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

Systemic thinking on innovation policy highlights the breadth of policies which can influence innovation e.g. skills, inward investment, enterprise, regulation and competition policy. This suggests that innovation policy must be examined holistically, both in terms of the framework conditions to promote innovation as well as in terms of more targeted or specific policy to promote innovation at the enterprise level e.g. financial incentives to enterprises. It has been suggested that national innovation 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 innovation 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 innovation policy. This paper presents a comparative analysis of innovation 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. This paper assesses the role of national innovation policy in Ireland and regional innovation policy in Northern Ireland. A number of issues are addressed, such as; to what extent did innovation policy in Ireland and Northern Ireland merely sustain prevailing economic strengths or was it instrumental in overcoming specific deficiencies in R&D investment and moulding current economic strengths? What effect does the underlying industrial structure have in shaping innovation policy in terms of industrial sectors, ownership and the size distribution of firms? What differences are evident between national innovation policy initiatives and regional innovation initiatives, particularly in a lagging region? Innovation policy is examined in terms of targeted assistance i.e. 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 innovation transfer of R&D.

Responding to the crisis: are policies aimed at a strong indigenous industrial base a necessary condition for sustainable economic growth?

peer-reviewedWe examine whether a strong indigenous manufacturing base is a necessary condition for sustainable economic growth in the case of two small, open economies, Ireland and Sweden. Sweden has been impacted by the economic crisis to a lesser degree than Ireland; we explore (through a manufacturing activity lens) the reasons for the asymmetric impacts and ask if the nature of the shock is related to 'Economic Sovereignty' and to the type of industrial policy. We argue Sweden was less affected given that its indigenous firms control the highly export-focused and technology-based engineering sector whereas in Ireland high-technology sectors are controlled by foreign firms. In terms of policy implications, we suggest that industrial policy should aim for sustainable economic activity and growth such that industrial activity within the economy should be able to minimise the impact of asymmetric shocks such as the current global economic recession.ACCEPTEDpeer-reviewe

The development and growth of the software industry in Ireland: an institutionalized relationship approach

peer-reviewedIreland's software industry emerged in the 1970s and 1980s due to significant international developments and, more importantly, the industrial policy approach adopted in Ireland. The attraction of software foreign direct investment during these decades was followed by the emergence of an internationally competitive Irish software sector. A multitude of factors combine to explain the trajectory of software in Ireland: from developments related to globalization and international trade, to policy makers' efforts to promote an industry where Ireland could forge a comparative advantage internationally. An analysis of industrial dynamics and institutionalized relationships (IRs) furthers our understanding of significant developments in the industry in terms of interactions between firms, government and other stakeholders. This paper makes a novel contribution by analysing Ireland's software industry within the IR framework. The IR approach we employ focuses on the finance IR, the purchase IR, the employment IR, and the commercial IR. The adoption of the IR framework approach is particularly insightful in the Irish case as it facilitates a multifaceted analysis of the complex relationships that have moulded the Irish software industry. Such an approach also facilitates a study of the policy implications and policy prescriptions that are pertinent to the software sector.ACCEPTEDpeer-reviewe

Human capital accumulation and economic growth in Asia

[Introduction]: The emerging technologically-centered economic system of the modern world calls for the acquisition and mastery of new knowledge, or for the upgrading of skills. Traditional patterns of trade – for the most part based on cost advantages - are being replaced by trade patterns based on ‘non-price’ competitiveness (quality, information-intensity…). The need for appropriate human capital development and accumulation is a prerequisite for modern economic growth in both developed and developing economies. Placed in the broad framework of the ‘new’ growth and ‘new’ trade theories, our contribution builds on the famous hypotheses advanced by Easterlin (1981) and others, which is that the population’s formal level of schooling governs largely the acquisition and application of new knowledge and the prospects for economic development. We will analyze the developmental experiences of ten Asian countries: the ASEM-10 (minus Brunei) and India. The aim is to provide some understanding in relation to the impact of knowledge on economic growth in the selected countries since the early 1980s, via the improvement of their human capital stock. The first section assesses the salient points in the debate on the technology/ human capital - economic growth relationship. Section 2 presents the variables selected as well as the data, and it will discuss the main findings. Finally, a few conclusive avenues will be proffered

Economic structural complementarity: how viable is the Korea-EU FTA?

Purpose – Economic structural complementarity between country A and country B, or the way the two countries specialize in different industries is a useful tool for the analysis of the likely impact of trade liberalization. Although implicit in earlier work on economic integration, this concept has been overshadowed subsequently, probably because of the “econometrization” of the studies on trade liberalization. This paper aims to discuss first the relevance of the concept of structural complementarity between two economies in the context of regional integration. Second, since the EU and Korea are on the verge of signing a free trade agreement (FTA), it aims to show that measuring economic structural complementarity in the case of these two countries is all the more desirable. Design/methodology/approach – The paper applies a number of indices such as the trade complementarity index and the Kreinin-Finger similarity of export index to the manufacturing sector. Findings – On the whole the EU and Korea are structurally complementary, implying large potential gains from the FTA. However, the existence of two critical industries, namely road vehicles and electrical machinery are revealed. Practical implications – The FTA poses some sectoral challenges to the industries, in particular for the EU, and it calls for appropriate strategies in these areas. Originality/value – This article both clarifies and measures economic structural complementarity, a concept connected with, but not reduced to that of competitiveness. By using several indicators, the present study shows that the manufacturing sectors of the EU and of Korea are on the whole complementary.Electrical equipment, European Union, Free trade, Machine tools, South Korea