Ireland's Innovation Performance: 1991 to 2005

Data suggests that over the 15 year period to 2005, there has been only a moderate increase in product innovation activity among Irish manufacturing firms. Over the same period the figures reveal a decline in the extent of process innovation activity. These findings are the result of a 15 year investigation into the level of innovation activity among manufacturing firms in Ireland and Northern Ireland. Tracking back over the 15 year period, the data highlights a steady increase in the proportion of innovation active plants in Ireland and Northern Ireland throughout the 1990s. At the turn of the century however, the global economic downturn had a disproportionate impact on innovation in the Irish economy relative to that in the North. Although innovation activity - in terms of the introduction of new or modified products - improved markedly to 2005, this 'recovery' was not evident for process innovation. Instead, it appears that the economic downturn has had a prolonged effect on innovation in Irish manufacturing plants, and in particular on innovation in the foreign owned sector. Over the 1991 to 2005 period, there was a 5 per cent increase in the proportion of manufacturing plants in Ireland performing product innovation. Over the same period however, process innovation activity declined by 7 per cent. These changes have contributed to a convergence in innovation activity between Ireland and Northern Ireland. Indeed, manufacturing plants in NI are now more likely to be undertaking process innovation than plants in Ireland. A lower level of innovation in the economy is also reflected in business sales. While until 2002, new or improved products accounted for around 46 per cent of business sales, this value has now dropped to around 34 per cent. As a result, standardised and unchanged products which typically have lower profit margins, now form a larger proportion of firms' sales. The research goes on to stress the importance for plants of investing in research and development (R&D) activities, whether formally or informally. Similarly working closely with suppliers or customers is found to have a positive impact on innovation activity, but in many cases firms are unable to find suitable partners with which to innovate. It is still too early to know how the innovation landscape has changed since 2005. One thing is clear however, if Ireland is to build a strong knowledge-based economy, achieve projected levels of economic growth and remain competitive internationally, then innovation must rise to the top of the policy agenda