Investing in ICT research is critical for the future

The information and communication technology (ICT) industry has been one of the fastest growing sectors in the Irish economy of the past decade.Employing 90,700 people in 1,300 companies - up from 19,000 in 1990 - the sector has been a primer of the State's swift economic development over the past decade, with ICT product and services exports contributing 16 per cent, or €31 billion of total GDP in 2001, the most recent year for which figures are available.

ICT is also the sector that has given the State its highest profile internationally as a place for inward investment, giving the Republic a string of accolades that politicians like to cite in speeches here and abroad. We are the largest exporter of software in the world; seven of the 10 largest ICT companies have a substantial base here; a third of all PCs sold in Europe are built here.

Yet all this is built on a rickety foundation, with no guarantee that the impressive structures seen above won't collapse in the future. The embarrassing truth is that until very recently, an economy basing a good part of its future on science and technology had one of the worst records for doing the economically-sustaining creative work - the research and development - needed to sustain inward investment and generate the high-value jobs needed in a globalised world. Now, more than ever, low level manufacturing will up sticks and go elsewhere.

But Ireland until 2002 was investing less than 1.5 per cent of GDP in R&D, one of the lowest figures in the EU, and disastrously low for an economy that was, at the same time, both heavily dependent on the ICT industry for its economic strength and desirous of becoming a front-running "knowledge economy".

According to Forfás figures, the R&D spend in all sectors actually declined 4 per cent overall, in the years from 1997-99, and from then to mid-2002, Forfás said the figures had not improved. Yet these were the years when the technology sector - which, along with pharmaceuticals, accounted for 75 per cent of all R&D - was growing most strongly. The neglect of R&D funding, called for regularly during those years from both industry and academia, make it seem as if the State was betting on good luck rather than brain power and innovation to generate its economic future.

In a recent report on technology and creativity from Demos, the independent think tank and research institute, Ireland scored poorly: we have produced few patents, especially in cutting edge areas of technology, and are in the bottom five of 15 countries, just ahead of Italy, Spain, Portugal and Greece.

We are in the same position in the amount of GDP spent on R&D, at just under 1.5 per cent, or 1.01 per cent of GNP. According to Demos, this along with other measurements, means we have poor chances of jumpstarting that knowledge economy unless we get our R&D skates on.

Well-known American economist Dr Jeffrey Sachs, director of the Centre for International Development at Harvard University, told Irish business leaders at the Irish Management Institute's annual conference last year that Irish R&D spend was far too low for the economy to develop into a knowledge economy, and should be increased to 3-5 per cent of GDP.

In other words, while the technology companies may be here, little R&D has gone on in them (though this is gradually changing at some of the larger companies, such as Sun and IBM, for example). The recent announcement of the arrival of eBay underlines the problem: while the job numbers may be high (eventually up to 700), the value of the jobs is low and easily moved elsewhere - back office work for PayPal, the internet payments arm of the company.

"This is the core of the paradox of Ireland's image as a tech-based economy," said a report in February from the National Competitiveness Council, Competitiveness Through Innovation. The State has an "absence of high levels of innovation activity and research investment to back up that image".

The Annual Competitiveness Report from the council adds: "Notwithstanding the hugely increased allocations to research under the National Development Plan 2000-06 (which includes Science Foundation Ireland spending), the report ranks Ireland only 11th out of 16 countries for gross domestic spend on R&D."

The bulk of R&D spending on ICT from the State comes from Science Foundation Ireland, which has a €646 million budget going to numerous sectors that fall under a general technology and science aegis. Of that amount, roughly 50 per cent goes towards ICT projects in hardware, software, networking, nanotechnology, wireless technology and other areas (the other 50 per cent of funding goes to projects in physics, chemistry, pharmaceuticals and other branches of science).

It may sound like a huge figure, but the foundation's director, Dr Alastair Glass, is more cautious. "€646 million is a huge number for Ireland, and per capita, it is a good number," he says. "But €646 million in terms of research spending in the world, is small."

Therefore, it is important to choose projects which identify and build upon existing or developing research strengths in ICT in the State, he says, and find a good coupling between industry and academia.

That is the heart of the foundation's philosophy: "We need to brand Ireland as strategically important in select areas. We also need to fill gaps in the portfolio," he says. "And there needs to be a much closer coupling between Irish academia and industry."

This view is echoed by the National Competitiveness Council in its report, and has been noted by industry and academia. A recent open forum held by the Irish Software Association heard Ms Bernie Cullinan, chief operations officer of Performix Technologies, say: "There is very little effective collaboration between the Irish software sector and third level institutions but we believe there is tremendous opportunity to sharpen Ireland's competitiveness and to generate research that is commercially viable."

One point that has curtailed closer involvement between the industry and academic sectors is the lack of a legal framework for commercialising and patenting research, Prof Kevin Ryan, of the Department of Computer Science at the University of Limerick said, but such work is under way, according to the Science Foundation Institute.

The head of computer science at UCD, Prof Mark Keane, says the Republic unfortunately started from "a low base" in doing tech-related R&D, and has had a struggle to catch up with its high-tech industrial image.

Now, SFI funding is helping change the way academia works with industry, he says, and has helpfully nudged (some might say pushed hard) to get academics in similar areas to work collaboratively. This has encouraged clusters of expertise to form, which Prof Keane thinks will be highly beneficial.

But he is concerned that software research remains "less well-funded than it could be". Many industry and academic observers agree - funding has tended to go to "big projects" in sexy tech areas like nanotechnology or grid computing or work with sensors - all of which are tangible things - rather than software, which is by nature intangible.

Yet according to Government and industry figures, the indigenous software sector produces the highest value jobs in the State, those elusive knowledge jobs based on brain and high skill levels.

Prof Dr Keane's view is that the Republic has "a reasonable number now of very good research teams (in software), though not all of them yet are funded."

But what about tomorrow? NDP funding runs through 2006 - around the time of a new government which may not champion R&D in the same way the Tánaiste, Ms Harney, has (SFI is widely - and often, thankfully - recognised as one of her pet projects). And for that matter, Ms Harney may wish to move to a new area in any Cabinet shuffles, leaving SFI vulnerable.

Dr Glass says: "We know the Tánaiste is a very strong advocate of SFI and a very strong and eloquent advocate of R&D. But we need to convince the Government. However, the Government recognises that Ireland is in a delicate situation now. We've grown the economy on the manufacturing sectors, and everyone has seen that they can move overseas."

He considers for a moment, then adds: "It's very easy to imagine that Ireland could slip backwards."