Ireland has bounced back from the crisis to become one of the OECD’s most dynamic economies. A key help has been the continued inflow of capital investment from abroad, allowing the country to bolster its position as a European hub for the likes of IT, finance, pharmaceuticals, engineering, and more. Ireland has been an attractive destination for global high-value investments for decades, yet its own innovation system lags that of other similar-sized OECD countries. Closing the gap would strengthen the country’s long-term outlook, but how can this be done? In our OECD Observer Roundtable, we put the question to a distinguished panel representing a range of perspectives:
What would you do to promote innovation in Ireland and what policies would you like to see introduced?
Towards recognising and rewarding innovators
Julie Sinnamon, CEO, Enterprise Ireland
For Enterprise Ireland (EI), “innovation means business”. There is clear evidence that innovative companies perform better, grow quicker and are more sustainable. Innovation is one of the four pillars of EI’s strategy to grow Irish industry.
To harness innovation for economic impact, companies need a blended suite of interventions. This must be market-led and market-informed, and given that the majority of our clients are small and medium-sized enterprises (SMEs), it must also be impactful for all companies and at all stages of development.
EI’s direct innovation-building interventions include financial assistance with in-company research and development (R&D) and business processes through to innovation management training. When dealing with an all-pervasive process, and driving it with multiple interventions, high standards and regular programme reviews are vital for ensuring the optimal impact from taxpayers’ money. The recent European Committee for Standardization in Innovation Management will help our client companies to benchmark and manage their innovation while providing a clear framework for improvement.
One important facet of innovation is the connection of companies to external sources of innovation, and this connectivity is a key indicator of innovation intensity. Ireland’s publicly funded research system has an important contribution to make as a significant source of disruptive opportunities and access to globally connected, innovative people. EI provides research commercialisation funding, commercialisation support services (to close the “investability” gap) and co-financing for market-led industrial collaboration. Such support must also be market-led, executed using commercial practices and in an environment that is as “industry-like” as possible.
Given that success in innovation is dependent on people, it is imperative that researchers from the Irish publicly funded research system participating in these activities are properly recognised and rewarded, and this requires some more work. In addition there is a substantial contribution made to the research system by researchers who are not Irish citizens, with a significant proportion of those being from countries outside the European Economic Area. Given the global competition for talent, more needs to be done to ensure that those researchers, where willing, get the opportunity to contribute to economic impact in Ireland when they finish their research.
A 10-point plan
Tom McDonnell, Nevin Economic Research Institute, Dublin, Ireland*
The economy’s innovative capacity is a function of education and skill levels, government policies that support research and development (R&D), and the quality of capital markets, among other things. The government has a critical role to play in this regard.
Innovation and R&D are fundamental determinants of international competitiveness, productivity gains and economic growth. Ireland’s gross domestic expenditure on R&D was just 1.6% of GDP in 2012 compared with 2.4% for the OECD and 2.8% for the US. Combined government and higher education spending on R&D according to the OECD was less than 0.8% of GDP in 2012 compared with 1.1% for the EU and 1.2% for the US.
A 10-point plan might look like this:
- Increase government and higher education spending on basic and applied research, targeting 1% of GDP.
- Provide incentives (such as subsidies) to take up science, technology, engineering and mathematics courses at undergraduate and postgraduate levels.
- Establish a state investment bank to raise affordable funding for innovating enterprises, including seed funding for high-potential start-ups.
- Reform bankruptcy laws to not overly penalise failure and risk-taking.
- Address market failures in the provision of high-speed broadband access.
- Increase education budget for early years learning (targeting disadvantaged households as a priority).
- Reform the patent system to prevent market incumbents from locking in advantages and excluding new entrants, and shorten patent protection in the IT sector.
- Provide grants for adoption of new technologies by small and medium-sized enterprises (SMEs).
- Increase support for horizontal links among the state, higher-level institutes and enterprises.
- Protect child care, family, housing supports and health care services at sufficient levels to avert child poverty, which has an extremely damaging effect on human capital formation.
Given Ireland’s relatively low revenue/GDP ratio by EU standards, there appears to be some scope for policies to increase the revenue to pay for these policies.
*The Nevin Research Institute is is supported by a number of unions affiliated to the Irish Congress of Trade Unions (ICTU); see www.nerinstitute.net
Wanted: Home-grown scientists
Chirag Patel and Chintu Patel, CEOs and Chairmen, Amneal Pharmaceuticals
We are in the midst of starting up our operations at our facility in Cashel, which will be dedicated to research and development (R&D) as well as the production of meter-dosed inhalers and dry-powder inhalers. We are also going to focus on developing and producing biosimilars–approved biological products that are comparable to originator biologics in terms of safety and effectiveness. These are all high-end specialty medications for the treatment of life-threatening diseases such as cancer, asthma and chronic obstructive pulmonary disorder (COPD), which will be distributed across Europe and the United States.
Continuous innovation will stem from ongoing testing of ingredients, drug delivery components, product formulation and stability. These medicines will be produced on very sophisticated manufacturing lines equipped with a high level of automation and quality control systems. We are constantly in search of the best new technological advancements to enhance the patient experience. Ultimately, our goal is to ensure that patients around the world can reasonably afford safe and effective medicines to enable them to live healthy lives.
While a favourable investment climate is essential to our success in Ireland, recruiting for scientists, engineers and R&D specialists is an important part of the equation. We expect to hire 250 to 300 employees, and a big part of our employee population will be skilled individuals capable of developing and manufacturing high-quality medicines.
We plan to work with research communities and universities down the road to find the right talent for our organisation. However, the government must work on building home-grown talent, particular in the areas of science, technology and engineering, and place greater emphasis on these courses across the education system to provide a base of skilled workers in these disciplines. A deep and diverse talent pool that we can tap into will be important to our long-term success and driving innovation in our Ireland operations.
Another area of government focus should be creating and maintaining vital and reliable infrastructure, so manufacturers like us can receive incoming raw materials as well as distribute and ship our final products across Europe and the United States without disruptions.
Ireland could be a pioneer in cloud services
Cathríona Hallahan, Managing Director, Microsoft Ireland
Microsoft celebrated 30 years in Ireland in 2015. In that time as a company we have grown and changed a lot: we’ve gone from being a software company to a devices and services company embracing a Cloud First, Mobile First world.
With a team of 1 200 people working in software development, research and development, engineering, sales and marketing, and the data centre, Ireland is the only location outside our headquarters in Redmond, Washington, that has every aspect of our business located in one place.
Critical to our success in furthering innovation has been the great work environment we have created. Flexible and diverse, and with an emphasis on collaboration, we have nearly 50 nationalities represented in Microsoft Ireland today, reflecting the diversity of our customers throughout Ireland and the globe.
We recently announced our investment in a new campus to house our team under one roof, which will support our objective to continue to lead and innovate through reinventing productivity and business processes, building the intelligent cloud platform, and creating more personal computing for our customers.
To ensure that Ireland’s next generation is its most innovative yet, Microsoft became an official European partner for the CoderDojo Foundation, which introduces children to technology and coding at a young age.
We also work closely with the start-up community in Ireland. Through our Microsoft BizSpark programme we have supported 2 000 Irish start-up companies since the programme launched in 2008.
Finally another European-wide problem we’ve been focused on finding a solution to is youth unemployment. In response to both the crisis and the requirements of our ecosystem of partners, to fill job opportunities we’ve partnered with FIT* to create an initiative called Youth2Work. Through an initial €3 million investment from Microsoft, the programme is on track to reach 10 000 young people through training.
We are very supportive of government efforts to drive more cloud usage. Ireland has huge potential to become known as a pioneer in the use of cloud services–in the private sector but critically also in the delivery of citizen service.
We’re ambitious for Ireland and its future–and look forward to continuing our relationship with the country.
*Read more about FIT (Fastrack into IT) at http://fit.ie
Stirling Behavioural Science Centre, University of Stirling
Innovation for well-being
Liam Delaney, Professor of Economics and Director, Stirling Behavioural Science Centre, University of Stirling*
A key potential for innovation in Ireland lies in engaging the developing literature on behavioural science. The creation of the Behavioural Insights Team in the UK and similar efforts across the world, along with a sustained focus on practical applications of behavioural science, offers an important source for innovation.
Public policies in Ireland should be driven increasingly by ideas from a wide range of disciplines, such as psychology and behavioural economics, tested more cleverly and adapted more rapidly. This should be driven by more nimble cross-departmental teams with capacities to develop and evaluate policies with a solid foundation in the literature and in international experience. This would facilitate the development of a wide range of innovative agendas, from financial regulations that are grounded in how people actually make financial decisions to the development of health services that reduce waste caused by a wide range of behavioural biases.
The development of a core group of civil servants working in collaboration with academics, practitioners and other stakeholders to develop such policies would be a key step.
As well as grounding policy in such principles, a related innovation is to rethink what is the ultimate goal of public policy. GDP, while extremely useful, is not a good measure of overall societal well-being. Developing metrics based on a wider set of criteria is crucial: the OECD Better Life Index provides one key example of how this might be done.
For such measures to provide a key impetus for innovation in Ireland, they must be fed into the democratic process and become accepted as measures by which governments can be held to account by their electorate. This will require widespread consultation across society. By combining a focus on behaviourally designed, ethically driven and smartly evaluated public policies with a greater focus on wider measures of well-being, Ireland could innovate across a wide range of public policies that are crucial to people's welfare.
* See http://rms.stir.ac.uk. Prof Delaney is formerly of University College Dublin.
The Stone Twins
Education, but not any education
Garech Stone, The Stone Twins Brand Consultancy, The Netherlands
Promoting innovation in Ireland does not require the establishment of another quango, the extending of tax credits or the bannering of a fluffy marketing slogan, such as “Innovation Comes Naturally”. If the Irish government is serious about promoting innovation, then it must rethink the fundamental principles of primary- and secondary-level education. Reforming education to take a more holistic approach is the only way to cultivate a true innovation agenda.
In general, the current education model revolves around the rote learning of lists and prose, and culminates in exams and grading. It prioritises academic ability–valuing languages, sciences and mathematics at the expense of the arts and humanities. But within this narrowly conceived curriculum (which is geared primarily towards university entry), it produces too many clones: children who regurgitate reams of facts, yet possess no critical thinking skills. Conformity kills innovation.
In addition, the education system pigeonholes children when they’re too young by forcing them to specialise, and continually encourages competition and individualistic goals. All these things stifle innovation.
True innovation–the one that is a powerful economic force and driver of prosperity–comes from a culture of questioning and shared knowledge. Innovation requires an open, fluid network.
Here in the Netherlands, my little boy goes to a vrije–or Waldorf–school. This educational approach has its foundations in anthroposophy, a philosophy founded by Rudolf Steiner. It is a schooling fuelled by the ideal of bringing forth every child’s unique potential, while respecting the talents and merits of others. Waldorf (Steiner) education encourages creativity, and celebrates the three I’s of imagination, inspiration and intuition. Most of the students turn out to be well-rounded, intelligent and, importantly, ever-inquisitive. Unlike the state schools, this education appears to provide a fertile place for facilitating the fresh thinking where innovation can happen. After all, the innovators of tomorrow will be those who have learnt to think for themselves.
Photo: Garech (right) and Declan Stone.
©OECD Observer No 305 January 2016