||Last Updated: Jan 15th, 2008 - 08:43:49
The Irish Mind and the Knowledge Economy: Should we bank everything on fuzzy leprechaunic political dreams?
By Michael Hennigan, Editor and Founder of Finfacts
Jan 13, 2008, 15:34
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|Praying or befuddled? - - Minister for Enterprise, Trade and Employment Micheál Martin announced on Wednesday 3rd October 2007 last that GlaxoSmithKline (GSK), with the support of IDA Ireland, is investing up to €14.6m in a collaboration with the Trinity College Institute of Neuroscience (TCIN) and NUI Galway, on a Research & Development programme for the discovery of new therapies to treat Alzheimer’s Disease.|
Prof Shane O'Mara, then IDA Chief Executive Sean Dorgan, Micheál Martin and Trinity College Provost Dr. John Hegarty.
The Irish Mind. An abundant supply of that rare commodity you'll need to bring your business to peak performance. The Irish. Creative. Imaginative. And flexible. Agile minds with a unique capacity to initiate and innovate without being directed. Always thinking on their feet. Adapting and improving. Generating new knowledge and new ideas. Working together to find new ways of getting things done. Better and faster.
This flexible attitude pervades the ecosystem. Nowhere else will you find such close, frequently informal, links between enterprise, education and research facilities and a pro-business government. Connected by a dynamic information infrastructure. In Ireland, everything works together - IDA Ireland (Irish State inward investment promotion agency).
Every modern American president has felt compelled to spin the mantra that the US army is the best in the world. Maybe it is - maybe it isn't but the danger is that a received truth in the hands of an individual with an attention deficit problem, can have unintended consequences. In 2001, President George W. Bush's first Defense Secretary Donald Rumsfeld, colourfully illustrated the distinction between having knowledge and its use, when he said: A trained ape can know an awful lot of what is going on in this world, just by punching on his mouse for a relatively modest cost!
In Ireland, "knowledge economy" is a current buzz term and Minister for Enterprise, Trade and Employment Micheál Martin, a man with a weakness for superlatives, exudes confidence that “Ireland by 2013 will be internationally renowned for the excellence of its research, and will be to the forefront in generating and using new knowledge for economic and social progress, within an innovation driven culture.”
Five years to go and looking ahead to that deadline, after ploughing through €8.2 billion of Exchequer funds, a skeptic like myself has some doubts. To borrow from Rumsfeld again, there are "known knowns, "known unknowns" and "unknown unknowns" and it's difficult to know which category some pertinent issues fall into.
What is striking is that there has been very little analysis of for example a public science budget of €2.51 billion in 2007. It may well be that it will take until say 2025 to have a credible innovation culture in the economy but when construction will no longer sustain big budgets for researchers, what will happen?
Forfás, the policy advisory agency, reported last year that the numbers of researchers working in the higher education sector, increased by almost 1,150 since a previous survey in 2004, to over 10,000. Since many researchers also teach, this equates to approximately 4,670 full-time equivalents (FTE’s) - a similar level to Ireland's largest industrial employer Intel, the US computer chip giant.
The outcomes thus far in terms of commercialisation and patents are part of the "known unknowns" but it is also unclear if the strategy is primarily to support inward investment or to underpin indigenous business following a period when it had been the very poor relation to property investment?
One of the "unknown unknowns," is what the four (not a misprint!) ministers in the Department of Enterprise, Trade and Employment know and given past statements, it's not clear if for example, some of them even know why Belgium is the third biggest destination for Irish exports or where is the ultimate destination of Irish exports to the Philippines?
With the overwhelming dominance of foreign owned companies in the economy, estimated to account for more than 90% of Ireland's exports, it appears to be a deliberate policy of obfuscation to blur the distinction between foreign and Irish-owned enterprises as it provides bragging rights on for example our pre-eminence as a software exporter. It even permeates through to the private sector and last year IBEC, the business lobby group, issued a report on the potential of trade with Asia without any reference to the fact that exports by Irish-owned firms to the region as a proportion of total exports from Ireland there, are estimated to be in single digits.
In the Irish Times on Dec 31st, IBEC Policy Director Danny McCoy wrote: Services exports continue to expand as Irish firms have been able to exploit the opportunities arising from the exceptionally high growth rates in world services trade and with service exports now accounting for over 40% of total exports, some economists see great potential in the service sector but is there a difference in terms of impact for the economy between Microsoft's software exports and a SIV (structured investment vehicle) in the IFSC (International Financial Services Centre)?
Microsoft Ireland is legally an 'Irish" firm and it has two companies which are multi-billion dollar firms operating from the offices of a Dublin law firm. The latter are also beneficial to Ireland because of the corporation tax paid on the profits channeled into Ireland from other overseas markets, but does it help identify the challenges facing Irish firms in overseas markets, by claiming Microsoft as an "Irish" firm?
"I am even happier to acknowledge that Ireland’s export trade to China continues to boom- in recent times even more steadily in relation to services exports. Ireland’s knowledge –based economy, built on innovation and technology, is substantially shaped by the emergence of strong technology-led and export-focused Irish companies. Companies, which have become world leaders in their respective industries.
Ireland, thus, has much to offer the Chinese market - and China recognises that fact," so spoke Minister Micheál Martin in June 2007?
Martin said that Irish innovation in key sectors - information and telecommunications technologies, education and training, environmental and engineering, life sciences and medical devices, aviation, electronics, industrial machinery and food and drinks products - have resulted in steadily increasing sales to China.
"China, the most vibrant and discerning market in the world, will continue to be a key target for Irish companies. And let the record show, that this, our Cork International Conference on China in the 21st Century marked a renewed impetus in the relationship between our two countries," he concluded.
Martin's words to a conference in Cork on trade ties with China, could be summed up in one restrained word: boloney.
|Image of renowned Irish poet W. B. Yeats (1865-1939), 1975, oil on canvas, painted by the the artist Louis le Brocquy and used in IDA Ireland's "Irish Mind" advertising campaign. |
It would be difficult to discern from the Minister's address that the "Irish companies" that are mainly responsible for increasing exports to China are from the foreign-owned sector in Ireland.
Even such products as Baileys Irish Cream (the registered trade mark omits the apostrophe), which accounts for about 6% of Irish food and drinks exports, and the leading Irish whiskey brands, are owned by foreign firms.
Eoin O'Driscoll is Managing Director of Aderra and formerly a Senior Vice President with Lucent Technologies. In 2004, O'Driscoll chaired the Enterprise Strategy Review Group and is currently Chairman of Forfás.
In 2005, O'Driscoll told a conference that most of the products we manufacture, are designed elsewhere and the bulk of our exports, are marketed/sold by organisations outside Ireland.
An international advisor to the Irish government and State agencies warned in the same month, in which Martin was misleadingly bragging about the source of Irish exports to China, that Irish businesses lack the confidence to become world business leaders.
Innovation specialist Professor Danny Breznitz of the Georgia Institute of Technology said that Ireland's research infrastructure is too narrow in its focus and may not be sustainable.
He also said that we are not creating enough new businesses, and when new businesses are set up, the financial supports are not there to keep them innovating.
Given Martin's proclivity for the delusional, who would expect him to see any implications for his 2013 target in the report this past week that Ireland's biggest high-tech company IONA Technologies, will report its second quarterly loss in 2007, later this month?
Also last week, the report of Comptroller and Auditor General (C&AG), said broad strategic objectives were identified for eGovernment, but measurable targets were not set in relation to those objectives.
Ireland’s performance in providing online transaction services has been assessed as being around the average for EU member states, but some states are delivering significantly higher levels of service online.
One online Irish success, the ROS - Revenue Online Service - was built by US company Accenture.
The C&AG report wasn't really a surprise - See Oct 2005 Finfacts report: The penny belatedly drops for Computer Illiterate Irish Ministers, Senior Bureaucrats and Advisers
In Ireland, everything works together?
IDA Ireland says so in its "Irish Mind" campaign, which was launched in 2006 using images of the likes of poet William Butler Yeats, rock musician Bono and writer Oscar Wilde, in advertising promotions.
“What is different here in Ireland is the way in which we tackle issues, solve problems and seek other new and better ways to meet needs. It requires ambition, vision, cooperation and partnership among many players. It reflects a mindset and an approach that is innate.
Ireland continues to win international investments because it is recognised as a business location where the workforce, in addition to being highly qualified, has a unique capacity to improve, to innovate and to initiate new ideas, new processes and new methods of operating that can make business more dynamic, more efficient, and ultimately more profitable” said Sean Dorgan, then IDA Ireland Chief Executive said at the launch.
Does being renowned for writing make us good innovators?
Could it be that we're better as traders than as organisers or innovators?
Broadband implementation? Any lessons here?
OECD Broadband Statistics to June 2007: Ireland makes progress but still only at Rank 22 among the 30 Member Countries - Denmark, the Netherlands, Switzerland, Korea lead
Roadbuilding? - Forty years ago this year, on the Dublin-Cork road route, a 26 km (16 mi) dual carriageway from Dublin to the town of Naas, was completed. In 1983, the town of Naas was bypassed and 15 years after the emergence of the Celtic Tiger, there is still not a complete motorway link on the 257 km (160 mi) route.
Irish Times report on Friday: Also on the traffic front in Dublin, there will be layout changes at the notorious Red Cow interchange, which is still under construction and which has caused massive confusion for even those most familiar with the road. The changes will take effect from Sunday at 8am.
IBEC Director of Transport Policy Reg McCabe in Nov 2006, said: "Urban motorways are a feature of virtually every city in the world. Inevitably there are interruptions due to accidents, breakdowns - even resulting from burst water mains. It seems, however, that only in Dublin does a minor incident escalate into a traffic catastrophe."
At a political level, there has been no significant reform of the governance structures/system of administration that was put in place in the 1920's/30's. To Irish politicians, the country is still 15 miles from the centre of Dublin.
There are 35 ministers, the majority of whom have a title and perks but do not hold what would be termed a job in the real world. We have 216 members of the national parliament, including an Upper House that is a talking shop.
New Zealand with a similar population and level of economic development, has a unicameral system with 121 members.
The Irish parliament has 23 Committees not to provide credible accountability and scrutiny but to provide 99 members with additional paid officer positions.
Land rezoning makes multi-millionaires of farmers in a country that is 4% urbanised and it has spawned corruption over the decades but reform is a taboo subject.
Some 23% of the overall budget of the National Roads Authority for roads is to be spent on compensating landowners.
This means that as little as €13.5bn will remain out of the original €18.5bn announced by the Government for roads in the Transport 21 package up to 2014.
The increase in the price of land for infrastructure projects has rocketed in line with the Celtic Tiger property and land boom.
The amount the State has been forced to pay out for land compensation was described as "disturbing" by Fred Barry, the head of the National Roads Authority.
It accounts for 23% of the cost of roads projects in Ireland, but just 12% in England, 10% in Denmark, 9.4% in Greece and 1% in Iceland. A further 2% of the €18.5bn provided in the Government's Transport 21 for road building over the next decade will go to archaeologists.
Greece, one of the country's with the richest archaeological treasures, has managed to build new roads while spending far less than Ireland on either land compensation or archaeology.
At the level of the knowledge economy, society and business has been slow in responding to the web. Many companies view the Internet as the modern equivalent of the telex machine and some public relations companies can get attention for a published report in the broadcast media but a related website may not be updated for days with the content.
Some public relations companies also cannot even operate a mailing list!
Despite the evidence that we need to look beyond the hype before possibly funneling billions more down a sinkhole, Minister Micheál Martin must have been gratified on sight of the draft statement from IDA Ireland's new Chief Executive Barry O'Leary on performance in 2007 and the outlook for 2008.
The IDA painted a positive picture to chime with the "Irish Mind" series as it hailed the "continued evolutionary growth in our knowledge economy in 2007."
The IDA also lauded the "Economic Ecosystem" (whatever that is) and cited an Economist Intelligence Unit (EIU) report but omitted an EIU ranking of e-readiness, including broadband adoption, Denmark, US and Sweden headed the rankings while Ireland slipped from 16th ranking in 2006 to a 21st ranking in 2007.
The World Eats Irish Food
If you have got this far, you may wonder if this armchair ranter has any positive message?
RTÉ, the Irish broadcasting service used the heading of this section in its report last week on food and drinks exports from Ireland.
It said that countries around the world are buying Irish food and drink in a big way. Exports last year were worth €8.6bn, up by 5%. The food industry is the largest indigenous industry in the country, and it continues to grow.
A growth of 5% in the fifth year of the best sustained period of global economic growth since the 1950's does not merit much self-congratulation but there is huge potential in Asia and the hardest part is to come.
| The 800-or-so components that go into Nescafé are subtly tweaked to fit national preferences. |
It raises the question of playing to our strengths rather than chasing a leprechaunic dream of being a global leader in high tech and biotech.
Irish State food agency Bord Bia reported a growth of almost 50 per cent in exports to Asia, which saw the value of Irish trade to the region reach €400 million. As a result, the target for food and drink exports to the region set for 2009, has been met two years ahead of schedule. This growth reflects the rise in the value of dairy and beverage exports to the region and a marked diversification by the industry to a wider range of Asian countries. The value of exports to Asia has increased by more than 80 per cent since 2002.
Alcohol exports to Asia more than doubled during 2007 fuelled by strong growth for cream liqueurs, whiskey and stout in China and a recovery in the import demand for whiskey in Japan.
A report produced by the Australian Farm Institute and the Rural Industries Research and Development Corporation, which was published in early December, examined the demand for meat and dairy in 12 Asian countries - representing more than half the world's population - to 2020.
It found beef consumption will increase by 50%, pork 30%, chicken meat 40% and dairy 55%.
Australia is the biggest beef and dairy exporters in the world and the forecast extra import requirements of the 12 Asian countries by 2020 is equivalent to 50% of the present dairy production and 85% of beef production.
Since 1990, the report says per capita consumption of animal protein calories in China had doubled, and that trend would continue.
Australia and New Zealand have had long-established trade links with Asia and the challenge for Ireland is to move beyond the supply of bulk products such as milk powder.
Ireland is not on the radar for most Asians but we could better develop our position in Europe, which would help open markets elsewhere.
People need to eat every day - tastes differ in various global regions and there are always opportunities to lead or respond to emerging lifestyles and tastes.
There is a scene in an episode of the American TV series The Sopranos where two of the characters end up in a coffee shop.
"Espresso! cappuccino!" one of them exclaims. "We invented this shit!"
They happened to have been in a Starbucks.
Swiss giant Nestlé has the biggest research-and-development operation in the food industry, with 3,700 staffers and an annual budget of $1.4 billion.
A summer 2007 issue of Time Magazine was a special on food and had an article on how Nestlé responds to localized taste in a globalized world.
Time says that one of Nestlé's biggest worldwide brands is Nescafé instant coffee. But there is Nescafé and Nescafé: the one you can buy in Singapore is quite different from the one you'll find in Spain or Swaziland or São Paulo. In fact, the company makes about 200 different types of Nescafé, ranging from the "three-in-one" sachets on sale in parts of Asia — which contain the supposedly perfect mix of coffee, milk and sugar for local taste — to the considerably more expensive jars of freeze-dried Colombian Nescafé aimed at French coffee snobs. And it's not just the brand variants that are different: the 800-or-so components that go into Nescafé are subtly tweaked to fit national preferences.
The Irish Farmers' Association may rail against Brazilian beef but how many European cities have branded Irish beef steak houses?
In Asia, the Starbucks brand has become ubiquitous while the Irish pub brand has become a little jaded if the Finnegan's' outlets in Kuala Lumpur are anything to go by.
While we cannot hope to achieve the success of a country like Israel in high-tech, with its more than 70 companies on the Nasdaq Stock Exchange, we can do much in exploiting our position in food and drink.
€8.2 billion of Exchequer funds is a lot of expenditure and it merits more than fuzzy goals and political hype.
For a start, the conflation of the foreign-owned and indigenous sector should end.
It should also be made clear what is the estimate of necessary support for the foreign-owned sector, the indigenous sector and the direction of the research?
Waffle on a so-called "Asia Strategy" and much more will prove to be costly if we continue to delude ourselves into believing that we are another Denmark while the failure to modernise and issues of broadband, lack of public sector reform and the system of limited accountability and buckpassing are all brushed under the carpet.
The IDA Ireland concept of the "Irish Mind" must seem like a joke to some Irish people. It could also give rise among its target audience to questions about our record in innovation - on a global scale, what is our record on innovation? The Swedes for example may not be into backslapping and they may not be great in meeting their obligations during a round a drinks but the proof of the pudding is in the eating!
Ireland still has great potential but its has a political system that is in the Dark Ages compared with the modern image it likes to portray - the bogman "messenger-boy" system still rules and the Green Party leader John Gormley with his 4 taxpayer funded "helpers" doing useless work in his constituency, has avidly taken to it.
At the risk of being seen as conceited, my goal is to think as Russian writer Anton Chekhov wrote, “Man will become better when you show him what he is like,” but despite the inherent optimism in Chekov's words, I know that change in Ireland only happens at glacial speed, if at all.
Irish Trade Statistics: Policymakers opt for Spin and Delusion rather than confront challenging facts
Irish Whiskey - A Lost Opportunity to Create Global Brands of Economic Significance for Ireland
Irish Economy: No crash in sight nor credible strategy to maintain export-led growth in long-term; Overseas commercial property to remain investment of choice
Irish Times Jan 14, 2008: Third-level research 'has limited effect' on business innovation
|Ireland's policy to promote innovation through interaction between businesses and third-level institutes is having a disappointingly limited effect, according to a study carried out by two economists from University College Cork (UCC).
In an article in today's Irish Times Innovation magazine, Declan Jordan and Eoin O'Leary from UCC write: "The massive public investment in research at third level may have a disappointingly limited effect on future Irish prosperity."
The article is based on a paper presented by the economists to the Statistical and Social Inquiry Society of Ireland.
"Our study is just one of a number of recent studies that fail to find the positive role for third-level colleges on which the Government has shaped Irish innovation policy."
The economists say that the Government policy is based on a "science-push" view of innovation, where scientific laboratories are the source of the new products and processes introduced in Irish businesses.
"It overlooks the majority of business innovations that are non-technological, the shining example of which is Ryanair," they write. "It is also misguided in that business innovation is usually market-led. Historically, third-level institutes have rarely been the main source of business innovation in any country."
In their first survey of 184 high-technology businesses in 2004, Jordan and O'Leary found that the greater the frequency of direct interaction with academics, the lower the probability of both product and process innovation.
In 2007, they undertook a similar survey of nearly 200 small and medium enterprises in the southwest and southeast and found interaction with third-level institutes had no effect on innovation.
Irish Times article and link to paper (subscription required- the economically challenged can subscribe for even a day!)
© Copyright 2007 by Finfacts.com
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