It could be a decade before the Republic matures into an innovation-driven economy on a par with world leaders in research and development, a leading expert in business strategy told an Irish Management Institute (IMI) briefing yesterday.
Prof Michael Porter, who is the Harvard university business strategy expert, said it could take 10 years before Ireland was on a par with countries such as the United States and Scandinavia.
In the intervening decade, the economy will experience growing volatility as cyclical trends from which the Republic has been immune since the mid-1990s return, Prof Porter told the meeting, organised in association with The Irish Times.
Although broadly upbeat about the State's prospects, Prof Porter, who is director of the Institute for Strategy and Competitiveness at Harvard, warned that "too many Irish take prosperity for granted". He pointed to a lack of political consensus about the importance of placing R&D at the heart of economic policy.
Unlike the dramatic leaps forward in the past decade, elevating the Republic to the top tier of world economies requires politicians to quietly "grind away", even if there is little personal glory to be reaped, Prof Porter said.
"Governments like sweeping policy changes but that is not what Ireland needs now," he said.
Among the "little things" that need to change if the Republic is to step up the value chain is a shift towards an R&D culture in third-level education, with world-class institutions producing highly qualified young people capable of innovating rather than merely following in the footsteps of others, he said.
Irish people need to become more willing to take risks. Fear of failure is too often an impediment in economies lacking a vibrant R&D sector, according to Prof Porter.
With the Irish economy having "moved sideways" over the past two years, the Republic will come under increasing pressure from emerging eastern European states, he said.
"Many of Ireland's traditional competitive advantages are eroding. Competing locations have caught up in terms of market opening and business-friendly regulations and tax structure," he said.
"With rising cost levels, Ireland's traditional position as a low-cost location to serve European markets will become untenable."
In a wide-ranging presentation to business leaders, Prof Porter cautioned against expecting a push towards innovation to deliver immediate benefits.
"Competitiveness is a marathon, not a sprint," he said.
The establishment of Science Foundation Ireland and other recent Government initiatives aimed at boosting private sector investment in R&D augers well, he told the briefing.
"The transition to an innovation economy is complex but within reach for Ireland... Success in the past bodes well for the country's ability to meet the new challenges. The country has identified many of the key steps that need to be taken - now it is a matter of persistence and implementation."
Prof Porter is co-author of the Global Competitiveness Report and has advised chief executives of major US firms and governments around the world.
The briefing was followed by the official opening of the IMI's new conference and residential centre by Ms Maeve Donovan, managing director of The Irish Times and a member of the institute's council.
