Relatively little innovation in Irish manufacturing sector, report shows

INNOVATION ACTIVITY by manufacturers in the Republic of Ireland has remained almost static over the 15 years to 2005, despite substantial public investment, according to a study published by the Economic and Social Research Institute yesterday.

While the data examined suggested a moderate increase in product innovation activity, it also revealed a decline in process innovation activity, according to the paper, Ireland's Innovation Performance: 1991 to 2005.

The paper, which is published by the ESRI but does not represent its views, finds there was a steady increase in the proportion of "innovation-active plants" throughout the 1990s. However, the global economic downturn at the turn of the century had a disproportionate impact on innovation in the Republic's economy relative to that in Northern Ireland.

The introduction of new or improved products increased markedly in the period 2003 to 2005, but this was not found to be the case with process innovation, according to the paper.

The paper's authors - Dr Nola Hewitt-Dundas of Queen's University Belfast, and Stephen Roper of Warwick Business School, the University of Warwick - say it appears the economic downturn had a prolonged effect on innovation in manufacturing plants in the Republic, and, in particular, on the foreign-owned plants involved in high-tech export activities.

In the Republic, in particular, the proportion of plants engaging in process innovation actually continued to fall over the 2003 to 2005 period. "This contrasts sharply with increases in process innovation activity in Northern Ireland and [the Republic's] plants' renewed enthusiasm for product innovation. One possibility is that this marks something of a change in the nature of product innovation in [the Republic] with a shift towards more incremental product innovation which does not require related process change."

"In Northern Ireland, both product and process innovation increased in the post-2002 period so that, between 2003 and 2005, Northern Ireland had a higher proportion of plants than in [the Republic] undertaking process innovation. These trends provide some evidence of convergence in innovation performance between Ireland and Northern Ireland over the 1991 to 2005 period."

As the period covered by the paper coincides with a growing emphasis on the promotion of innovation by the industrial development agencies of both the Republic and Northern Ireland, backed by substantial public-sector investments on both sides of the Border, "it is perhaps disappointing that levels of innovative activity in both [the Republic] and Northern Ireland have not increased more rapidly," the authors stated.

In terms of product innovation, the proportion of manufacturing plants making product changes increased by only 5 per cent in the Republic and just over 7 per cent in Northern Ireland. The trend is even more disappointing for the proportion of plants undertaking process innovation, with a decline of almost 7 per cent in the Republic. Northern Ireland had a 7 per cent increase.