Exports fell a record 20 per cent in the first six months of 2003, according to the Irish Exporters Association (IEA).

The association warns that many companies risk being driven out of business unless the Government's commitment to making the economy more research and development oriented brings tangible benefits to businesses in the short term.

The IEA predicted a 13 per cent decrease in exports for the full year.

Although the level of decline is the heaviest recorded, it follows a period of unprecedented growth.

Sales are predicted to slip to 78 billion for the full 12 months, compared with last year's highest total to date of 90 billion. In contrast, exports in 1993 were worth 25 billion.

Admitting some exporters could have laid heavier emphasis on innovation during the boom years, the association said Irish companies had grown to expect and rely upon Government guidance - and now needed it more than ever.

The steepest slump came in exports to Britain where sales fell 48 per cent.

Diminished competitiveness due to rising wage and insurance costs was a major factor, according to IEA chief executive Mr John Whelan.

However, exports to the US held firm to become the largest single destination.

Exports to the US were 8.3 billion, 20 per cent of the total. Euro-zone sales slid 14 per cent to 18 billion.

While trade was expected to pick up moderately in the second six months and rally further next year, any recovery would be moderate without radical steps to address waning competitiveness, said the IEA.

Expressing concern that the push to nurture the Republic's research and development culture was too closely concentrated on third level, the IEA called for immediate and practical assistance for companies seeking to innovate and tap new markets.