The Paris based think-tank says we need knowledge based capital

By Will Goodbody, Science and Technology Correspondent


It’s strange how sometimes two studies, on the same topic, can be published within hours of one another; but with markedly differing conclusions. That was the case last week and the topic was innovation.

When it comes to getting the most out of innovation, Ireland is almost top of the class in Europe. That’s according to the European Commission’s proposed new “Indicator of Innovation Output”, which was published late last week. With a score of 124.8, well above the EU average of 100, the tracker places Ireland third in the table, and suggests we are good at bringing clever new ideas to the market. And as the Commission points out, that means jobs and an improvement in competitiveness.

Only four countries topped the 120 mark – Sweden, Germany, Ireland and Luxembourg. Not a bad league to be in on the face of it. The new index evaluates four key areas – technological innovation, employment in knowledge intensive activities, competitiveness of knowledge intensive goods and services and employment in fast growing firms of innovative sectors.

But around the same time as the Commission was publishing the findings of its first survey, the OECD made public its latest economic study of Ireland. And it clearly suggests that we could and should do more to improve our innovation record.

It acknowledges that with good universities, infrastructure, well educated workforce, etc, Ireland scores highly in international innovation scoreboards. It also says the overall policies to boost innovation and entrepreneurship are on the right track.

Ireland has made good progress in building up its scientific capabilities, it says. The increase in government research funding over recent years, the establishment of Science Foundation Ireland and the introduction of an R&D tax credit have all helped, it claims. It also suggests the government shift towards research prioritisation and the funding of applied research is in line with the trend in other OECD countries.

But despite this, it says, Ireland’s innovation capacity still remains weaker than in other small advanced OECD countries, like Sweden, Austria and Switzerland. Investment in knowledge based capital could be made a more dynamic source of growth and jobs it claims. It warns Ireland’s innovation system is young and risks moving too fast with too few resources. It says a lack of certainty about which policy tools are most effective means government must stand ready to re-allocate resources where needed. This would require rigorous evaluations of programmes, a system of indicators and the shutting down of those that aren’t delivering – perhaps through sunset clauses, it suggests.

The international economic think-tank also proposes that a move from “bricks and mortar” to knowlegde based capital is the way to rebuild the economy. The innovation strategy should be simplified, it says, “with a drastic reduction in the number of government agencies involved in funding innovation” – 11 at last count. It suggests a small number of agencies would be sufficient, with one dealing with applied research and innovation, and another with science and basic research. A high level coordination committee is also needed, it says, to prevent gaps or duplication. All this, it says, would allow a better focus on strengthening links between the business and academic communities, it adds.

It also calls for the development of applied research centres. The Paris based organisation agrees with the strategy of focusing on attracting high-tech multinationals, but adds that there could be more “spillover” between such companies and domestic SMEs – a sort of knowlegde, skills and overall innovation transfer. Firms involvement in patenting intellectual properties is below the average of 15 other OECD countries in nearly all industries, it points out.

And despite all the talk about Ireland being a tech-hub, the OECD starkly warns that Irish firms need to become more tech driven. Tech innovation is low by EU15 standards, it says, especially in large Irish firms over 250 employees. It suggests modernising production processes is not enough, and Irish companies need to get stuck into technological patenting, cooperating with outside partners and with other businesses.

So a tale of two studies when it comes to innovation, it seems. And clearly there are significant messages in both. We are trying, we are doing better. But if we want to reach the top of the class, we’ll have to do more.