'Our talent and skills base are key demands for firms coming here'
Investment in research and development is vital for attracting FDI
As Dan O'Brien said recently, Ireland's focus on FDI is the most successful policy initiative in the history of the State. Despite the fact that Ireland accounts for less than 1pc of Europe's population, we managed to attract 4.5pc of FDI investment in Europe in 2014. The contribution of FDI to the Irish economy and Irish society is huge. According to a recent report by Grant Thornton, there are 1,033 overseas companies operating in Ireland, employing over 161,000 people, spending €24bn, paying Irish staff €8bn in wages and generating €122bn in exports.
The foundation for this success was Ireland's 12.5pc corporation tax rate; other countries are learning from Ireland's experience - Britain, for example, intends to cut its corporate tax rate to 18pc. Companies looking to locate their business now demand more than a favourable taxation policy. We are aware that it is our national talent and skills base, and the continuous development of this base that companies look to and is a key demand for locating in Ireland.
One of the critical ways we can, and must, compete is in research and development. Ireland has become an increasingly important location for research with a growing reputation for research in immunology, nanotechnology, nutritionals, computer science, and advanced materials. Nature, the scientific publishing journal, has named Ireland as a top-five country for up-and-coming high-level research, based on the quality and quantity of scientific research being carried out in its institutes. Just last week Science Foundation Ireland announced that Ireland moved up the world scientific league tables from 20th place to 16th.
The benefits are not just in terms of reputation. As O'Brien also pointed out, "Since 2007, the number of people employed to carry out R&D has grown by almost 11,000 to 25,000 people. That is, to be sure, only a small part of the overall workforce, but the rate of growth is little short of phenomenal."
It is not just a case of jobs created but also of jobs held. Recently, a major multinational company engaged in a global restructuring exercise shed thousands of jobs all over the world in the process, except in Ireland. Why? An internal report cited the quality of our workforce and our research capability as the reason it did not let people go in Ireland.
As the global battle for FDI intensifies, investment in research and development will become even more critical to attracting and retaining FDI companies, but R&D is not just important for FDI, it is also critical for Irish firms. In 2012 Irish-owned companies spent €1.36bn on R&D, and that spend is yielding real business results. For example, Radisens Diagnostics is an Irish company that has developed ground-breaking technology to enable local blood-testing at doctors' surgeries using nanotechnology. It puts the power of a central lab into a local clinic and has the potential to transform blood-testing.
Industry understands the importance of R&D to Ireland's future. The American Chamber recently unveiled a major report, Ireland's Innovation Pathway, with some very concrete positive proposals on how we develop Ireland's R&D capacity. These proposals helped to inform the new science strategy currently being drafted by the Government. Last Wednesday, we held a workshop where more than 120 leading scientists, business leaders and policymakers gathered to provide their expert input to the strategy. Three words sum up the findings of that workshop: excellence, impact and talent.
Excellence: across all disciplines Ireland's research, whether basic or applied, has to be world-class. Research and development is an investment and any investment portfolio has to be balanced between high-risk, high-reward investments like basic research and lower risk opportunities like applied research.
Impact: all research has to deliver a demonstrable return to the economy or society (or both). Science Foundation Ireland and the Irish Research Council are now European leaders in impact assessment so we are now far better positioned to understand and demonstrate the real impact of research conducted in Ireland.
Talent: Ireland's investment in research and development is really an investment in human capital, building research skills and capabilities not just in academia but also in industry. We need to put in place proper career structures for researchers, to ensure researchers possess not just research but business and leadership skills so they can easily move to industry or set up their own business. That process has to begin early on, we need to cultivate our talent base from primary school on. My role in Government is to pull together business and education so that we put in place the supports to ensure that Ireland has a workforce with the skills to survive and thrive in a globalised economy. That's why I am so interested and passionate about the Science Strategy. In the last 15 years, Ireland has gone from a ranking not too far off Bangladesh's to 16th for R&D.
In the 20th Century, Ireland's investment in free secondary education unleashed a wave of talent that transformed the country. I believe investment in R&D has the potential to do the same in the 21st Century.
Damien English TD is Minister for Skills, Research and Innovation
Sunday Indo Business