OPINION:We are gambling borrowed money on our fourth level scientists finding a technology they can bring to market, writes DECLAN JORDAN
THE RESEARCH merger which has been announced by UCD and Trinity sets itself some very ambitious targets. It hopes to create 300 new businesses and 30,000 jobs, based on an investment of €650 million from government, industry and private funding. The fundamental basis for thinking such a merger can succeed is that the new alliance provides a critical mass of research, including important infrastructure to support commercialisation of new scientific discoveries.
The alliance, according to the heads of the two universities, represents a "sea-change in how education and research sets up to create jobs". What is lacking from the statements on the alliance is any basis for the targets set and how the alliance is anything other than the science-push model that has, according to government sources reported in The Irish Times, failed to deliver the jobs expected from the previous €1 billion investment.
It is not the case that those questioning the science-push approach of Irish innovation policy are against any funding for scientific research at our universities. The questions raised have to do with appropriate use of scarce resources to generate business innovation, and whether there is a better model to achieve the goal of economic prosperity.
It is important to put the new alliance in some context. The proposed investment over 10 years is €650 million. MIT invested $650 million (€485 million) in research in 2008 alone. MIT averages between 20 and 25 start-up businesses each year. This means that the new alliance expects to have a rate of new business start-ups approximately 25 per cent superior to that of MIT, with approximately 13 per cent of the MIT investment.
It is also notable that in MIT the average rate of new technology ventures lasting five years is about 5 per cent. It's unclear whether the 300 new businesses arising from the proposed alliance includes the 95 per cent that will fail after five years or not. This means that either 6,000 new businesses will be established (with 300 surviving), or we should expect 30,000 jobs from the remaining 15 businesses - an average of 2,000 jobs each.
UCD and Trinity may not wish to be compared to leading US research universities, but their press release refers to the MIT model as a "driver for the alliance".
This context is important, even before discussion on whether it is wise to invest €650 million to generate 300 businesses (an average of €2.1 million each).
Of course, there is no reason why the jobs will be a significant increase in Irish job creation from investment in university-based research in Ireland, except for the additional researchers themselves. In terms of commercial return it does not matter where know-ledge is discovered, what matters is where it is exploited. Currently we are placing significant amounts of money - at a time when that money must be borrowed - on a gamble that our scientists in fourth level will discover a new technology that is commercially viable and, crucially, that they will also have the ability to get such a product to market.
The Vice-Provost of Trinity was quoted as hoping that a world-leading company on the scale of Nokia could emerge from the alliance. Is there any appreciation of how rare it is to achieve this? Is there any appreciation that the huge investments in this area correspond to little more than a high-risk gamble?
The reason that previous investments in fourth level research have not generated the hoped-for increase in jobs is not because of a lack of funding or critical mass, but because the "business model" is fundamentally wrong.
We cannot compete in terms of funding with other larger countries. Trying to do so is a waste of resources. Ireland is behind the curve in coming to this realisation. Prof Amar Bhidé of Columbia University argues in a recent book, The Venturesome Economy, that the US trying to maintain a lead by subsidising more research and training more scientists will do more harm than good.
He argues that the willingness and ability of businesses and consumers to effectively use products and technologies derived from scientific research is far more important for competitiveness and growth than having a share of that research. A nation's level of innovation depends on its entrepreneurs, managers, salespeople and consumers, not just scientists.
What does this mean for Irish innovation policy? The entire thrust needs to be rethought. More research does not equate to more innovation. We require greater training for business-people and entrepreneurs to identify market opportunities, very likely from overseas, which they can exploit to create jobs in Ireland.
Dr Declan Jordan is a lecturer in Economics at University College Cork