Danny McCoy on why ‘a knowledge economy requires strategic long-term thinking’

For years, successive governments have talked about the need for Ireland to build a smart knowledge-based economy – one that drives research and innovation, develops talent, creates high value jobs and pushes the country forward both socially and economically. However, the commitment and investment required to make this a reality has always been wanting.

While Ireland has made great strides over the past fifteen years to become a more knowledge and innovation intensive economy – we still lag well behind world leaders like Denmark, Germany and the Netherlands. Internationally we are still classed as an ‘Innovation follower’ and a high proportion of Irish companies do not engage in any R&D activities.

Investment in research and development

Last December the previous government published Innovation 2020 – Ireland’s new strategy for research and development, science and technology. With this strategy there is an opportunity for the new partnership government and all those who espouse the vision of a knowledge economy to turn words into action.

Implementation of this strategy will require ambition and a significant increase in both public and private investment. The government is currently committed to a target of increasing total investment in R&D to 2.5% of GNP by 2020. The lion’s share of this – approximately two thirds – will be covered by industry. But government should be prepared to cover the remainder. Come budget time, the new government may be tempted to row back on these commitments. And while this may provide some short-term fiscal relief, it would damage the foundations of the country’s long term growth and competitiveness.

A strong pipeline of talent

A knowledge economy is built around people and skills. In 2016 our talent pool remains our key global competitive advantage. This was underlined earlier this week when Ireland’s strong skills base helped Ireland jump to 7^th place in the IMD World Competitiveness rankings. However there is no room for complacency. Education spending has been cut in recent years in spite of growing student numbers and the higher education sector is at breaking point. Irish school and university capacity will need to increase by over 220,000 over the next 15 years. Investment in the system and a sustainable solution to higher education funding need to be prioritised by the new administration

We also need to take a strong look at how we are preparing our young people for life after school. Full implementation of the new Junior Cycle is critical in this regard. For the last 24 years, the junior certificate has been little more than a dress-rehearsal for the leaving certificate and a guide for making decisions around subject choice. The new model will help students develop the higher order thinking skills and character qualities they need to thrive in the 21st century; the ability to think critically and creatively, to adapt to changing situations, to make a strong argument, take initiative and work in collaboration with others. If this purpose is met at this critical time in a young person’s life, the benefits will carry all the way through to third and fourth level and prepare the student for a life time of learning to follow.

Long-term thinking needed

Building a knowledge economy requires long-term strategic thinking. The return on investment however is a better society backed by stronger economy. In 2016 Ireland has the fastest growing economy in Europe. As the economic recovery gains momentum it is crucial political expediency and short-sightedness do not undermine this goal.

Danny McCoy
CEO, Ibec

Ibec represents Irish business; home grown, multinational, big and small, spanning every sector of the economy. The organisation and its sector associations, work with government and policy makers nationally and internationally, to shape business conditions and drive economic growth. It also provides a wide range of professional services direct to members.