How a Government spends and invests its money is of crucial importance. This is obvious. What is less obvious is that much of any annual budget allocation is earmarked for essential support systems for all citizens e.g. housing, social welfare, health and education. A surprisingly smaller amount can be put towards developing the future of the country. In Ireland the total capital expenditure per annum is of the order of 10%. Some of that is for necessary infrastructure but other funding goes towards developing the country of the future. That is the category that includes investment in research and development and innovation. In Ireland that figure corresponds to about 1% of the total annual budget of the country.
It is from this slim foundation that the edifice that will generate new jobs and income is to be built. It is interesting that the EU budget also has a small percentage targeted to growth lines with most of its funding (50%) going to supporting the Common Agricultural Policy. But that is a different story.
When it comes to science policy i.e. how to use the Government’s money in a sensible manner there are two different schools of thought: one believes that research is a motor for the development of the economy and therefore it is right to invest generously in Science Technology and Innovation (STI), while the other does not believe that there is any cause and effect between economic development and STI, and therefore it is not worth undertaking such investment. The use of the word belief in such a point of decision is deliberate. Unfortunately many prominent voices build their arguments against investment in R&D (or STI) from the subjective start point of “they do not believe” or “they are not convinced” or a simple assertion that there would be no significant impact or return on the investment. Opinions based on such feelings, are frequently informed by an amalgam of anecdotes and very personal experiences. They might have real value in the sport pages but they have to be challenged when they lead to a consequence that is greater than simply losing a bet on a horse race. The challenge for those who believe that there is a basis for economic growth coming from investment is equally high. What is the evidence to support any such opinion? There is no doubt that this is a topic which has engaged policymakers and strategists for very many years. Vannevar Bush, wrote in 1945 a report to the President of the USA entitled The Endless Frontier. In it he wrote (to quote from Wikipedia) that “basic research was: “the pacemaker of technological progress” and “New products and new processes do not appear full-grown. They are founded on new principles and new conceptions, which in turn are painstakingly developed by research in the purest realms of science!” He recommended the creation of what would eventually become in 1950 the National Science Foundation (NSF). Very many would trace in the industrial strength of America to the decisions which were made based on that philosophy.
Another key strategic decision was made in 1990 in Finland. Faced with a very negative economic future, the Finnish government decided to “bet” on science and technology as their way out of their problems. They immediately increased the funding for science and technology to a level of 3% of their GDP. They have maintained it at that level ever since and are currently in the process of increasing to an even higher level. Finland had the prospect of becoming a backwater with a marginal economy. Instead, because of its investment in STI it is a model for many countries who wish to improve their economic position.
With the passage of time country after country has increased its investment in R&D. In some cases such as South Korea it is too early to say if this has paid off. In others, such as Switzerland and the Netherlands, their economic strength is very much linked to the skill and understanding and engagement in high-quality research such that they are inevitable leaders in most charts that monitor the economic success of countries as well as scientific quality. Ireland cannot be immune or isolated from such general trends. In the mid-90s discussions had already started on the reasons for supporting investment in STI and this process grew ultimately from analysis, report, expert opinion and case history studies, until Science Foundation Ireland(SFI) was established in 2001. A recurrent theme at that time was that Ireland had moved up the scale of salaries such that companies which could move their operation to cheaper locations would do so. The closure, for example of Fruit of the Loom in Donegal 2004 and their transfer of jobs to Morocco can be seen as an early but continuing trend that shows that such an analysis was correct. Prior to the decision to establish SFI, consultation engaged not only those close to science policy but the economists who have a different perspective on such investments. The report of ESRI at the time was very supportive of this development. They ‘believed’ having seen the evidence which was presented.
Following an early phase of establishing its programmes and structures, SFI started serious funding in 2003. Discussions on science strategy now can be informed by the impact of the considerable investment that SFI have made to date. This allows both those who argued with hand waving evangelical fervour in favour STI investment and those who headshake in disbelieving rejection of the proposition, to check on some realities. I contend that the data point unambiguously in the direction of the investment having a positive impact not only on scientific quality but also on the Irish economy. The easiest question to ask is has there been a replacement for the Fruit of the Loom-type industries? Here, the essential benefit to Ireland would be shown if the high-quality manufacturing companies that are the backbone of exports at present were retained and moved up the technology chain in Ireland. If they are merely allowing their capital investment to be depreciated before they move then the outcome is negative. The facts point in a different direction. The majority of investments made by such companies in Ireland in the past two years were to start or consolidate their R&D activities. This is not what you do if you’re planning to leave the country. The IDA figures in their annual reports for the past years point to a truly dramatic change in the profile of the companies that they are attracting or retaining. I have frequently used the figures but they are worthwhile repeating: over 40% of the IDA agreements entered into in the past year and in the previous year are categorised as R&D. Indigenous industry is also growing as R&D activities, with Enterprise Ireland reporting increases in the investments in R&D in their section. On face value then the only data which are available point to a positive outcome. It should be noted that this is earlier than had been expected by many, even the most optimistic, as the impact of R&D investment is usually after a period of 10 years. In Ireland we seem to have invested in a way which has reduced this time lag.
If new industries are adding R&D to their activities then inevitably it follows that people would be required to work in those companies. This is the reason why much emphasis was put initially in the Strategy for Science, Technology and Innovation (SSTI) 2006-2013 on increasing the number of fourth level graduates (or PhD’s and MScs). The areas, in which these are being trained, using SFI funding, are aligned with the industrial areas that come from the IDA activities and were originally described in broad strokes in a Technology Foresight exercise when SFI was established. A PhD is not simply a mechanic who can use one set of tools: he/she is somebody who is equipped with training to allow them to work in a team, to address and solve problems, analyse data critically and have a broad knowledge of their research area. In other words they very malleable and hence appropriate for industry needs. There can of course be a lag between the training of a PhD and their employment by industry and it is into this timeframe that the sceptics leap. They point to first movement data of PhDs and not surprisingly, from those who are familiar with research careers, many of these move from Ireland or do not move into industry. Nonetheless the data would suggest that approximately 30% of those that are qualifying end up in industry after a very short time period. Those reaching negative conclusions about these STI investments seemed to anticipate that it would be possible for a higher percentage to arrive in industries that are just beginning to start their road into R&D within a time period of approximately 2 years (a classical chicken and egg situation). It should be recognized that the first major wave PhD’s emerged from the system in 2005 and 2006. To achieve a transformation of the economy in Ireland within a shorter time period was never promised nor should it have been anticipated and it certainly isn’t a basis for reaching a conclusion that the investment in SFI is ill judged.
The third benefit of the investment had been defined at all times as Ireland becoming a location for “world class research”. SFI has invested in and developed a number of teams that fit into this stratum. Of course quality judgments based on publications and invitations to international meetings could be a sterile academic exercise but the data again points the opposite reaction. SFI’s insistence on a linkage between research and the consequences of research has always been strong and has been consolidated in the last two years. Because of this the research groups that are the leaders in terms of publications are also the first point of call for the many industries that are now looking at Ireland’s capabilities in research. They are also the point of contact for that we increasingly record between indigenous companies and the researchers. These teams have a value in the depth of knowledge and understanding which they have, their linkages to the leading researchers worldwide and the specific tasks that they can perform in conjunction with industry. Again the numbers (facts should trump belief!) are important. Over 300 industries interacted with Irish scientists last year (and the previous year). Over a hundred of these are SMEs, giving lie to the assertion that SFI funded research is only a benefit to multinational companies.
The final output is the one that those looking for evidence for a non-return on investment focus on-the number of start-up companies. I could point to a small but growing number of new Irish companies that arose from funding including that from SFI. And I could show a graph that points upwards for new patents that are often the precursors to a new company. But the figures for this metric are always going to be small and will fail to impress. The world average is that it costs almost 100 million Euro per company formed. Based on the SFI budget this would yield 1 or 2 per annum. More are being started but that is almost irrelevant. What is more difficult to measure or predict is the number of companies that will be formed by those that were trained through SFI funding, and I would not put that figure as being very high. What is needed, of course is not a large number of companies but some small number of very successful ones. Here my position is no stronger than that of those who do not believe it will happen; I have no evidence that it will. I am merely expressing an optimism that matches the pessimism of others. But what I would insist is that strengthening the activities of the companies that are already in Ireland and thereby retaining them or consolidating them and attracting others to come here are much more relevant metrics that should be monitored and as outlined above, the evidence points to that being a positive outcome already.
It follows from all of the above that the evidence shows that investment in STI is working in Ireland as it has previously elsewhere in the world. This is not a matter of belief it is a matter of accepting the data as presented. The need to continuously pay attention to the targets for the investment by SFI is well recognised by this organisation. We should point out that SFI is responsible for only 20% of the total ST&I budget spent annually here so others share the credit or the blame for injudicious spending of resources. All of our decisions at SFI are made on the basis of critical international peer review analysis allied to national assessment of the strategic benefit of the research project. In its short time in existence, the organisation has been examined twice to-date by external experts. The first probed at the quality of the research that was been funded and the manner in which SFI was functioning and found that it was doing the right thing. The second specifically looked at the important question of value for money and concluded that all of the indicators pointed that SFI was delivering value for money. SFI has established a portfolio of programmes that are changing not only the quality of the research in Ireland but also the culture in a sub-set of the Higher Education laboratories. The SFI Centres for Science and Engineering Technologies (CSETs) and the SFI Strategic Research Clusters (SRCs) are very good examples of the determination of SFI to link research funding to the needs of industry. The programmes that are carried out in the SFI CSETs are driven to a large extent by the roadmaps of the industries that are engaged in them and hence reflect industries needs at present. The impact of the CSETs is well recognized and we are confident that the same will be true of the SRCs in a short time. In fact, the surprising result that SFI can report is that its investments when looked at as a portfolio have yielded positive commercial results in a 3-5 year period
The future directions for Ireland seem to be inevitably connected with decisions which we are going to make in the area of STI investment. The need for a discussion that is informed, factual and evidence based on this is very important. Faith and beliefs have a prime role in some sectors of our lives. However, I would argue that this does not extend into making decisions on whether or not to contract or expand investment in STI.