REVISED ESTIMATES of the amount businesses in Ireland spend on research and development (R&D) show a markedly more positive picture in 2010 than earlier estimates.
The total R&D spend by all companies operating in the Republic in 2010 stood at €1,833 million. This amounts to a fall of under 2 per cent according to the Central Statistics Office. Estimates in March pointed to a large double-digit decline.
Given the weakness of the domestic economy and continued difficulties accessing credit, the small decline suggests the most innovative parts of the economy are weathering the recession well.
Figures from last year reinforce this interpretation. The €1,868 million spent in 2009 was an all-time peak. RD spending by business rose in 2009 compared to 2008 by 16.5 per cent. This came about despite the very deep decline in the overall size of the economy in that year and extremely difficult financing conditions as a result of the banking crisis.
The new figures give cause for optimism both because spending on R&D remains at historically high levels (in 2001, for instance, it was less than half the 2009-10 levels) and because of the importance of such expenditure. R&D spending by companies is central in generating innovation in both new products and processes. These, in turn, raise productivity of workers and the wider economy. R&D spending is among the most important hard indicators of the development of the wider “knowledge economy”.
Yesterday’s figures do not include the significant amounts the State spends on R&D.
Of the estimated €1,833 million spent last year on R&D by business, half went on labour costs - mainly wages and salaries of researchers.
The total R&D labour bill last year reached €966 million, an increase on 2009 of 2 per cent. It was one of the few components of the overall spend to grow last year.
Capital spending on R&D, which includes investment in R&D capacities such as laboratories, computers and software, stood at an estimated €301 million last year. Capital spending accounts for about a fifth of total business expenditure on R&D.
While that proportion of capital spending in the total R&D spending rose rapidly over the last decade, it fell back slightly last year. Capital spending declined by 8 per cent on 2009 .
