Globalization, Change and Policy in Asia and Europe
Edited by Charles Edquist and Leif Hommen
Chapter 5: High Growth and Innovation with Low R & D: Ireland
5. High growth and innovation with low R&D: Ireland Eoin O’Malley, Nola Hewitt-Dundas and Stephen Roper 1 INTRODUCTION For a long time Ireland was a relatively poor country by Western European standards, but since the late 1980s its average productivity and income levels have caught up quickly with the rest of Europe (see Appendix Tables A2.3 and A2.4). The most rapidly growing sectors in Ireland during most of this period were those generally identiﬁed as being R&D-intensive or ‘high-tech’. Today, there are concentrations of these high-tech industries in Ireland that are greatly disproportionate to the country’s small size (see Appendix Table A2.6). Given the importance of high-tech industry in Ireland’s economic renaissance, it may seem somewhat paradoxical that Ireland has relatively low levels of domestic R&D expenditure. Gross expenditure on R&D as a percentage of gross national product (GNP) and business expenditure on R&D as a percentage of GNP are both a good deal lower in Ireland than in the EU. Thus Ireland has a record of fast productivity and output growth, and a relatively large presence in normally R&D-intensive industries, while its levels of expenditure on R&D remain relatively low. Furthermore, the available evidence suggests that Ireland also has quite high rates of innovation by international standards, despite low levels of R&D expenditure (see, e.g., Appendix Table A4.2). This unusual combination of characteristics raises questions about how this situation has come about. A signiﬁcant point in our analysis is...
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