Innovation and Innovation Policy in Ireland
Innovation and Innovation Policy in Ireland 
Overview of Innovation Policy
A short Description of main challenges faced
Challenge 1: To ensure the performance of the HE sector achieves its targets
The HE sector has now being in receipt of significant research funds since the year 2000. HERD spending rose to €600m in 2006, up from €492m in 2004. The HERD spending intensity ratio rose to 0.40% of GNP in 2006, slightly above the EU27 average. Given the current economic position additional funds are unlikely to be provided over the next 3 to 4 years. Thus the focus must now be on the deliverables from this investment to date and the maintaining the investment in the future. It is important that a measuring system be put in place and the anticipated outputs monitored, such as, number of successful PhDs, patents and other IPR, spin-out companies created, and growth in employment and companies in the third level incubation centres.
Challenge 2: To maintain the level of innovation in the private sector
Recent trends for BERD (Ireland is 20th in the EIS) suggest that BERD is unlikely to meet its Lisbon target by 2013. Contraction of GNP in 2008, forecasted in 2009 and 2010 will undoubtedly change the BERD percentage of GDP. It is difficult to predict the outcome with any degree of reliability as employment is currently contracting very rapidly and the number of R&D performing companies is likely to decline. The government continues to use a wide range of support measures to encourage and stimulate more innovation in the private sector, e.g., the tax credit has been increased and a new tax relief scheme relating to the purchase of intellectual property is currently being developed. Unfortunately the impact of the recession on the services sector, particularly the financial sector, is likely to reduce the level of innovation in the shorter term.
Challenge 3: To build the internal company capacity to innovate
The current recession provides a good opportunity to renew the efforts that were being made to stimulate internal company capacity to innovate. Those companies that successfully meet the challenges of the recession are likely to be better positioned to become more innovative than heretofore. It is important that the measures to stimulate further development encompass an innovation approach over the next few years. If resources are available it would be useful to undertake a review of innovation supports to determine which have the greatest impact in the different sectors of the economy. Over 25% of the Irish labour force requires significant upskilling if they are to participate in the evolving knowledge economy. Success of this strategy will be evidenced by more new products (4.3) and higher innovation expenditures (3.3) in the EIS.
A summary of innovation governance and policy trends
Government policy over the last year has reaffirmed its commitment to the key role of innovation in pursuit of its long-term policy aim to create a knowledge society in Ireland by 2020 despite the current economic downturn. Since 2004, the Irish STI governance system has consisted of a Subcommittee on STI of the Cabinet (chaired by the Minister for the Department of Enterprise, Trade and Employment - DETE), a high level Interdepartmental Committee of senior civil servants, a Chief Scientist to the Government and the Office of Science, Technology and Innovation (OSTI) of the DETE. The key targets[1] may take longer to achieve given the severity of the current recession in Ireland (see the endnote on the Irish economy[i]).
Because STI is now a subset of Economic Renewal relevant Ministers will report regularly and bring forward new proposals on the key action areas to the Cabinet Committee on Economic Renewal, which is chaired by the Taoiseach (Prime Minister). The Cabinet Committee will be supported by the work of the National Economic and Social Council (NESC) and by regular analysis from the National Competitiveness Council (NCC). Time will tell how this new process works with the existing structures. In addition, the Deputy Prime Minister and Minister for Enterprise, Trade and Employment is establishing an Advisory Council of Business Leaders who will report regularly to her and the Cabinet Committee on measures the Government can take to return the economy to a sustainable growth path in line with the knowledge society vision.
Suggested future actions for innovation policy
The key governance challengeis to maintain the longer term strategy while stimulating short term innovation and competitiveness. Many useful measures are already in place.
New developments suggested are:
q One particular issue arises from the Strategy on STI (2006) - the lack of a Technology Agency to work with industry as recommended by the Enterprise Strategy Group (representing indigenous industry) in 2004. This has not happened yet.
q Knowledge Transfer measure to provide Master/PhD support for in-company R&D based on the UK Teaching Company/Knowledge transfer scheme with support from the Third Level institutions. The objectives would be to increase the number of R&D performing indigenous companies; and to support the establishment of new R&D units in private companies.
q A support scheme for Stage II High Potential Start-Ups (HPSUs) to establish their overseas presence (i.e. a young Gazelles programme). Also the annual number of first stage HPSUs needs to be greatly increased.
q Better define the role and contribution of Third Level institutions in National and Regional development (at NUTS III level).
One new trend is the effort to make the Third Level sector an active part of the NIS. This means that specific innovation roles are being assigned to Ireland’s two tier HE sector. This is only beginning to happen and the eventual configuration will depend, in part, on the responses of the Third Level institutions.
[1] To increase GERD from 1.4% to 2.5%; BERD from 0.9% to 1.7% and GOVERD from 0.4% to 0.8% of GNP by 2013.
Following average GDP growth of 6% (1995-2007), economic activity dropped sharply in 2008 (-2.3% of GDP) and Ireland entered into a recession exacerbated by the world financial crisis and subsequent collapse of the Irish property and construction markets. GDP in 2009 is likely to fall by more than 9.2% and wages and salaries have already declined in the private sector by 10-20% in many cases. Consequently, the Irish economy faces the following major challenges:
· Bridging a gap in public finances of €14.5 billion by 2013 (2009 budget deficit is likely to be 13.5%);
· Rescuing the Irish Banking system - estimated cost of €24 billion (source: IMF, 2009). Since 2008, the government has guaranteed all bank deposits, re-capitalised the banking system, and nationalized one bank. It is currently planning to purchase the Irish banks’ toxic assets.
· Increasing employment – unemployment is currently 11.4% (April 2009) and likely to rise to 15% by year end due to a combination of the world wide recession (decrease in exports generally), appreciation in the value of sterling (our main indigenous market) and the further globalisation of MNEs in Ireland (with jobs moving to India and Central Europe).
The recent supplementary budget has focused mainly on severe tax increases and some spending cuts. The response of the government to calls for more stimulation has been to maintain high capital expenditure (€7.3 billion to support construction jobs), set up a special fund for new start-up investment of €500m. , maintain the innovation investment, and introduce tax relief for the purchase of intellectual property. Many commentators and opposition politicians regard these stimulation actions as too little in the circumstances.
| Annual Country Reports |
 Country report 2009 for Ireland
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| Country report 2008 for Ireland
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| Country report 2007 for Ireland
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| Country Report 2006 for Ireland
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| Country Report 2005 for Ireland
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| Country Report Ireland September 2004
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| Ireland - Trend Chart Country Report, September 2003
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| Ireland - Trend Chart Country Report, March 2003
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| Ireland - Trend Chart Country Report, October 2002
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| Ireland - Trend Chart Theme-specific Country Report, May 2002
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| Ireland - Trend Chart Country Report, November 2001
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| Ireland Trend Chart Country report June 2001
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| Ireland Trend Chart Country Report Dec 2000
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| Ireland Trend Chart Country Report June 2000
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| Latest TrendChart Deliverables |
| Workshop Briefing Ireland 13_2006 |
| Workshop Briefing Ireland 11_2006 |
| Workshop Briefing Ireland 10_2006 |
| Workshop Briefing Ireland 8_2005 |
| Workshop Briefing Ireland 7_2005 |
| New Support Measures |
 IE 34 Innovation Partnership Initiative |
| IE 74 Stimulating Business Innovation |
| IE 19 Business Angels Database |
| IE 17 National Skills Awareness Programme |
| IE 16 Discover Science & Engineering (DSE) |
Who Is Who
Senior Official(s) for Ireland
Jos A Evertsen
Correspondents for Ireland
Brendan Wafer
Search Who's Who
Innovation Performance
Performance in Innovation Scoreboard 2008Find Out More
List of relevant websites
