Speech by the Minister for Enterprise, Trade and Innovation, Batt O'Keeffe TD, at the regional innovation cluster workshop, Ballincollig, Co Cork

17 May 2010

I am delighted to join you here today at this regional innovation cluster workshop.

As you will be aware, recent changes in departmental structures have brought innovation to the fore in my new Department of Enterprise, Trade and Innovation.

Innovation, in both the production and use of ideas, technology and processes, is important because it is a key driver of productivity.

Increasing productivity, that is, developing new ways to get a higher quality and quantity of output of goods and services from each unit of input, is the key driver of economic performance and sustainability.

And it is important to emphasis innovation can and should happen in a variety of settings in the public and private sectors.

Research and development is obviously key to supporting innovation, attracting inward investment and allowing indigenous enterprise to grow and flourish.

Recent estimates levels point to sharp increases in the number of firms performing significant research and development - that is investing more than €2 million annually in the area.

But research and innovation are limited in their contribution unless we turn a significant number of new ideas into commercialised products and services.

The development of a strong research, innovation and commercialisation ecosystem is core to the Government’s framework for economic renewal.

Central to this framework is the development and application of human capital - the knowledge, skills and creativity of people - and our ability and effectiveness in translating ideas into valuable processes, products and services.

In this context, regional innovation clusters are an important competitive strength for business.

Clusters help to close the gap between business and research, thereby bringing knowledge faster to the market.

Successful clusters promote intense competition along with co-operation.

They also help to share risks such as in entering new markets, in training provision and in standards development.

Ireland can be characterised by having both a policy push and bottom-up approach to cluster formation.

A number of clusters have arisen as a result of Ireland’s approach such as bio-pharma, information and communications technology, and internationally traded services.

Science Foundation Ireland (SFI) is our national funder of world-class research.

Through its supports for world-class researchers and the creation of world-class research centres in higher education institutions, SFI is creating a stream of highly-skilled research talent and building Ireland’s reputation as a location for research and development activity.

The remit of SFI is to invest in academic researchers and research teams in Irish higher education institutions who are most likely to generate new knowledge, leading-edge technologies and competitive enterprises in the fields of science and engineering underpinning three broad areas: biotechnology, information and communications technology and sustainable energy and energy-efficient technologies.

SFI is connecting its funded research teams with industry.

SFI-funded world-class research teams work with over 300 companies including many blue-chip multinationals such as GlaxoSmithKline, Intel, Hewlett Packard and Pfizer.

It is through this close industry engagement, primarily through their centres for science, engineering and technology and strategic research cluster programmes, that SFI is supporting the employment of over 56,000 people in Ireland.

The SFI centres for science, engineering and technology (CSETs) and strategic research clusters (SRCs) link researchers in partnerships across academia and industry to address crucial research questions.

There are 29 of these SFI-funded top-class research centres - 10 CSETs and 19 SRCs - in operation.

One of the 10 CSETs is APC - Alimentary Pharmabiotic Centre - based in University College Cork.

Two SRCs are led by UCC and two more are led by the Tyndall National Institute.

Enterprise Ireland (EI) and IDA Ireland are working closely with companies to strengthen the research and technological base of the enterprise sector in order to drive productivity, competitiveness, exports and jobs.

In 2008, EI assisted around 700 companies in performing research and development.

Growth in researcher capacity, led by SFI, coupled with the enhanced research and development tax credit, continues to be a major attraction for overseas investors, resulting in a series of significant industrial research and development investments by IDA Ireland-supported companies.

Over 40pc of IDA Ireland investments in 2009 were in research and development, with about €500 million of investment.

There are about 170 IDA Ireland-supported firms with a significant research and development mandate and a spend of about €1.7 billion.

Broadly speaking, total research and development spending in Ireland has almost trebled over 10 years.

Total research and development investment across all sectors of the economy climbed to an estimated €2.6 billion in 2008 which was equivalent to 1.68pc of GNP.

Ireland’s profile of investment in research and development continues to comprise two-thirds private investment to one-third public investment.

This is seen as the optimum split at European Union level.

Business expenditure on research and development (BERD) rose to €1.56 billion in 2006 - a 17pc increase on the previous year - almost double the level recorded in 2000.

It is estimated that BERD reached €1.68 billion in 2008.

Higher education research and development investment has almost quadrupled in current terms over 10 years and it is now at the EU and Organisation for Economic Co-operation and Development average levels.

This increased investment in the higher education sector is having a significant impact in terms of human capital development, feeding through to attraction of foreign direct investment and commercialisation.

In Budget 2010, we reoriented the focus of the spend on science, technology and innovation.

Our goal this year and the immediate future is to leverage the investments made to date.

The tripling of the public investment on science, technology and innovation over the past 10 years concentrated on built infrastructure and productive human capital development.

The reorientation of investment is now focused on deriving maximum commercial benefit from investment to date.

The intention to create a single funding line for science, technology and innovation, as announced in Budget 2010, aims to enhance the efficiency of science, technology and innovation expenditure and enhance the State's ability to re-prioritise the public investment consistent with resources with identified areas of science and with potential applications to support and develop the Irish economy.

In addition, the Innovation Taskforce has developed a road map to make Ireland: the best place in Europe to turn research and knowledge into products and services; the best place in Europe to start and grow an innovative company; the best place to relocate or expand and scale a small-to-medium-sized enterprise; and the best place in Europe for research-intensive multinationals to collaborate with each other and with clusters of small companies.

I am pleased to say that the Government has agreed that I personally chair a high-level implementation committee to oversee implementation of the Taskforce Report.

Work has already started on implementing some of the recommendations in the report.

Given the openness of our economy and the extent of integration into the European economy, action to address the current challenges at European level are important for us.

Overall, Ireland welcomes the EU2020 Strategy because it provides an important framework for the European Union to respond to the global financial crisis and to achieve higher levels of growth and job creation.

The tighter integration of research and innovation which the new Commissioner Máire Geoghegan-Quinn has signalled is a very positive development and we look forward to the Commissioner’s plan for research and innovation which will be completed later this year.

There is no doubt that in Ireland our resilience as an economy and society is being tested by the challenging economic and financial environment.

Despite these challenges, I am confident that the interaction of our scientific, technological and business community and ecosystem will, in effect, be the game-changer so that we can continue to forge ahead in turning our dream of the smart economy into a reality.

ENDS/ETI2213