Nearly 94 per cent of software projects coming into the Republic now have a research and development content providing skilled employment and increasing the need for high quality third level education, according to IDA Ireland.

Addressing the conference of university rectors in Ireland in Belfast yesterday, Mr Frank Ryan, head of personnel at the IDA, said the agency was increasingly focussed on the future development on high-value and knowledge-based industries. For this reason, third level education system will be critically important and a fundamental element of competitiveness.

More than 53 per cent of overseas electronics companies in Ireland now have higher value functions such as R & D, marketing, back-office and other activities at their plants, compared to 40 per cent five years ago.

Mr Ryan, who is also head of organisational development at the IDA, said it was imperative that universities and other third level colleges continued their sustained improvement relative to the highest international standards.

A focus on meeting the skill needs in the economy and developing centres of research excellence with greater links to industry was needed. Mr Ryan said that, over the next five years, IDA Ireland wanted to see more value added, more R & D and more regional economic impact by multinationals. "We should not allow our positive national economic statistics to cloud strategic insight. The re-zoning of Ireland into Objective One and Transition areas reflects independent confirmation that regions of the country remain less developed and with high levels of unemployment."

Although Mr Ryan said much of the success of the economy was directly attributable to the Republic's policies in foreign direct investment, it was now time to re-appraise the forces underlying the state's competitiveness.

IDA Ireland sees the way forward as moving business and industry into higher value generating activities, increasing value-added through greater participation of higher skilled people in business and industry.