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Monday 25 September 2023 Dublin: 14°C
Column Without tax breaks, skilled workers and innovation, Ireland is Albania without the weather
We need more than documents and targets. We need a national shared vision on innovation, writes Martin Curley.

EVERY SECTOR, EVERY industry and every company is changing. Technology has disrupted the way businesses and customers interact, the way we communicate, the way we shop, the way we bank, the way we work.

Innovation is not something to be dismissed as just another business buzzword, but a real opportunity – and challenge – for the wider economy. A chain reaction of disruptive technologies, all arriving at the same time, is driving enormous creative disruption and the pace of change is speeding up, meaning many more industries are going to turn on their head.

Take the retail sector, for example. In the last decade, major US retailers, such as Sears and JC Penneys, have seen their market capitalisation drop by more than 80%. Meanwhile Amazon has seen its market capitalisation grow by 1,900%. And similar trends are evident in other sectors, and other countries.

Continuing to capitalise on change

Staying still is not an option. It’s vital for both individual companies, and the wider Irish economy, that we continue to value innovation and capitalise on the growth opportunities that an increasingly knowledge-based economy presents.

Ireland is an innovative country, but innovation is a continuous process. We need to keep pace with change, to continue to evolve, adapt and grow. Ireland has come a long way from a country that was still being electrified 40 years ago to one which is a now a tech manufacturing and innovation powerhouse in certain fields.

While Ireland has taken steps towards becoming an innovation leader, such as the creation of the Innovation 2020 strategy, there’s still some way to go. Recently Ireland was reclassified from an innovation follower to a strong innovator in the European Innovation Scoreboard.

Ireland continues to be a leader in attracting foreign direct investment. Compared to other European countries, we have a larger share of high and medium high-tech manufacturing, a higher number of top R&D spending companies and a higher average R&D spend by these companies.

Attracting innovative companies

The continued high rate of Foreign Direct Investment (FDI) investment into Ireland is evidence that innovation in Ireland is working. Attracting innovative companies to Ireland in turn breeds further innovation. Ireland has used a concentration of high tech manufacturing to its advantage, and has built an impressive R&D and innovation ecosystem.

Developing the right ecosystem, and providing the right conditions for growth, is key to the success of a knowledge-based economy. Our creative, skilled workforce, our favourable tax environment and our ability to attract major companies to our shores has helped to bolster our ecosystem, and support further innovation.

The presence of so many fast moving and fast growing digital businesses is testament to the vibrancy and strength of Ireland’s ecosystem. Companies such as Google, Twitter, MasterCard, Facebook, and many more have chosen Ireland as a key location. And in other sectors, such as finance, pharma and agtech, Ireland is also seen as a beacon of innovation.

Innovative innovation

The strength of Ireland’s ecosystem is well-aligned with the manner in which innovation itself is changing. A shift towards a new phase, known as open innovation 2.0 (OI2), has seen an increased focus on ecosystems and platforms, rather than companies and products.

Ireland is an exemplar of an OI2 innovation ecosystem, with the high tech community, academia and government working together to drive continued innovation. But Ireland is not, and must not, rest on its laurels.

Six years ago DJEI made hard calls on where we should invest our research funding. And we must continue to prioritise funding in this way. I just had the honour of chairing the advisory group for “Horizon Scan of Global Markets and Identification of Opportunities for Ireland and Irish based Enterprise” which will be a key input to a report being developed by the government to inform the the next wave of research prioritisation.
We are punching well above our weight on the international stage and have a great foundation to build on.

Challenges ahead

That said, while Ireland has reasonable rates of entrepreneurship compared to other European countries, we struggle to local create companies which scale up quickly. This is not a problem unique to Ireland but it is an area of concern. Our national business model is very dependent on FDI which creates some risks with respect to European tax harmonisation.

David McWilliams said recently that without the tax benefits, Ireland would be Albania without the weather. While this might be an exaggeration, we must work and enhance all of the levers which influence our innovation ecosystem and output.

Our skilled labour force, for example, must continue to be viewed as a reason for companies to locate here. That requires the education system to reflect the skills needed to succeed in a knowledge-based economy. The lack of an information technology subject in secondary education continues to be a big gap. The world is digitising quickly: US entrepreneur and investor Marc Andreessen says “software is eating the world”. Despite great teachers, our education system is not keeping up, meaning our future work force is at risk of falling behind the curve.

In the past having natural resources like oil and gas were hugely important for wealth creation. Today the primary resource for wealth creation is knowledge, which is not unique to any one country or geography.

We need a national shared vision

There are areas where Ireland is well positioned. Ireland has a great opportunity to become a leader in sustainable data centres, taking advantage of renewable resources and our temperate climate (for data centre cooling). To fully capitalise on this opportunity, our planning system needs to become more agile. Otherwise we risk losing important data centre development projects to other countries with the same FDI appetite and access to renewable power.

Ireland has a national innovation strategy, Innovation 2020, with many actions items targeted to improve our innovation ecosystem and research effort.

But we need more than documents and targets. We need a national shared vision on innovation, with buy-in across companies and different sectors. Our limited scale can make it a challenge to compete on competitiveness, but we can — and must — compete on creativity and innovation.

Martin Curley is Professor of Innovation at Maynooth University and is the chair of the EU Open Innovation and Strategy Policy. He is also Senior Vice President and Group Head for Global Digital Practice at MasterCard. Curley will be speaking at the IRDG annual conference on Innovation at Croke Park today, Tuesday 24 October. For more information see here

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