Despite Government talk, innovation culture yet to take hold

For all the Government's talk about turning Ireland into an innovation hub, figures from the Central Statistics Office released yesterday show that most research and development spending here is done by foreign enterprises.

They also indicate that despite playing host to global juggernauts such as Google, Apple and Facebook, the State spends less than the European average on R&D. According to the latest survey, businesses here spent just over €2 billion on R&D in 2013, which represented a 15 per cent jump on 2011, the previous year that figures were collated.

On closer inspection, it appears foreign-owned enterprises accounted for 65 per cent of this spend, equating to about €1.2 billion, while Irish-owned enterprises spent €700 million.

This raises serious questions about where our culture of innovation would be without foreign direct investment from the US, and how much of this culture is percolating out to the natives.

The survey is now carried out in all 28 EU member states, albeit up-to-date comparisons can only be made for 2011.

In that year, Ireland ranked 11th in terms of R&D intensity with a figure of 1.03 per cent – the metric expresses R&D expenditure as a percentage of gross domestic product. This was well below the average of 1.24 per cent. Finland had the highest intensity in the EU with a figure of 2.56 per cent, while Cyprus has the lowest, at 0.07 per cent. Comparable figures for 2013 show that the intensity for Ireland has increased to 1.16 per cent.

The figures show R&D spending here in 2013 was highest in the services sector which accounted for 57 per cent of all expenditure, equating to about €1.2 billion.

They also show the largest 100 enterprises in terms of R&D spend accounted for over €1.4 billion (70 per cent) of the total spend in 2013. Of these top 100 enterprises, the CSO calculated 80 per cent of the spend could be attributed to wholly foreign-owned enterprises.

Small enterprises, those with fewer than 50 employees, the backbone of the Irish economy, spent €445 million, accounting for just 22 per cent of the spend. Ireland has long way to go before it can tout itself as an innovation hub.