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Innovation Inputs, How does the Republic of Ireland Compare?

Posted on February 01, 2017 by Tom McDonnell

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The Republic of Ireland’s industrial and enterprise strategies will have to evolve in the future to adjust to changing political, economic and technological realities.

One constructive step that the Irish government can take to future proof its economy is to renew its focus on innovation policy with a view to building a world class innovation system. Technological change and innovation have long been of fundamental interest to economists because of the belief that sustainable long-run economic growth depends on the ability of the economy to produce and diffuse new innovations.

It is unwise to conflate innovation with R&D or to treat innovation as a linear process. Yet it is notable that the Republic invests significantly less in innovation inputs than do other similar small open economies. While the Republic is making progress in building up its innovative capacity, its capacity remains weaker than in other small advanced economies.

National Innovative Capacity depends on much more than the volume of innovation inputs. Knowledge flows and linkages, as well as compatible institutions and the quality of capital markets are also important. Even so, the volume of inputs is important for innovative competence and ultimately for productivity led growth. In this context, the Republic’s systemic underinvestment is a concern.

For a brief discussion of this issue and the implications for long-run economic growth see the latest NERI inBrief here.

For a much wider discussion see the latest NERI Working Paper here.

Posted in: Government SpendingInvestment

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