Over the past couple of months, I’ve been surprised at how little real debate there has been about the government’s Smart Economy strategy. Monday’s Irish Times Innovation supplement had a useful article discussing the economist-free Innovation Task Force that I mentioned last week.
As one might expect, the article contains some enthusiastic comments from some members of the Task Force—industrial policy experts will recognise the idea of the strategy succeeding by “picking winners.” In addition, however, the article also quotes some less enthusiastic economists—me and UCC’s Declan Jordan. The Times also carried another article from Declan, which together with his earlier article from April, represent important contributions to the debate on these crucial issues.
There are many aspects of these policies that are worth discussing and I don’t have the time now to get into most of them. One thing I will say, however, is that to my mind, this strategy seems like something dreamed up some time during 2007. With Ireland at full employment based on years of attracting foreign direct investment, it may have seemed like a logical progression to pivot the focus of policies towards generating new Irish start-ups based on locally generated technologies.
However, viewed from today’s perspective, with an unemployment rate of at least 15% by next year taken as a given, this logical progression seems less logical. At a minimum, it is worth asking a few questions about the current official stance that economic growth in Ireland in the future will come from indigenous innovation, with government-funded research leading to start-up firms, which, if successful, will generate jobs. For instance, one could instead argue that the current conditions suggest a return to the policies that worked very well in the past—IDA attraction of large-scale foreign investments in selected sectors backed up by education and training policies to provide the required pools of trained labour.
As I was quoted as saying in the article linked to above, I do believe that building up a supply of well-trained PhDs should be an important element in this strategy. But, in light of the substantial evidence on failure rates for business start-ups and the immediacy of our unemployment problem, the idea that we are relying on university research to create the required jobs seems a bit hopeful.