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Analysis of Ireland’s
Innovation Performance
CSO Business Stats Seminar
Dublin Castle
Dr Jonathan Healy
23/3/11
Forfás
►National policy advisory body for enterprise, trade, science, technology and innovation
►Forfás aims to shape, and to support implementation of, enterprise and science policies to make Ireland one of the most competitive and successful economies in the world
Analysis of Innovation Performance
► Aim: To benchmark Ireland’s performance on innovation
relative to European counterparts
► Use of Community Innovation Survey (CIS) data
• International comparisons of 2004-2006 data
• 2004-2006, and 2006-2008 survey data: manipulation
and identification of trends at national level, by
sector, size of firm and firm origin
► European Innovation Scoreboard – composite indicators
• Reports annually – “raw” trends indentified
► Other Sources, notably OECD
Innovation Intensity in Ireland by
Size of Enterprise, 2006-2008
40.1%
61.4%
75.7%
44.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Small Medium Large All Enterprises
Source: CSO Community Innovation Survey 2008
Innovation Intensity in EU-27, EEA &
Accession States,2008
0% 10% 20% 30% 40% 50% 60% 70%
Romania
Poland
Latvia
Hungary
Slovakia
Bulgaria
Lithuania
Malta
Turkey*
Spain
Slovenia
Croatia
Italy*
Netherlands
France
United Kingdom*
Czech Republic
Norway
Greece*
Denmark
Austria
Cyprus
Sweden
Ireland
Luxembourg
Finland
Estonia
Belgium
Portugal
Germany
Source: Eurostat Community Innovation Survey 2006; CSO Community
Innovation Survey 2008
Expenditure on Innovation as % of
GDP, 2008
Source: Eurostat Community Innovation Survey 2006; CSO
Community Innovation Survey 2008
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
Greece*
Turkey*
Norway
Lithuania
Spain
Slovakia
Croatia
Portugal
Malta
Cyprus
Netherlands
Poland
Bulgaria
Luxembourg
Romania
France
Slovenia
Hungary
Belgium
Denmark*
Czech Republic
Estonia
Ireland (GNP)
Germany
Sweden
Turnover Rates from Product Innovation
0% 5% 10% 15% 20% 25% 30% 35%
Latvia
Hungary
Norway
Bulgaria
Malta
Denmark
Italy
Czech Republic
United Kingdom
Finland
Netherlands
Ireland
Belgium
Ireland (2006)
Poland
Portugal
Lithuania
Luxembourg
EU 27
Cyprus
Austria
Slovenia
Croatia
Spain
Slovakia
Greece
Estonia
Germany
Turkey
Romania
New to firm
New to market
Source: Eurostat Community Innovation Survey 2006; CSO
Community Innovation Survey 2008.
Technological Innovation Rates in Ireland, 2008
Non-Technological Innovation Rates in Ireland, 2008
Technological Innovation by Sector, 2008
Product Innovation Process Innovation
All Goods Services All Methods LogisticsSupporting
Activities
Medical Equipment (3250) 44.9% 44.9% 19.2% 47.4% 44.9% 23.4% 26.0%
Food Products (10) 39.7% 39.7% 6.0% 54.6% 38.9% 13.2% 35.1%
Chemicals (20) 56.5% 56.5% 21.7% 57.6% 45.7% 20.7% 45.7%
Pharmaceuticals (21) 60.4% 60.4% 9.4% 71.7% 60.4% 20.8% 41.5%
Manufacturing of Computers
(26) 51.0% 46.0% 12.0% 46.0% 37.0% 22.0% 32.0%
Telecommunications (61) 48.7% 27.6% 47.4% 26.3% 18.4% 18.4% 26.3%
Computer Programming and
Cons. (62) 56.6% 37.7% 46.8% 42.5% 18.0% 17.5% 39.1%
Information Service Activities
(63) 37.8% 16.2% 32.4% 37.8% 21.6% 21.6% 37.8%
Financial Services (64) 26.6% 8.3% 25.5% 35.9% 14.8% 11.7% 30.7%
Insurance (65) 32.0% 14.7% 29.3% 42.7% 17.3% 26.7% 40.0%
Architectural and Engineering
(71) 19.7% 6.7% 18.1% 24.7% 10.6% 7.0% 20.6%
Economy-Wide 27.8% 19.8% 16.1% 32.4% 18.7% 14.0% 26.0%
Co-operation in Innovation Activities, 2008
European Innovation Scoreboard - Overall Innovation Performance & Growth Rate, 2009
Source: EIS 2009
IRELAND: among Innovation Followers
Innovation Leaders
Moderate Innovators
Catching-up Countries
Recent Empirical International Evidence
► In the context of the economic downturn, firms in the EU
with a strong background in product and service
innovation are less likely to cut innovation expenditures.
► Germany and Canada consistently rank among the world’s
foremost innovative economies, particularly in
manufacturing.
► Firms in receipt of public funding are more likely to be
innovative.
► Almost all countries register a positive and significant
relationship between engaging in product innovation and
sales per employee.
► However, process innovation was generally not closely
linked with sales per employee. In the one instance
where there is a significant relationship, it is negative.
SWOT of Ireland’s Innovation Position
Strengths
High proportion of firms engaged in technological innovation, particularly among SMEs
Relatively high levels of expenditure on innovation by EU standards – maintained in 2008
Weaknesses
Contribution to turnover of new-to-firm and new-to-market innovations is below EU average
Innovation intensity has fallen between CIS 2006 and CIS 2008
High perceived cost of innovation
Opportunities
International evidence suggests that Ireland’s high innovation intensity will ensure a greater number of firms remain innovative during recession
Potential value in non-technological innovation, particularly marketing innovation in service industries
Threats
Innovation expenditure may be poorly targeted and inflexible, with an over-emphasis on technological innovation and R&D andacquisition of machinery
Poor external physical infrastructure, particularly telecoms, may hold back technological product innovation, particularly in knowledge-intensive service industries
Highly Important Barriers to Innovation
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Lack o
f Funds
wit
hin
Ente
rpri
se
Gro
up
Lack o
f Exte
rnal Funds
Innovati
on C
ost
s to
o h
igh
Lack o
f qualifi
ed p
ers
onnel
Lack o
f In
form
ati
on o
n
Technolo
gy
Lack o
f In
form
ati
on o
n M
ark
ets
Dif
ficult
y in f
indin
g c
oopera
tion
part
ners
Mark
et
dom
inate
d b
y e
stablish
ed
ente
rpri
ses
Uncert
ain
dem
and f
or
innovati
ve
goods/
serv
ices
Need t
o m
eet
govern
ment
regula
tions
Excess
ive p
erc
eiv
ed e
conom
ic
risk
s
No n
eed d
ue t
o p
rior
innovati
ons
No n
eed b
ecause
of
no d
em
and
for
innovati
ons
Cost Knowledge Market Operational
Irish
Foreign
Source: Community Innovation Survey 2008
Key Messages
► Ireland’s innovation performance is generally promising, with
high proportions of firms engaged in innovation activity, as well
as relatively high levels of expenditure and reasonably high
levels of turnover attributable to product innovations.
► The smallest firms in Ireland are also the least innovative.
► Indigenous firms are less innovative.
► Financial returns to product innovations are below the EU
average.
► Particular modes of innovation are more suited to certain
industries and sectors than others.
► Opportunities to increase non-technological innovation.
► Competitive framework Conditions for innovation are essential
and need improvement