Building on a wealth of knowledge

While the economic crisis has forced cuts in spending, a return to the vision of the National Development Plan in relation to science and technology is critical, writes PATRICK CUNNINGHAM

AT THE PEAK of the recession last year, the Government commissioned two important reviews – the first on innovation, and the second on the higher education sector. The first of these will be launched today, and the second will follow later.

It is entirely appropriate that we should use this time of recession to take a critical look at these two dominant elements of our ambition to build Ireland’s future prosperity on a knowledge-based economy.

Other strategic initiatives of the past 50 years have paid off handsomely. They include the commitment to international trading, free secondary education, development of the Institutes of Technology, and expansion of the University network. The programme to become internationally competitive in research and innovation is the logical next phase.

We are not alone in aiming to build our future as a knowledge-based economy. Last year, US president Barak Obama said, “Science is more essential to our prosperity, our security, our health, our environment and our quality of life than it has ever been before”.

He went on to announce massive increases in public support for a range of agencies and activities, and to commit the US to annual investment of more than 3 per cent of GDP in research and development. The latest EU policy document, issued last week by President José Manuel Barroso, restates the Lisbon agenda commitment to the same target, but now aimed at 2020.

Ireland’s growing investment in science and technology is unashamedly a part of our economic policy. In fact, two-thirds of this investment is made by business firms. The one-third that is public investment is a strategic support for that.

The economic justification of this public investment rests on two realities. The first is that most of the wealth of the country rests in its intellectual capital. A formal study by the World Bank a few years ago estimated that just 3 per cent of the wealth of Ireland lay in its natural resources, primarily its farmland. A further 14 per cent is the capital that we inherit from previous generations – such as roads, railways and buildings. The remaining 83 per cent is in the knowledge and skills of our citizens, and the collective knowledge, competence, experience and memory contained in our institutions. In other words, in our knowledge economy.

The second justification is that the broader goals of society are only achievable if we have the resources to deliver them.

Improvements in health, happiness, security, equality and cultural richness can flow from increased wealth. GDP growth is therefore not the endpoint of our investment, but the enabler of these multiple endpoints. In this sense, it is a broadly reasonable objective for public investment in the knowledge economy.

In the decade to 2008, public investment in science and technology grew steadily from €320m in 1999 to almost €1bn in 2008, and went from 0.30 per cent to 0.63 per cent of GNP. This was paralleled by business investment in R&D, which grew at the same rate. The European Innovation Scoreboard, which measures investment in and benefit from R&D, shows that this has brought us to a position about half way up the list of the 15 EU states.

As the economy recovers, Ireland’s resumption of planned growth in its R&D capacity should have the objective of matching the leading countries such as Finland, Sweden, Switzerland and Denmark. This should be achievable within a decade.

This year’s total public expenditure will be roughly €60 billion. Three-quarters of this spend is to sustain current services, social needs, health and the general standard of living. In other words, spending for today. One quarter is investment in our future – 12 per cent on physical infrastructure, 13 per cent on education and 1 per cent on science, technology and innovation. This 1 per cent is our seed corn. The economic crisis has forced a crash reduction in public spending across the board – including allocations for science and technology. The critical thing is to return to the vision of the National Development Plan in an ordered way.

At the same time, we should use this period to look critically at the structures that have evolved over the past decade to extend competitiveness and accountability in the programmes, and to strengthen the support for linkages between public research and business innovation.

Prof Patrick Cunningham is the Government’s chief scientific adviser

See also: Innovation Task Force report in Business