying goes “stagnation is decline”. This also proved to be the case in the Dutch case and the economy as well as the public finances were in a deplorable state.

A new momentum had to be created for the Dutch industry, as well as for the Dutch economy and actually this process had already started. The first Innovation Memorandum of 1979 already emphasized the need for more collaboration and the need to position the Dutch economy as a knowledge-intensive one, with knowledge-intensive jobs and the Report on Market-Based Technological Policy already concluded a focus on specific areas would be especially effective. It took however until 2005 to get to such a so called “key area policy” and it took until 2011 for government to fully support and actively execute the then name “key sector policy”, which was aiming at positioning the Dutch economy very strategically in the global market.

The years in-between however, marked the rise of the service sector in the Netherlands and the growth that for example the ever more specialised financial services brought. One prime minister and three cabinets got the public finances in order (the cabinets under prime minster Lubbers) and the economy – amongst others due to its renewed focus on exports – recovered accordingly. The liberal–social-democratic government that got into power afterwards could start spending the money earned by getting the economy back on track, and at the same time could fully reap the benefits from the technological development within, as well as the financialization of the Dutch economy. Since things were going so well, government decided it could retract out of the economic sphere as much as possible and used primarily (neo-)classic and NPM-induced policy reasoning to do so. It would try to create a great framework by, amongst others, provide a strong infrastructure. This infrastructure would be created, using money made from the only natural resource available in the Netherland: the natural gas. This gave way to the development of prestige projects like the Betuwelijn (train line from the Port of Rotterdam to Germany) and the High Speed Train Line (from Belgium to Amsterdam).

The beginning of a new century gave way to another period in Dutch economic policy, that of full focus on innovation to further society. European integration was going full speed ahead, which also meant that broader policy goals would be formulated on a supranational level. This was the case with for example the Lisbon Agenda of 2001, in which countries agreed they should pursue an agenda to increase the knowledge position of all member states in favour of employment and social inclusion.

The financial crisis of 2007/2008 shocked the Dutch economy back to reality after several years with above average economic growth. It also posed big problems again for the Dutch economy, since again the status quo was vastly threatened. This time only, it wasn’t a direct consequence of government’s dealings, but of technological advancement and of globalisation, forcing interchangeable companies to either cut costs or provide a quality that justifies a higher price. To this latest challenge, government decided to react by focusing on the aforementioned strategic areas in which competitive advantage could be gained ánd it focused on entrepreneurs. Whether the businesses were small, medium or large, entrepreneurs were the ones that were and are able to quickly adapt to changing circumstances and at the same time to adapt new knowledge, new technology, perhaps even faster than society as a whole could. These entrepreneurs needed to be empowered and starting an own businesses needed to be encouraged.

With regards to the hypotheses of this study, only two of them were partially accepted, since indeed the frequency of TPA and dirigisme-induced policies went drastically down after its rise in the Seventies, and since (neo-)classical theories were indeed most prominent in the two reports marking the end of an era of industrialisation (the RSV report and the Report on the Reconsideration of State Participations). The other hypotheses were mostly rejected due to the fact that either policy was probably described in other policy reports (with regards to Keynesian Demand Management, probably in tax-related reports) or due to the fact that economic policy was from the start already focused on increasing the human/knowledge capital of the Netherlands, giving way to the Schumpeterian-Renaissance way of thinking, or it was already focused on (international) policy goal formulation in networks of deliberation instead of from ivory towers, giving way to Public Value Management induced public policy reasoning. Lastly, important to mention is also the significant presence of the focus on the long-term since the Seventies, most of the time focusing on energy or environment related issues aimed at a more sustainable world.

To sum it all up: government’s economic policy went from a framework-based industrialisation policy aimed at full employment, to a government supported policy aimed at retaining full employment. After the crash in the middle of the 1980s, which according to a parliamentary enquiry was due to the ineptness of government at running private businesses, a new focus had to be found and this was innovation policy. After a special focus on areas was already suggested

90 in 1984 and again in 1997, it took government until 2005 and 2011 to finally put their full weight behind strategically positioning the Dutch economy into several key sectors. In the meantime, the 1990s gave rise to structural investments made in infrastructure to create a top of the charts framework for a free market in the Netherlands and Europe. The early 2000s saw the introduction of Europe-based policy goals that aimed at innovating in favour of employment and social inclusion. After the financial crisis of 2007/2008 government fully backed (new) entrepreneurs as the builders of the new Dutch economic structure, laid out in the key sectors. Meanwhile, attention for knowledge/human capital has always been adamant in economic policy making, as well as the strive for a free market. From the Seventies onwards more focus was also put on leaving a better planet for future generations, by focusing on the long term instead of the short term, for example with regards to our energy usage and our claim on the environment.

It can be claimed that there has always been some form of common weal between government and business, although in the first industrialization period from 1945-1970 and in the Nineties it was not as warm as it was in the Seventies. In recent years however, government has really positioned itself, not as a supplier of just money or subsidies, but really as an equal part of the so called golden triangle between government, research institutions and the private sector, and it really wants to put effort into it. This in order to let business grow, but at the same time perhaps to protect business from going in the wrong way or losing sight of the nation’s long- term goals.

5.2 Discussion This study has been an ambitious one, especially regarding the amount of complex theory compared to the amount of complex empirical data. It is therefore of the utmost importance to discuss possible shortcomings of the study, as well as discuss developments with regards to the coding and analysis of the empirical data.

The first point that needs to be raised is regarding the theories themselves. More often than not, they are not completely separate from each other as well as from other fields of policy. Industrialisation & Innovation policy acts – amongst others – between interfacing fields of labour, energy, monetary, fiscal, and educational policy. It is therefore difficult to sometimes distinguish when one policy ends and when the other starts, as well as it is difficult what a policy aims to achieve. This is for example the case with innovation policy. It aims to activate

91 knowledge by bringing people together. This means it can act on the field of education, it could be a public goods market failure as well as it could be a public value management approach to policy.

Choices had to be made while coding and, especially because this subject also has a political side to it, choices had to be made with regards to the tone it struck. The same goes for arguments that weren’t explicitly brought as arguments. There were instances in which policies were introduced with a certain logic, but without naming its consequences or its ideational reasoning. The context then had to act as a guideline for a possible coding of the policy in order to take it into consideration in the analysis of the empirical data.

With regards to the coding itself and the results of it in the frequency table shown in appendix 2, it is important to note again that the length of a report has its consequences for the height of the frequency. Big peaks in frequency can be seen in some codes, but that is also due to the fact that the report itself has a relative peak in the amount of pages compared to the other reports. Secondly, the selection of reports is important. The selection in this study was made on the basis of other books and scientific articles that had been written about the two separate policies. This is one of the first studies that takes both policies as its centre of attention, but the selection of documents can be leading in the outcomes. In this study, the period 1945-1980 is mainly covered by industrialisation policy related documents. At the same time research and development might have been stimulated, but it could have been mentioned in for example scientific related policy documents. The same goes for industrialisation instruments, like for example the one used in the NedCar case, they could perhaps be found in more specific instrument related reports. Both of which weren’t included into this study due to the focus of it, but they might be included in future research for improvement purposes.

During coding a couple of minor changes were made to the coding scheme, they can all be found shaded red in appendix 1. There is however one big change made and that is regarding the coding of government failure (code 4.7). This code was originally one that focused on discouraging economic action by government due to the fact that it is only used as a mean to further agenda’s. Added to that is that economic action should be discouraged due to government not having the capability to run a private business (code 4.7.2) and a government/market failure is introduced, since this code states government is allowed to step

92 in when (international) politics disrupts the workings of a free market. Both these codes were added while coding the Law on the Establishment of the Industrial Guarantee Fund in which both were explicitly stated as reasons for government to establish the guarantee fund and not to directly invest into firms, and/or assist companies that were frustrated by (international) politics). Also during coding there were three types of reasoning that were too vague to be coded. These were (1) economic growth, (2) competitive power, and (3) fiscal climate. All three were mentioned multiple times, but instead of adding codes, these were – as much as possible – split up and divided over the original codes. They do however all three have some special intrinsic characteristics that in future research could be included.

Chapter 6 – Literature List 6.1 Used Scientific Articles, -Books and -Reports Bagchus, R. (1996). Waardevolle instrumenten: De totstandkoming van beleidsinstrumenten als plicht, ritueel en zoektocht naar legitimiteit. Delft: Eburon [pp. 63-88];

Bartik, T.J. (1990). The Market Failure Approach to Regional Economic Development Policy. Economic Development Quarterly, Vol.4, No.4. [pp. 362-7];

Bekkers, V. (2011). Beleid in Beweging. Den Haag: Boom Lemma Uitgevers. [pp. 189-90];

Bestebreur, A., Kraak, A.D. & Van der Burg, C. (2004). Modern Financieel Management bij het Rijk. Den Haag: Sdu Uitgevers. [pp. 130-4];

Boels, J.W.M. (2012). Joseph Schumpeter, honderd jaar economische ontwikkeling. Maastricht: Universitaire Pers Maastricht. [pp. 28-31];

Bordewijk, P. & Klaassen, H. (2011). Begroten met Beleid. The Hague: Sdu Uitgevers. [pp. 33-62];

Bos, H.C. (1970). Tinbergen's scientific contribution to development planning. De Economist: Vol. 118, No. 2. [pp. 142-3];

Bozeman, B. (2002) Public-Value Failure: When efficient markets may not do. Public Administration Review, Vol. 62, No. 2. [pp. 150-5];

Block, F. (2008). Swimming Against the Current: The Rise of a Hidden Developmental State in the United States. Politics & Society, Vol. 36, No. 2. [pp. 3-15];

Blyth, M.M. (1997) "Any More Bright Ideas?" The Ideational Turn of Comparative Political Economy. Comparative Politics, Vol. 29, No. 2. [p.246];

Boltho, A. (1996). Has France converged on Germany? In Berger, S. & Dore, R. (eds.) National Diversity and Global Capitalism. Ithaca, NY: Cornell University Press. [p.104];

Carlsson, B. (2009). New Knowledge: The driving force of innovation, entrepreneurship, and economic development. Paper presented at the Copenhagen Business School Summer Conference 2009. [p. 20];

Crouch, C. (2009). Privatised Keynesianism: An Unacknowledged Policy Regime. The British Journal of Politics and International Relations, Vol. 11, No. 3. [pp. 385-6];

De Kam, C.A., Koopmans, L. & Wellink, A.H.E.M. (2008) Overheidsfinanciën. Groningen: Wolters-Noordhoff. [pp.15-25];

Dercksen, W.J. (1986). Industrialisatiepolitiek rondom de jaren vijftig : een sociologisch- economische beleidsstudie. Assen: Van Gorcum;

Edquist, C (2011). Design of innovation policy through diagnostic analysis: identification of systemic problems (or failures). Industrial and Corporate Change, Vol. 20, No. 6. [pp. 1728- 30];

Friederiszick, H.W., Röller, L.-H. & Verouden, V. (2006) European State Aid Control: An Economic Framework. In: Buccirossi (ed.) Advances in the Economics of Competition. Cambridge: MIT Press [pp. 20-40];

Gelder, van, W.J. (1973). Industriepolitiek. Deventer: Kluwer. [pp. 19-31];

Glyn, A. (1995). Social Democracy and Full Employment. Nordic Journal of Political Economy, Vol. 22. [pp. 109-110];

Gordon, R.J. (2016). The Rise and Fall of American Growth. Princeton: Princeton University Press;

Gourevitch, P.A. (1996). The Macropolitics of Microinstitutional Differences in the Analysis of Comparative Capitalism. In Berger, S. & Dore, R. (eds.) National Diversity and Global Capitalism. Ithaca, NY: Cornell University Press. [pp. 251-4];

Hall, P.A. (1993). Policy Paradigms, Social Learning, and the State: The Case of Economic Policymaking in Britain. Comparative Politics, Vol. 25, No.3 [pp. 273-290];

Hall, P.A. (2001). The Evolution of Economic Policy. In Guyomarch, A., Machin, H., Hall, P.A. & Hayward, J. (eds.), Developments in French Politics II. Cambridge, MA: Palgrave Macmillan. [p.4];

Hebbink, G.E. & Van Velthoven, B.C.J. (2008). Macro-Economie en Stabilisatiepolitiek. Houten: Noordhoff Uitgevers. [pp. 164-70];

Heemskerk, E.M., Mokken, R.J. & Fennema, M. (2012). The fading of the state: Corporate– government networks in the Netherlands. International Journal of Comparative Sociology, Vol. 53, No. 4. [pp. 253-7];

Hirschman, A.O. (1991). The rhetoric of reaction: perversity, futility, jeopardy. Cambridge: Belknap Press. [pp.7-8];

Jasanoff, S. (1985). Technological innovation in a corporatist state: The case of biotechnology in the Federal Republic of Germany. Research Policy. Vol. 14, No. 1. [p. 24];

Kolm, S.G. (2010). History of public economics: The historical French school. The European Journal of the History of Economic Thought. Vol. 17, No. 4. [p. 690];

Koolma, H.M. (2013). Remodelling Public Value Creation: Assessment of Innovation in a Public Service Sector. Contribution XVII IRSPM Conference 2013;

Lundvall, B.-Å. (1992). National Systems of Innovation. London: Pinter;

Manlow, P. (2005). Welfare State Building and Coordinated Capitalism in Japan and Germany. In: Streeck, W. & Yamamura, K. (eds.), The Origins of Nonliberal Capitalism Germany and Japan in Comparison. Ithaca: Cornell University Press. [pp. 94-5];

Mazzucato. M. (2014). The Entrepreneurial State: Debunking Public vs. Private Sector Myths. London: Anthem Press;

Nationaal Archief (2014). Rapport Domein Economie: Onderzoeksteam Maatschappijbrede Trendanalyse 1976-2005. Den Haag;

Nelson, R. (1993). National Innovation Systems. New York, NY: Oxford University Press;

Reinert, E.S. (1999). The role of the state in economic growth. Journal of Economic Studies, Vol. 26, No. 4/5. [pp. 269-84]; a: Rijksoverheid (1948). Verdrag nopens Europese Economische Samenwerking. Kamerstuknummer 865, Ondernummer 1-2. [pp. 2-13]; b: Rijkoverheid (1948). Overeenkomst tot Economische Samenwerking Verenigde Staten & Nederland. Kamerstuknummer 890, Ondernummer 1. [pp. 2-6]; c: Rijksoverheid (1948). Wet op de Materiele Oorlogsschaden, Memorie van Toelichting. Kamerstuknummer 705, Ondernummer 3. [p. 26];

Rijksoverheid (1949). Nota inzake de industrialisatie van Nederland. Kamerstuknummer 1400X, Ondernummmer 6. [pp. 4-39];

Rijksoverheid (1955). Memorie van Toelichting op de Wet Stichting Industrieel Garantiefonds. Kamerstuknummer 4173, Ondernummer 3. [pp. 6-12];

Rijksoverheid (1963). Achtste nota inzake de industrialisatie van Nederland. Kamerstuknummer 7169, Ondernummer 1. [pp. 36-117];

Rijksoverheid (1970). Memorie van Toelichting Rijksbegroting 1971, hoofstuk XIII Economische Zaken. Kamerstuknummer 10900, Ondernummer 2. [pp. 2-9]; a: Rijksoverheid (1971). Regeling Bijzondere Financiering. Kamerstuknummer 11238, Ondernummer 1. [pp. 1-2]; b: Rijksoverheid (1971). Memorie van Toelichting Rijksbegroting 1972, hoofstuk XIII Economische Zaken. Kamerstuknummer 11500, Ondernummer 2. [pp. 5-7];

Rijksoverheid (1972). Statuten Oprichting Nederlandse Herstructureringsmaatschappij (NEHEM). Ministerie van Economische Zaken, Intern Kenmerk 272/20270. 16 March 1972. [pp. 2-8];

Rijksoverheid (1976). Nota inzake de Selectieve Groei (Economische Structuurnota). Kamerstuknummer 13955, Ondernummer 2. [pp. 7-46];

96 a: Rijksoverheid (1979). Economisch Structuurbeleid (Sectornota). Kamerstuknummer 15818, Ondernummer 2. [pp. 6-16]; b: Rijksoverheid (1979). Technische Innovatienota. Kamerstuknummer 15855, Ondernummer 2. [pp. 6-23]; c: Rijksoverheid (1979). Rapport Steunverlening Individuele Bedrijven. Kamerstuknummer 15306, Ondernummer 3. [pp. 7-29];

Rijksoverheid (1981) Rapport Adviescommissie inzake het industriebeleid: Een Nieuw Industrieel Elan. Ministerie van Economische Zaken. June 1981. [pp. 6-44];

Rijksoverheid (1982). Oprichting Maatschappij voor Industriële Projecten. Kamerstuknummer 17418, Ondernummer 3. [pp. 4-12]; a: Rijksoverheid (1984). Nota inzake Marktgericht Technologiebeleid. Kamerstuknummer 17973, Ondernummer 6. [pp. 13-25]; b: Rijksoverheid (1984). Conclusies parlementaire enquêtecommissie RSV. Kamerstuknummer 17817, Ondernummer 16. [pp. 451-67];

Rijksoverheid (1985). Heroverwegingsrapport Staatsdeelnemingen. Kamerstuknummer 16625, Ondernummer 73. [pp. 1-20];

Rijksoverheid (1990). Nota Economie met Open Grenzen. Kamerstuknummer 21670, Ondernummer 2. [pp. 5-25];

Rijksoverheid (1993). Instelling Aardgasbatenfonds. Kamerstuknummer 23002, Ondernummer 3. [pp. 1-8];

Rijksoverheid (1997). Op innovatie gerichte clustervorming in de marktsector. Kamerstuknummer 25518, Ondernummer 1. [pp. 2-23];

Rijksoverheid (1999). Industrie- en Dienstenbeleid. Kamerstuknummer 26628, Ondernummer 1. [pp. 3-38];

Rijksoverheid (2001). Nota Kenniseconomie in Zicht. Kamerstuknummer 27406, Ondernummer 2. [pp. 3-26];

Rijksoverheid (2003). In actie voor Innovatie: Aanpak van de Lissabon-ambitie. Kamerstuknummer 27406, Ondernummer 4, Bijlage 1. [pp. 5-30]; a: Rijksoverheid (2005). Notitie Sterke Basis voor Topprestaties: Vernieuwde EZ- Instrumenten voor Ondernemers. Kamerstuknummer 29800 XIII, Ondernummer 73, Bijlage 1. [pp. 1-20]; b: Rijksoverheid (2005). Organiserend vermogen. Kamerstuknummer 27406, Ondernummer 60, Bijlage 1. [p. 7];

Rijksoverheid (2007). Zelfstandig Ondernemerschap. Kamerstuknummer 31311, Ondernummer 1. [pp. 1-16]; a: Rijksoverheid (2008). Microfinancing Pilot. Kamerstuknummer 31311, Ondernummers 3 & 20. [pp. 1-3]; b: Rijksoverheid (2008). Industrie, een wereld van oplossingen: Industriebrief 2008. Kamerstuknummer 29826, Ondernummer 32, Bijlage 1. [pp. 1-36];

Rijksoverheid (2011). Naar de Top: Het bedrijvenbeleid in actie(s). Kamerstuknummer 32637, Ondernummer 15, Bijlage 1. [pp. 3-59];

Rijksoverheid (2012). Industriebeleid: Overeenkomst Plan NedCar. Kamerstuknummer 29826, Ondernummer 45. [pp. 2-4]; a: Rijksoverheid (2014). Aanvullend Actieplan Mkb-Financiering. Kamerstuknummer 32637, Ondernummer 147. [pp. 1-13]; b: Rijksoverheid (2014). Toekomstfonds. Kamerstuknummer 34000 XIII, Ondernummer 5. [p. 1-3];

Rijksoverheid (2015). Begroting Economische Zaken 2016: Hoofdstuk 2 De Beleidsagenda. Kamerstuknummer, Ondernummer 2. [pp. 10-20];

Ringeling (1993). Het imago van de overheid. Den Haag: VUGA. [p. 133];

Rodrick, D. (2003). Growth Strategies. Working Paper, Department of Economics, Johannes Kepler University of Linz, No. 0317. [pp. 4-7];

Schilder (2000). Government Failures and Institutions in Public Policy Evaluation. Assen: Van Gorcum. [pp. 7-15];

Smith, R.F.I. (2004). Focusing on public value: Something new and something old. Australian Journal of Public Administration, Vol. 63, No. 4. [p. 76];

Stichting van de Arbeid (1982). Akkoord van Wassenaar: Centrale aanbevelingen inzake aspecten van een werkgelegenheidsbeleid. 24 November 1982. [pp. 1-2];

Stoker, G. (2006) Public Value Management: A New Narrative for Networked Governance? American Review of Public Administration, Vol. 36, No. 1. [pp. 41-51];

Thiel, van, S. (2007). Bestuurskundig onderzoek: Een methodologische inleiding. Bussum: Uitgeverij Coutinho. [pp. 57-135];

Toninelli, P.A. (2008). The Rise and Fall of State-Owned Enterprise in the Western World. Cambridge, MA: Cambridge University Press. [p. 5-7];

Velzing, E.-J. (2013). Innovatiepolitiek. Delft: Eburon. [pp. 19-20];

Verschuren, P. & Doorewaard, H. (2007). Het ontwerpen van een onderzoek. Den Haag: Uitgeverij Lemma. [pp. 198-239];

Wade, R. (1996). Globalisation and Its Limits. In Berger, S. & Dore, R. (eds.) National Diversity and Global Capitalism. Ithaca, NY: Cornell University Press. [p. 87];

Wijers, G.J. (1982). Industriepolitiek. Leiden: H.E. Stenfert Kroese. [pp. 8-11];

Zanden, van, J.L. (1997). Een Klein Land in de 20e Eeuw: Economische Geschiedenis van Nederland 1914-1995. Utrecht: Het Spectrum [pp. 16-171]. 6.2 Used Websites Banning, C. & Meeus, T.-J. (1998) Dutch Bastards: the Netherlands, Philips and State Support Controllers from Brussels. [http://retro.nrc.nl/W2/Lab/Technolease/tl170398eco.html]. 14 August 2016;

BNR (2015). NS baas erkent 800 miljoen verlies op Fyra-debacle. [http://www.bnr.nl/nieuws/fyra/520215-1506/ns-baas-erkent-800-miljoen-verlies-op-fyra- debacle]. 21 May 2016;

Encyclopaedia Britannica (2016). Euro-zone debt crisis. [https://www.britannica.com/topic/euro-zone-debt-crisis]. 11 August 2016;

Oxford Dictionaries (2016). Definitions of Industrialisation and Innovating [http://www.oxforddictionaries.com/definition/english/industrialization?q=industrialisation & http://www.oxforddictionaries.com/definition/english/innovate]. 19 May 2016;

Parlement & Politiek (2016). Kabinet Den Uyl (1973-1977). [http://www.parlement.com/id/vh8lnhronvw9/kabinet_den_uyl_1973_1977]. 11 August 2016;

SER (2016). Tijdbalk Geschiedenis Sociaal-Economische Raad. [http://www.energieakkoordser.nl/sitecore/content/internet/nl/raad/tijdbalk.aspx]. 11 August 2016;

Stichting van de Arbeid (2016). Tijdbalk Geschiedenis Stichting van de Arbeid. [http://www.stvda.nl/nl/stichting/geschiedenis/tijdbalk.aspx]. 11 August 2016;

Verlaan, J. (2015). BMW Mini plaveit voor fabriek in Born de weg naar nieuwe groei. [http://www.nrc.nl/handelsblad/2015/07/20/bmw-mini-plaveit-voor-fabriek-in-born-de-weg- naar-1517145]. 21 May 2015. 6.3 Used Images Front Page: http://www.prospectmagazine.co.uk/wp- content/uploads/2014/12/feature_haldane.jpg

Chapter 7 - Appendices Appendix 1: Coding Scheme Category Variable Sub-Variable Code 1. Dirigisme Active Persuasion 1.1 (Developmental Direct Investment Individual Firms 1.2 Bureaucratic National Industry 1.2.1 State) International Industry 1.2.2 Direct Economic Incentives, Instructions or Subsidies Individual 1.3 Firms (DBS) National Industry 1.3.1 International Industry 1.3.2 2. Corporatist Dependency on export 2.1 Export-Based Beneficial Exchange-Rate 2.2 Economics Corporatism 2.3 Industry-Sector Based 2.3.1 Big-corporations based 2.3.2 3. Keynesian Influencing of demand 3.1 Demand Pro-Cyclical 3.1.1 Management Contra-Cyclical 3.1.2 National Debt 3.2 Pro-Cyclical 3.2.1 Contra-Cyclical 3.2.2 4. (Neo-)Classical Money Supply 4.1 Economics Cheap/Easy Labour 4.2 Bring down costs (cheaper) 4.2.1 Simplify/loosen labour 4.2.2 regulation (easier) Incentivizing Individual 4.3 Free Market + Delete Trade Barriers 4.4 Strict Property Rights 4.5 Market Failure 4.6 Intrinsic Value 4.6.1 Support Motive (+indiv. parties) 4.6.2 Merit Goods 4.6.3 Demerit Goods 4.6.4 Externalities 4.6.5 Public Goods 4.6.6 Lowering Transaction Costs 4.6.7 Preventing Monopolies 4.6.8 Underinvestment in R&D 4.6.9 Imperfect Information- and 4.6.10 Capital Markets (+NL branding) Government Failure 4.7 Mean to further political agenda 4.7.1 Not capable in private decisions 4.7.2 Negative influence (int.)politics 4.7.3

100

Category Variable Sub-Variable Code 5. Schumpeterian Focus on Entrepreneurship 5.1 Renaissance Emphasize the value of knowledge +knowledge capital 5.2 Economics Developmental Network State 5.3 (Developmental Network State) Targeted Resourcing 5.3.1 Free flow of ideas 5.3.2 Supplying Infrastructure 5.3.3 Creating High-Quality Demand 5.3.4 Failure-Friendly Environment 5.4 New Market Development 5.5 Backing Winners 5.6 6. Additional Income Distribution 6.1 Economic Full Employment 6.2 Theories Public Value Failure 6.3

Hoarding of Benefits 6.3.1 Short-Term Horizons & Substitutability vs. Conservation 6.3.2 of Resources

X. Traditional Policy Goal Formulation X.1 Public Accountability Instruments X.2 Administration Instrument Selection X.3

Public Service Delivery X.4 Y. New Public Policy Goal Formulation +efficient usage of budget Y.1 Management Accountability Instruments Y.2 Instrument Selection +Streamlining instruments Y.3 Public Service Delivery Y.4 Z. Public Value Policy Goal Formulation +International Cooperation Z.1 Management Accountability Instruments Z.2 Instrument Selection Z.3 Public Service Delivery Z.4

Appendix 2: Workfile Frequency Table including Graphs The workfile including the frequency tables used for the graphs will be seperately sent as an Excel-file

Appendix 3: Workfile Quotations Empirical Data The workfile containing the selection of the empirical data will be separately sent as an Excel- file. This file includes quotations of all empirical data as well as specific research into the possible causal relationship between TPA & Dirigisme.

Appendix 4: Coded Empirical Data The 718 pages empirical data will be hand delivered.

101

Appendix 5: Frequency Table Frequency Table Code 1-4.5

Code 1948a 1948b 1949 1955 1963 1970 1971a 1971b 1972 1976 1979a 1979b 1979c 1981 1982a 1982b 1984a 1984b 1985 1990 1993 1997 1999 2001 2003 2005a 2005b 2007 2008a 2008b 2011 2012 2014a 2014b 2015 Total Pages 15 12 39 7 52 9 2 7 19 48 18 27 37 46 11 2 15 17 22 23 12 24 38 24 29 20 4 18 9 38 36 4 14 5 15 718 Neg 1 0 1.1 1 3 2 1 1 1 1 1 3 1 1 16 Neg 1 1 2 1.2 1 1 7 1 10 Neg 2 7 1 3 13 1.2.1 1 2 1 3 4 11 Neg 1 1 2 1.2.2 1 1 2 1 1 1 5 12 1.3 2 1 1 4 Neg 1 1 1.3.1 2 2 3 5 2 1 2 1 1 19 Neg 1 1 1.3.2 1 2 4 2 1 7 7 1 2 4 1 2 2 36 Neg 1 1 2.1 1 4 5 7 2 3 6 4 3 3 1 3 6 1 2 4 6 1 1 63 Neg 3 5 1 1 1 11 2.2 1 1 2 1 1 6 Neg 1 2 1 2 1 7 2.3 1 1 Neg 1 1 2.3.1 1 1 1 1 1 1 1 1 1 9 2.3.2 0 3 1 1 3.1 3 3 Neg 2 1 1 4 3.1.1 1 1 1 3 Neg 2 2 3.1.2 1 2 3 3.2 1 1 2 Neg 0 3.2.1 2 1 3 Neg 1 1 2 3.2.2 1 1 4.1 1 1 1 3 4 5 2 1 1 19 4.2 1 1 Neg 0 4.2.1 1 3 3 6 1 2 1 2 1 20 Neg 2 2 3 1 1 1 10 4.2.2 2 1 2 2 2 3 1 13 Neg 1 1 2 4.3 1 1 2 4 3 11 4.4 4 7 6 1 2 6 1 4 2 5 1 8 11 9 6 14 2 2 1 6 2 2 3 105 Neg 1 1 1 1 2 2 8 4.5 1 1 1 3

102

Frequency Table Code 4.6-6.3.2

Code 1948a 1948b 1949 1955 1963 1970 1971a 1971b 1972 1976 1979a 1979b 1979c 1981 1982a 1982b 1984a 1984b 1985 1990 1993 1997 1999 2001 2003 2005a 2005b 2007 2008a 2008b 2011 2012 2014a 2014b 2015 Total Pages 15 12 39 7 52 9 2 7 19 48 18 27 37 46 11 2 15 17 22 23 12 24 38 24 29 20 4 18 9 38 36 4 14 5 15 718 4.6 1 1 2 4.6.1 1 1 4.6.2 1 1 10 1 1 14 4.6.3 2 1 2 1 2 8 4.6.4 1 1 4.6.5 4 2 5 1 3 1 16 4.6.6 1 4 1 1 1 11 3 3 1 3 4 2 1 3 2 2 43 4.6.7 3 1 1 3 1 4 2 3 4 7 6 3 38 4.6.8 4 1 2 4 2 3 1 17 4.6.9 1 2 1 4 Neg 1 1 4.6.10 3 1 1 2 5 3 3 3 3 5 4 4 2 39 Neg 1 1 4.7 1 1 2 4.7.1 1 5 1 7 Neg 1 1 4.7.2 2 1 8 1 12 4.7.3 3 2 1 2 2 2 7 5 1 7 4 36 5.1 6 1 2 1 1 1 8 5 2 2 2 4 9 8 7 3 8 3 9 6 2 1 91 Neg 1 1 2 5.2 7 1 18 1 1 5 5 11 5 9 3 7 1 15 1 4 22 23 13 1 3 16 12 3 7 194 Neg 1 1 1 1 1 5 5.3 0 5.3.1 1 1 4 6 2 1 1 5 2 1 2 3 1 3 3 5 1 8 3 1 54 Neg 1 1 2 5.3.2 10 2 1 1 15 1 2 4 7 8 10 8 7 15 7 3 2 19 19 1 1 7 150 Neg 2 2 5.3.3 1 2 1 1 5 5.3.4 1 2 1 4 1 4 1 1 3 9 2 1 1 4 2 1 38 5.4 1 1 2 2 1 7 5.5 7 3 1 1 4 5 1 2 2 1 2 1 1 4 35 5.6 1 2 2 6 2 2 6 3 10 4 1 39 6.1 2 2 1 1 6 Neg 1 1 1 3 6 6.2 2 8 6 4 1 18 5 5 8 3 1 2 1 6 3 2 1 1 1 20 1 1 2 3 6 3 2 1 117 Neg 1 2 1 2 1 6 1 1 15 6.3 0 6.3.1 1 1 2 6.3.2 1 1 1 2 7 2 4 3 10 1 1 6 1 3 5 4 2 13 6 9 82 Neg 1 1 1 3 1 1 8

103

Frequency Table Code X1-Z4

104