Innovation policy in Ireland and Northern Ireland, 1991 to 2001 – the changing face of firm-level financial incentives for R&D

Technology policy encompasses a number of different strands but can be sub-divided between institutional support e.g. development of educational and technological infrastructure, and financial support, or more specifically support at the enterprise level for R&D e.g. financial incentives to enterprises. It has been suggested that national technology policy tends to reinforce the strengths of a country’s industrial system, particularly in relation to large firms and the promotion of R&D in core technologies and focuses less on technology transfer which is often left to regional technological policy initiatives. In lagging regional economies, which are often dominated by SME’s, this presents specific challenges for technology policy. This paper presents a comparative analysis of technology policy at both the national and regional levels in Ireland and Northern Ireland respectively, over the 1990s. In both Ireland and Northern Ireland the period from 1991-99 was marked by expansion as measured by steady output growth for manufacturing as a whole (albeit at substantially lower levels in Northern Ireland than in Ireland). In Ireland this largely reflected rapid economic growth of output in the high-tech sectors, itself a consequence of inward investment and re-investment. Despite growth in gross expenditure on R&D over the 1990s closely related to output growth, Ireland’s investment in R&D (at 0.95% of GNP) lags behind Slovenia, Norway, the UK, Austria, Netherlands, Belgium, Denmark, France, Germany, Finland, Sweden, the US and Japan. Technology policy is examined in terms of direct government financial support for business sector investment in R&D. This is based on a database of all grant offers (Northern Ireland) and payments (Ireland) made by the industrial development agencies in Ireland and Northern Ireland over the 1991 to 2001 period which was developed for this paper. The paper emphasises issues concerning the concentration of R&D investment, change in the balance between pre-competitive and near market R&D and the move towards financial incentives for technology transfer of R&D.