State R&D funding 'may not be value for money'

ESRI Quarterly Report: The State may not be getting enough value for money from the funding it uses to promote research and development, according to a new study.

The research, published today in the Economic and Social Research Institute's (ESRI) new quarterly commentary, finds that the majority of "high-technology" firms have very limited interaction with third-level colleges that receive large amounts in research funding from the State.

The report's authors, Declan Jordan and Eoin O'Leary of University College Cork, note that third-level colleges received €599 million in research funding from State agencies such as Science Foundation Ireland in 2003.

State funding of research and development in third-level colleges should only be committed if a detailed analysis of economic costs finds that it is justified, the study concludes.

Equally, the authors find that most companies in high-technology sectors such as pharmaceuticals and computers have little or no interaction with support agencies such as IDA Ireland.

They do however have high levels of contact with other companies in their group, according to the study, which was funded by Enterprise Ireland.

The authors find that much of this interaction with other group companies does not occur regionally or locally and may thus be international.

This suggests, they argue, that the policy of promoting innovation by clustering suppliers, customers, competitors, third-level colleges, support agencies and high-technology companies on a local or regional basis may not be the most workable option for the Irish economy.

The Enterprise Strategy Group report, published by the Government last year, advocated "industry-specific intervention to support 'clusters' of related enterprise activities".

The National Spatial Strategy also recommended the creation of "gateways" with large clusters of national or international businesses.

Another study published by the ESRI today finds meanwhile that the Republic has a very weak culture of measuring the success or failure of industrial policy.

Research conducted by Helena Lenihan of the University of Limerick with colleagues Mark Hart of Kingston University and Stephen Roper of Aston Business School argues that a large proportion of companies receiving State grants would probably have generated the same level of economic activity without the funding.

They describe this phenomenon as "deadweight", reporting that 53 per cent of firms receiving grants from Shannon Development in 1995 reported "pure deadweight" in relation to monies received.