High achievement on the world stage is something of a Dutch trait. Whether it is science (inventing microbiology thanks to Leeuwenhoek's microscope), sport (three Fifa World Cup finals), business (Shell, Unilever and Philips all have Dutch roots) or culture (Vermeer to Van Gogh), the Netherlands has always punched above its weight in the international arena.

To this list can be added the country's world-class university system. In this year's Times Higher Education World University Rankings, 12 of the Netherlands' 13 research universities finished in the top 200, behind only the US and the UK, despite being a nation of only 16.8 million people.

A culture of applied practical knowledge is certainly a sturdy basis for a healthy higher education system.

"God made the world, but the Dutch made Holland," goes the folk saying. While other European nations feuded, Dutch scientists and engineers were busy making dykes, dams and canals to turn seas and swamps into fertile farmland, and the country later found success in shipping, science and commerce.

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Innovation has subsequently permeated many aspects of Dutch life, from floating waterside homes and meticulously planned, cycle-friendly cities to particularly cerebral footballers.

But the Netherlands' success has less to do with its rich intellectual history, famous ancient universities at Leiden and Utrecht and industrious national character, according to Bert Meijer, scientific director of the Institute for Complex Molecular Systems at Eindhoven University of Technology (TUE), than with the fact that the country has seen sustained investment in higher education since 1945.

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"After the war, the country had to rebuild," Meijer explains. "There was investment in new roads, railways and other infrastructure. Universities were also created and grown. These institutions lack the beauty and history of older universities, but they also lack the burden of history.

"It gives you the option of doing new things, unhampered by tradition. Money can be spent on research and teaching, not on old buildings and libraries."

The impressive campus of TUE, a stone's throw from Eindhoven's central rail station, bears witness to such investment. Older 1950s and 1960s structures sit alongside new, striking copper-clad buildings.

At the heart of the campus is the looming industrial design department building, symbolising the central role played by private industry since the university's foundation in 1956.

It was the electronics giant Philips, which began as a small light-bulb manufacturer in Eindhoven in 1895, that brought the university into existence.

"They were making light bulbs, but they needed to improve production technology," says Maarten Steinbuch, a former research scientist at Philips Labs who is now head of control systems technology in the university's mechanical engineering department.

"In the 1950s, electrical motors also began to replace mechanical camshafts. Philips needed new people and the university basically started because Philips wanted it."

Graduates of TUE and other top Dutch universities filled the famous Philips laboratories, which spawned the first audio and video cassettes, CD and laserdisc players.

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With such important links to the electronics behemoth, which boasted sales of EUR25.4 billion (?21.8 billion) in 2010, it is unsurprising that TUE was one of just seven universities in the top 200 of the 2011-12 rankings to enjoy full marks for industry income.

But it is the Philips spin-offs in the so-called "Brainport" region around Eindhoven that are now more important to the university's industrial links.

"Philips is smaller now, but lots of things have come from the Philips nest," says Steinbuch, who identifies semiconductor giants ASML and NXP and truck firm Daf as key local employers. "It's similar to the Cambridge region where you have a lot of high-tech start-up companies with strong links to the university."

The university employs 250 adjunct professors from industry to work one day a week alongside its own 230 full-time professors, and more than 70 firms have a presence on site.

On campus, students cut their teeth on real technological innovations. One project is to develop a remote-controlled robot capable of inserting a needle into the eyeball to perform retinal surgery.

With all master's and PhD programmes in English, TUE is now attracting hundreds of foreign students and its 8,000 student body is set to increase to 11,000 by 2020.

"There is such a demand for engineers that we just can't deliver enough," admits Hans van Duijn, the university's rector magnificus.

Delft University of Technology, the country's oldest and largest technical university, also boasts the top score in the industry income category of the É«ºÐÖ±²¥ World University Rankings.

Here, projects are under way to develop speed control technology for Nissan, refine drilling techniques for Shell and improve boat design for Damen Shipyards.

TU Delft has even established its own research branch in Beijing, specialising in energy-efficient LED lighting, which complements high-tech facilities in the Netherlands ranging from wind tunnels and flight simulators to a nuclear reactor.

But maximising industry revenue is only part of the story; the Netherlands' higher education sector has a strong track record in research. There are about 30,000 research papers produced each year listing at least one Dutch author, with an average of 73 publications in international scientific publications a year per 100 researchers - twice the global average, according to a report on scientific indicators by the Dutch education ministry in 2010.

These papers make up 2.8 per cent of the world's research publications, despite the Netherlands accounting for just 0.8 per cent of the population of the 18 major research nations.

Almost all papers are published in English and have a high citation impact of 1.33, which is 33 per cent above the world average, according to figures from the Netherlands Observatory of Science and Technology. This compares with 1.44 for Switzerland, 1.34 for the US and 1.26 for the UK.

From the early 1980s, "a clear difference was made between good and bad research", explains Dymph van den Boom, rector magnificus at the University of Amsterdam.

"All universities had to do good research to get their budgets. If they did more, they received more money. Less and you got less money. If people in charge feel that directly, it helps to raise the overall quality," she says.

Today, as in the UK, Dutch funding councils allocate public research cash for projects on the basis of competition, with grant applications assessed by external peer review. Lump sums are also awarded based on the quantity of PhDs completed at a university and historical factors.

An external peer review process similar to the UK's research excellence framework, known as the standard evaluation protocol (SEP), allows institutions to gauge the quality of the research they produce. Scientific and societal "impact", research policy and management are taken into account, but the results of the SEP, which runs on a rolling six-year cycle, are not used by the government or a central funding body to distribute cash.

Instead, universities themselves often decide to reward high-performing departments with extra funding.

Bert van der Zwaan, rector magnificus at Utrecht University, argues that universities in the Netherlands have also benefited from a high degree of autonomy, as institutions are free to spend their income according to their own priorities.

"There is a strong separation between government and institutions. You don't have to fight every step of the way - it is based on quality."

But in recent years, universities have been asked by the government to further consolidate their research strengths by specialising in particular areas.

For the University of Amsterdam, research priorities are an eclectic mix including international law, behavioural economics, astro-particle physics, brain science and cultural heritage.

The government hopes that this decision to sharpen the focus of universities will help the Dutch to become top players on the world stage, because although 12 of its 13 universities made the top 200 of the É«ºÐÖ±²¥ World University Rankings, none was in the top 50. (Utrecht, the top Dutch institution, was placed at 68.)

But this could be seen to go against a deep commitment to equality in Dutch culture, where "tall poppy syndrome" - the tendency to criticise others' success - is prevalent and team players are deeply valued.

"If you say you want to be the best, people think you are an arrogant prick," one senior professor told É«ºÐÖ±²¥.

Some argue that a consistently good higher education system is better than an average one peppered with a few exclusive enclaves of excellence.

Nonetheless, some universities are setting out on a mission to become the country's top dog. Utrecht - one of the Netherlands' largest universities with 30,000 students - has begun an aggressive drive to become the nation's undisputed leader.

Based at the institution's academic teaching hospital, the Utrecht Life Sciences project is looking to recruit world-leading researchers in health studies and create Europe's number-one cancer research centre. Regenerative medicine is another focus, helping to attract pharmaceutical giants GlaxoSmithKline and Genmab to collaborate in on-campus initiatives.

"We are putting a lot of money on the table to get the top people," explains Frank Miedema, dean of the faculty of medicine and vice-chairman of University Medical Center Utrecht. "It is a very un-Dutch thing to do. We are seen as very pushy, as cowboys. It goes against our [national] character.

"But if we want to put science in Holland on the map, you have to go this way.

"Some say it should be the Dutch Life Sciences initiative, but we want the best here at Utrecht. Competition is good at a national level - it's good that Leiden is also striving to be the best in science.

"By bringing the top people together (in Utrecht), they will go for the real problems, not just something you can produce a few papers on.

"We want to take chances and put our bets on people who are really good. That means dropping more mediocre research lines."

About 1.5 per cent of GDP is spent on tertiary education in the Netherlands, which is the Organisation for Economic Cooperation and Development average (2008 figures).

But adjusted for purchasing power, the $17,000 (?10,900) spent per student is well above the $14,000 OECD mean and matched only by the US, Canada, Switzerland and the high-tax Scandinavian countries.

However, extra cash will be hard to find in the future.

Many rectors insist that the consistent year-on-year improvements will help to boost Dutch institutions into the top 50 and even top 20 of the world's leading research institutions, but others believe that more radical reforms are needed.

Paul van der Heijden, rector at Leiden University, insists university mergers are the only way for the Dutch to break the US-UK monopoly of the É«ºÐÖ±²¥ World University Rankings' top 10.

Founded in 1575 with the motto "Bastion of Freedom", the Netherlands' oldest university boasts an enviable reputation in health sciences, astrophysics and law.

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At its peak in the 1920s and 1930s, visiting professors included the physicists Albert Einstein, Enrico Fermi and Paul Ehrenfest, who rubbed shoulders with home-grown Nobel laureates Hendrik Lorentz, Pieter Zeeman and Heike Kamerlingh Onnes.

But despite this proud heritage, van der Heijden argues that Leiden's future would be best served by an alliance with the nearby institutions at Delft and the Erasmus University Rotterdam.

Aligning Leiden's scientific prowess with Delft's technological expertise and Erasmus' business nous would create a "super-university" capable of competing with the world elite, he believes.

New cross-disciplinary courses and research would help to attract top research talent and students. For instance, Leiden's Asian studies department, which teaches languages, history and culture, could link up with the growing business school in Rotterdam.

In addition, a combined student body of 50,000 would provide scope for economies of scale through shared services without ever becoming too large.

Van der Heijden admits that the plan is "not a very Dutch thing to do".

"We are looking at a model similar to the University of California, where we see a lot of subsidiaries. The government will not invest more money in the next five or six years. Against that background, it may be smarter to cooperate, rather than compete against each other.

"Within the university, there is some scepticism, but many people see the opportunities," van der Heijden says.

At the modern campus university of Erasmus, named after the Rotterdam-born scholar, there is similar passion for the idea of joining forces with others to create a world-leading university brand.

"This is a world where the winner takes all," explains Pauline van der Meer Mohr, a former Shell and ABN Amro executive who is now president of Erasmus University Rotterdam.

"You have to be strong to attract top research talent and the best students. The more resources you are able to attract, the more you become a magnet for the top people. Dutch society is incredibly egalitarian and we cherish that. But given the strong infrastructure, there is now a case to create three or four top universities over the next 10 to 15 years.

"You would have us [Delft-Erasmus-Leiden] and one at Amsterdam [Amsterdam linked with the newer VU University Amsterdam]. Utrecht is resisting, but it has already set up links with Eindhoven. There could also be a cluster on the north-east flank of the country, including Groningen and Twente."

Universities located below the country's southern rivers - TUE, Tilburg University and Radboud University Nijmegen - have also been suggested as natural partners.

Such clusters would lessen the fierce competition for funds from the Dutch government, in which universities compete for money allocated on the basis of market share of students, adds van der Meer Mohr.

"It's a very frustrating zero-sum game that no universities like, but we have not been able to change it."

And the new super-institutions could also include the universities of applied sciences (roughly similar to the UK's pre-1992 polytechnics) that teach two-thirds of the Netherlands' 600,000 students, thereby creating better links between the two levels of the country's binary system.

"There would be a complete spectrum of courses, from two-year applied science courses to PhD schools. We are becoming more boundary-less. With a new generation of managers in universities, I think we can bridge some of the gaps between the systems," argues van der Meer Mohr.

"We see big chances ahead," Leiden's van der Heijden agrees.

Big plans in small packages

A growing number of small US-style liberal arts colleges are being set up on campuses in the Netherlands.

Pioneered by Utrecht University, these colleges break the Dutch model by selecting ultra-motivated students who are keen to have a broad cross-disciplinary undergraduate experience.

Taught solely in English, the BA courses allow students to study physics with philosophy, cognitive science with languages or biology with Classics.

While some universities endeavour to link their courses to the workplace in an attempt to guarantee "employability", these university colleges and their students eschew such an approach.

"It is an investment in lifelong skills", explains Rob van der Vaart, dean of University College Utrecht, who oversees a group of about 700 students out of Utrecht's 30,000 student body.

With low drop-out rates, a high ratio of international students and an intimate college feel, it is an "island within the university" and the perfect place to study, he insists, with academic exploration encouraged at every level.

Graduates have no trouble progressing to master's courses, van der Vaart adds, despite the emphasis on breadth of knowledge and study skills rather than subject-specific expertise.

About 30 per cent stay in Utrecht for further study, with 30 per cent leaving for other Dutch higher education institutions and 30 per cent going abroad for their master's. Just over 10 per cent enter the workplace directly after graduation.

According to van der Vaart, at BA level, universities "do not care about specialism - they look at the total package. When it comes to critical thinking skills, our students outperform their peers."

The success of the college, set around an attractive New England-style quad, has spawned many imitators at institutions including Amsterdam, Leiden, Maastricht and Tilburg.

Dutch treat: Maastricht University vaunts its foreign-student appeal

Maastricht University hit the headlines again this summer after inviting UK students who had missed out on university places to "go Dutch" amid the clamour of clearing.

But are students really flooding abroad? A total of 579 British undergraduate candidates lodged an application with the Netherlands' most international university, with 137 of them taking up a place in September. That was up from 49 who enrolled in 2010 and seven times the 19 UK students who began in 2009.

Given its undergraduate tuition fees of around ?1,500, applications to Maastricht are expected to increase again in 2012 when tuition fees in England rise to a maximum of ?9,000.

The university, which offers almost all its undergraduate courses in English, is happy to have more UK students, according to Martin Paul, president of Maastricht.

"We need a certain amount of native speakers - these English students are needed to improve quality," he says.

Although he denies actively targeting the UK market, he confirms that the university applied to join the Universities and Colleges Admissions Service last year, but was rejected.

"We have not put up adverts, but we have been getting publicity," says Paul.

"Maastricht is attractive because it is about learning in small groups in an international classroom.

"Anyway, we have a lot more students from Germany - about 3,000 - and 1,000 students from Belgium. We also have Spanish and French students."

Last year, 43 per cent of the university's students came from outside the Netherlands.

Lady luck rules: the Netherlands' admissions lottery

The Netherlands has an unusual undergraduate admissions system.

Introduced in the 1970s as a "fair way" of picking students, applicants to oversubscribed courses such as medicine and dentistry are required to enter a lottery for a place.

Under reforms made in 2000, applicants with the very highest marks gain automatic admission to courses, but the rest are divided into four bands according to their secondary school marks.

Their chances of gaining a place decrease depending on their grades. For instance, if 80 per cent of category B students receive a place, 53 per cent of applicants in category C will be assigned a place, and per cent of category E students will be admitted.

That means a "lottery-winning" student with the equivalent of three Es at A level could be sitting next to a straight-A student on a medical course, while a better-qualified candidate is forced to choose a less popular course.

"It's a ridiculous system and we want to get rid of it," says Bert van der Zwaan, rector magnificus at Utrecht University, who oversees all academic matters.

"It was a typical Dutch solution for a situation with a limited number of places and high demand. In 2013, Utrecht will adopt an alternative system where the quality and competence of the students count, and not the outcome of a lottery."

But others like the system, which saw 37,500 candidates apply in 2010 and 12,500 miss out on their first choice.

"If you select only on grades, you are missing out on creative people who think outside the box," insists Frank Miedema, dean of Utrecht's faculty of medicine.

"Our students perform, so I have no complaints about them.

"A lottery as such is not a bad way to select students. It may also bring some good. If I'm assessing two individuals from Groningen with identical grades, they will both have rehearsed their motivation speeches with their parents. They will say the same things. Is that really a more honest way?"

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