IRELAND RANKS 13th among 40 countries and regions in a new study which comprehensively evaluates Europe and the Unites States on innovation and competitiveness.

While in some categories the country scores poorly, overall Ireland makes a respectable showing, generally in the top 15. In several categories – corporate tax rates and in foreign direct investment – it is ranked number 1.

The report also ranks countries and regions on the basis of how much they have changed – improved or slipped – over a decade in each of the categories.

In the “change ranking” categories, Ireland is ranked first on government investment in research and development, with 52 per cent more funding going into this area during the assessment period.

But currently, it only comes 18th overall in the key category of RD, with the report’s authors noting: “In spite of Ireland’s economic progress, that country is actually very far behind in government RD, only barely ahead of China, and actually below the EU-10 (the accession countries).”

Ireland does do well on its change ranking for broadband internet provision, measured in terms of numbers of subscribers, where it comes third, with a huge 6,088 per cent increase in just three years, between 2005 and 2008. However, it comes in 15th overall for its current broadband infrastructure.

Ireland also does well in the category of “ease of doing business” (ranked 4), for its trade balance – exports set against imports – (ranked 3), and in the numbers who attain higher education (ranked 5th).

In the category of GDP per hour worked, a standard measure of productivity, “Ireland actually exceeds the United States (and ranks number 1), an amazing feat given its relative low levels two decades ago,” states the report.

In IT investment measured as a share of GDP, Ireland is 12th, just below Poland, and the report authors comment: “Given Ireland’s intention of becoming an IT leader, its performance is at only 80 per cent of US levels, suggesting that it, as well as most other nations, needs to ensure widespread IT investment in all sectors, not just focus on growing the IT industry itself.”

While Ireland does relatively poorly compared to the US in the number of researchers employed per capita (ranking 14th overall), it does better than Britain at 16th place.

It comes in at 13th for availability of venture capital but this represents a worrying 40 per cent decline in cashflow between 2000 and 2006. However, Ireland placed a respectable seventh for entrepreneurship, measured by the number of new firms set up in 2005 (the last year for which there are national statistics from a range of countries to enable a broad comparison).

The report, entitled The Atlantic Century: Benchmarking EU and US Innovation and Competitiveness, was produced by think tank and non-partisan research and education institute the Information Technology and Innovation Foundation in Washington DC.

In overall rankings, Ireland places ahead of Belgium, Germany, Canada, Austria and Australia. But among European countries, it lags Sweden at 2, Luxembourg at 3, Denmark at 4, Finland at 7, Britain at 8, the Netherlands at 11 and France at 12. Singapore is the top-ranked country and the US comes in at 6.

The report indicates that all other 39 countries and regions considered in the study are moving more rapidly towards a knowledge-based innovation economy than the US. The report warns that the lack of a co-ordinated national policy on innovation in the US is damaging US performance and competitiveness.

Europe will overtake the US in just over a decade if the situation remains static, say report authors Robert D Atkinson, director of the ITIF, and researcher Scott M Andes.

“If the EU-15 region as a whole continues to improve at this faster rate than the United States, it would surpass the United States in innovation-based competitiveness by 2020,” they say.

Along with making five strategy recommendations for nations and regions (see panel), the report authors note: “The rise of global economic competition means that the United States and Europe need to think of themselves as a big state (in the case of the United States) or a big nation (in the case of Europe), and proactively put in place national or continental economic development strategies.

“This particularly applies to the United States, where the prevailing view among many Washington policymakers is that the United States has been number 1 for so long that it will continue to be number 1.”

The European Commission needs to spur innovation by supporting science and technology and having a regulatory framework that supports innovation, the report says.

The report was researched and completed before the current economic crisis.

Ireland’s rankings

The study ranks 40 countries and regions.

Overall ranking:13

Change 1999-2009:18

Higher education:6

Science researchers:14

Investment, RD:18

Change ranking RD:1 (+52%, 1999-2006)

Venture capital:13

eGovernment:11

Broadband:15

Change ranking, broadband:3 (+6,088%, 2005-2008)

Corporate tax rates:1

Ease of doing business:4

Trade balance:3

Foreign direct investment:1

Change ranking, FDI:7 (-14%, 1999-2006)

What to do: incentives to innovate

• Put in place incentives for firms to innovate within their borders. "These should include robust RD tax incentives; incentives to invest in new equipment, particularly IT; and other policies that spur investment in the building blocks of growth, such as workforce development tax credits."
• Be open to high-skill immigration. "High-skill immigrants are the source of many new ideas and innovations. Countries that are open to high-skill immigration will be able to better succeed."
• Foster a digital economy. "Nations should not only expand public investments in IT in areas such as healthcare, energy systems, transportation, government and education, but also put in place the right regulatory frameworks to spur, not limit, digital investment."
• Support the kinds of institutions that are critical to innovation. "Nations need to expand funding not just for university research, but for the kinds of mechanisms and institutions that help foster commercialisation of research... and boost support for a host of efforts such as local economic development, entrepreneurship development, and workforce training."
• Ensure that regulations and other related government policies support innovation. "Too often, powerful interest groups (business, civic, and labour) fight against change and innovation, often under the guise of the public interest, but all too often the result is that progressive and positive innovation is slowed. Nations should ensure that their regulations, procurement, and other related policies tilt toward innovation.

Source: The Information Technology Innovation Foundation