Irish exporters increased sales by €1.3 billion last year despite the world economic slowdown, the annual report from Enterprise Ireland reveals.But renewed emphasis must be placed on research and development if the Republic is to build overseas markets, cautioned chief executive Mr Dan Flinter.

With 105 Enterprise Ireland supported companies going out of business last year, it is clear that only the most competitive and innovative can hope to thrive, he said.

Mr Flinter said: "We are witnessing a sea change in Ireland's industrial development. We no longer have a low-cost, low-wage economy and the days of securing sales for 'me too but cost less' products and services are well and truly consigned to history."

He added: "The future lies in becoming smarter and faster at the commercialisation process to generate new waves of products and solutions that will quickly meet market-driven demands."

Internet and communications technology companies increased overseas sales by 18 per cent, while life science and chemicals sectors posted a 10 per cent rise.

Prepared consumer foods, which Enterprise Ireland has identified as a key growth area, saw revenues climb 15.6 per cent.

However electronics fared badly, with exports slumping 27 per cent. Overall productivity increased by 4.7 per cent.

Continental Europe proved a key growth driver with sales up 6.4 per cent to €2.6 billion. Software and services companies saw exports to Europe rise 39 per cent while prepared foods upped sales 24 per cent.

There was also substantial growth in exports to Britain with an overall growth of nearly €5 billion. But exports to the United States dipped 15 per cent to €1.3 billion, due to the slowdown.