Firms 'must focus on innovation'

Firms must focus on innovation, investment and education if the State is to maintain its place in the global economy, said Forfás chief executive Martin Cronin.

Speaking yesterday after the launch of the agency's annual report, Mr Cronin said that while Ireland was doing well, it was important to recognise that the rest of the world was not standing still.

"At a time when everything is going so well the temptation is to say there are no issues to address," he said. "But to continue doing well we have to make the right types of investment. We have to keep investing aggressively in education, skills and infrastructure and we have to build investment capacity."

Ireland's strong economic performance continued last year, with GNP - the value of goods and services produced by Irish-owned entities - estimated to have grown by twice the OECD average, while employment is expected to exceed two million for the first time this summer.

Total investment in research and development rose 7.3 per cent last year, the report showed, boosted in the most part by increased research and development (R&D) activity in the higher education sector. Total spend on R&D was €1.9 billion.

In the past, this strong growth has been fuelled by increased consumer and Government spending as well as strong construction growth.

However, this has led to an increase in Ireland's cost base and means businesses now need to take on a new focus, according to Mr Cronin. "Companies need to develop their ability to create new products and maintain a strong focus on growing productivity," he said. The report shows there has already been a shift in the profile of businesses, with more growth in jobs and exports in the newer sectors of medical devices and software.

The report also shows that employment in firms backed by IDA Ireland, Enterprise Ireland, Shannon Development and Údarás na Gaeltachta stood at 298,372 last year, up 2,879 on the prior year. Corporation tax payments were €5.5 billion, with firms backed by State agencies accounting for half of this.