This is a report I wrote up last year, based on ICT and ICT Policy, what role do they play and why are they important to Ireland. I was asked to give a 30 minute presentation on the topic. See slides attached.PPT_Presentation_ICT_Policy_in_Ireland by Dara

Because ICT represents an excellent opportunity for the Irish Economy to re-emerge,  ICT Policy has never been more important.

Although the details included below are a little dated now, it may still be of interest…

Background

Irelands success at growing a knowledge and skills based economy prompted “The Economist” to describe Ireland as “one of the most remarkable transformations of recent times.”

Ireland has prospered in ICT markets. A simple indication of this can be seen in the Foreign Direct Investment by companies such as Paypal, Ebay, Google, Facebook and most recently Linked In.

Yet, a recent Economist Intelligence Unit study placed Ireland only 17th in terms of global digital economies.

Why is this important? I take the stance that, the opposite of innovation is stagnation. Similar to the mantra which is commonly spoken amongst ICT board members; “its grow or die.” Although, severe challenges exist, Ireland must proceed in developing competitive advantages within ICT and also the wider smart/green economy.

Key Debating Points

  • Is the smart economy a political construct and what are the positive and negative implications of this? What role does ICT play in the wider smart economy?
  • What factors attract Foreign Direct Investment, what makes Ireland an attractive location for high tech Industry, and is this sustainable in the short/long run?
  • Sustainable economic development via low carbon/ICT innovation, a realistic target?
  • A critical assessment of government published policy documents. To what extent are they: accurate, realistic and are initiatives measurable?
  • Ireland’s economic future and the future of ICT, are they mutually synonymous?

“The Smart Economy”

At the time of writing, I was reflecting on a base report, on the smart economy.

I remember that, throughout my research, along with a classmate, whether it was Googling the hell out of Smart Economy or reading the reams and reams of Government Policy Documents (Fianna Fail/Green Party at the time), I found very little criticisms of the “Smart” Policy. In fact, reading the Government papers, they often read like marketing pitches, heralding the Smart Economy as my saviour, almost. Withstanding any supposed brainwashing attempts, I presented my own assessment…

If you have ever read any of the documents put out by Government, e.g. Innovation Ireland Report (Innovation Task Force), you may notice a common theme. These reports are seemingly always based around a buzz word – Innovation, Knowledge, Smart. I feel as Ill that, the message put out there by Government can be a little skewed from reality. I mean, yes Ireland is prospering in ICT, but listen to too much of these reports and you might start thinking that Silicon Valley is in my shadow.

In 2006, there was a target set for Ireland to be recognised as a “world-class knowledge economy” by 2013.

In 2010, I saw record 3rd level attendance levels but the real measure of Knowledge Economy (4th level 0 PHD’s) did not increase. The knowledge economy encountered image problems, and in my opinion, was rebranded as the Smart Economy.

Incidentally, the Celtic Tiger phenomenon coincided with the dot-com era, and the 2 ideas did merge a bit in the minds of policy makers.

“If I have designed ourselves into difficulty, then I can design ourselves out of difficulty”

From a Political or Policy perspective, there are differences between each “economies”. The knowledge economy puts all investment into small, dispersed units whereas the smart economy incorporates Green Economy etc.

The message is a good one. Particularly in light of the Governments budgetary deficits, I do need to find ways to do more with a lot less. Hence, the GreenER economy, the SmartER economy…

I do believe that the Smart Economy is a political construct, which aims to provide a context necessary for large scale investment.

This, I don’t have an issue with. For example, anything the Government can use to achieve buy in and push through policy relating to, e.g; increasing amount of skilled IT workforce numbers or replacing Infrastructure, must be good.

For example: The various job bridge / springboard initiatives which aim to supplement the levels of available skilled IT workers. It is Ill understood that the lack of skilled workers is a real threat to Ireland’s Smart economy. IT workers are in strong demand, but the supply is short. As such, various Government incentives, as Ill as education cmyses and Visa allocations, can help.

Also consider the replacement of Infrastructure. Take a look at the case of Ard na Crusha power station. Developed in the 1930’s, the Government wanted to modernize with new a new power grid. Instead of coming out and saying that it was time to replace, they say its time to invest as part of the Smart / Green Economy.

Critical Analysis

From researching ICT policy in Ireland, I realise that the government has put in significant resources and funding into the development of the ICT sector. What I question is how has this funding been used and what are the tangible results?

For example: A study conducted in 2006 placed Ireland 19th out of 25 countries in Europe when it came to use of technology in schools One in three 15 year olds in schools had not used a computer. The 2007 National Development Plan promised EUR252m investment in Information and Communications Technology (ICT) in schools from 2007-2013.

There was very little structure or specifics given about when and where this funding was going to be invested in. The Minister for Education in 2008 stated that spending on ICT would have to be revised to fall in line with the economic recession. Ireland as a result has been slow to see the benefits of this aspect of the National Development Plan. There have been some recent manifestations of investment however. €20 million worth of grants for ICT equipment has been made available for 698 post-primary schools as part of the Smart Schools = Smart Economy scheme which launched in November 2009. With this relatively slow roll out of investment I continue to lag behind my global competitors in terms of ICT learning.

The direct result of the lack of technological expertise amongst my workforce was evident recently. A County Monaghan based technology company which develops software for Microsoft is unable to fill fifty new positions because of the lack of relevant skillsets amongst applicants. As a result these jobs are going to be outsmyced. This is an indictment of government ICT policy to date as in a period of high unemployment and economic demise; I don’t have the right people to fill these much needed vacancies.

The truth is that the highest ICT adoption rates and broadband connections are in Ireland’s major cities such as Dublin, Cork and Galway. There is a noticeable divide betIen these cities and more rural areas. The lack of ICT investment in these more remote places means that there is a slow uptake in 3rd level computing cmyses. As a result I are not sufficiently producing the ‘smart’ workforce to drive the smart economy.

Conclusion

The aim of my presentation was to critically analyse ICT policy in Ireland. Before I conducted my research I Ire Ill aware of buzzwords such as the ‘knowledge economy’ and the ‘digital boom’. What I have presented hoIver is that although government policy consistently talk about nurturing this smart economy through investment, there is little evidence of accountability on where that money is going. The ICT sector is one of the few areas where there is job creation in this country at the moment. I must focus on creating a skilled workforce that is capable of filling some of these niche technology positions.

The ICT sector in Ireland employs over 70,000 people in this country. Most of these jobs are with the major global companies such as Google and Facebook. It is important to remember that although the government remarks about the attractiveness of my smart workforce to these multi nationals, this is not what makes us unique. My comparatively low corporation tax rate of 12.5% must be considered the primary factor for these multinational companies decision to locate in Ireland. It has been a very real driver of innovation. If the government had sufficient confidence that my skilled workforce was the driving force surely they would have increased the corporation tax rate in the latest budget. Alas it stayed at 12.5% while social welfare and children allowances Ire cut.

A point re: Government’s four year plan and the very recent budget. I Ire disappointed to find the Government had scrapped a tax break on patent royalties, as it is my critical assessment that this will harm future investment and innovation. The patent royalty scheme had allowed companies to earn up to €5 million in patent royalty income tax-free and pay tax-free dividends to its shareholders. This I feel illustrates poor leadership amongst Government ministers and poor policy making. Policy makers are under pressure to meet a goal, realign government finances, but they must keep sight of their strategic goals – the smart economy.

This, in my opinion gives out a mixed signal to Industry – “I support smart business” V’s “I are eliminating support measures if they save the exchequer money.” Ireland is competing on a global scale for people and investment and I must hold on to competitive advantages. Abolishing this particular tax exemption hits innovation at a time when the government is attempting to encourage knowledge-intensive business.

What this illustrates is the abolishment of any benefit on a personal level. The R&D tax credit is effectively a corporate benefit. So is the tax credit for managing IP intangible assets. But as the inventor, I now reap no personal benefit.

I concede, there Ire only 1,000 applications for the exemption per year, and it cost the economy €84 million. However, I feel these figures suggest a larger level of patent activity in the economy.

The tax returns don’t show the pipeline of those that tried and failed along the way, incentivised by a scheme they never ultimately benefited from. It is from that pipeline I at least partially, draw my future economy.

Finally, the smart economy is at the centre of the Irish Government’s programme to reposition Ireland in the coming years as an economic centre for Intellectual Property rich industry.

Ireland has 3 necessary ingredients to be what the Innovation task force refer to as an: international innovation hub:

  1. a skilled workforce for the creation of IP;
  2. a robust legal system for the protection of IP; and
  3. a favourable tax regime for its exploitation.

I hope policy makers continue to consider IP legislative changes to offer Ireland a competitive advantage over other countries.

The Commercial Court which handles almost all IP enforcement cases is one of the most significant recent innovations in the Irish IP legal landscape.  The efficiency of disposal of cases and the quality of judgments has been recognised internationally.  I hope the Government, whoever that may be in the future, complement this and look at legislative changes that give Ireland a competitive advantage over other countries.

The work of groups such as the International Content Service Centre Task force and the Innovation Task Force are focussed on positioning Ireland as the country of choice for knowledge-based foreign direct investment, as Ill as on driving indigenous growth, especially in the exporting high technology sector.

I only hope now that the momentum that the Government started with these initiatives is maintained by seeing through their implementation.

What lies ahead of Ireland now, is a real strategic opportunity, if not a necessity, to differentiate ourselves through the smart economy. Pivotal in this concept is ICT and the supposed long term, sustainable growth which ICT may offer.

See

(http://www.independent.ie/national-news/ireland-bottom-of-class-for-technology-1917596.html) (19 October 2009)

http://www.lexisnexis.com.remote.library.dcu.ie/uk/nexis/results/docview/docview.do?docLinkInd=true&risb=21_T10804760923&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T10804760926&cisb=22_T10804760925&treeMax=true&treeWidth=0&csi=315462&docNo=2 (15 October 2010)