Irish firms spent €917 million on R&D in 2001, an increase of €133 million from 1999, according to the latest report from industrial development agency Forfás.
The average annual real growth rate for R&D spending was 4 per cent for the period 1999-2001, compared with 11.8 per cent for the previous two-year period.
Speaking at the publication of the report, Forfás chief executive Mr Martin Cronin, said: "This report highlights a number of important issues for Ireland as a location for R&D and for our future enterprise development."
Mr Conin said: "Business is increasing its investment in R&D activities, but not at a rate which will improve our position relative to other countries."
The report also found Ireland spent just under 1 per cent of GNP on Industrial R&D in 2001.
"This is in line with the relative expenditure in 1999 and compares to an EU average of 1.2 per cent and an OECD average of 1.6 per cent," it said.