To judge by the constant stream of funding and job announcements, one might think that innovation in Ireland is flourishing. Research and development figures from the Central Statistics Office last month showed that Irish firms spent €1.9 billion on in-house R&D in 2011. And in keeping with international trends, more than 60 per cent of this spending was in service and process innovation. Meanwhile the recently-created Innovation Fund Ireland has up to €250 million of risk capital available for early-stage and high-growth companies. Yet the fund's very existence underlines the problems that exist in the natural order of business development.

In a normal business environment such funding would come from the banks and private investment. The Irish business spend on R&D represented 1.17 per cent of Gross Domestic Product, compared to an EU average of 1.26 per cent. Of the €1.9 billion spent, foreign-owned enterprises accounted for €1.3 billion, indigenous firms just €600 million. Without the contribution of multinationals, Ireland would have one of the lowest levels of R&D spending in the EU. Even now the investment is some way off the target of 3 per cent of GDP set by EU members back in 2000 as part of the so-called Lisbon Strategy.

There are some positive signs of innovation at work in Irish business. Last Friday Trustwater, a Tipperary-based business set up in 2004, won the overall Irish Times InterTradeIreland Innovation award. Its patented technology replaces conventional chemicals in a wide variety of cleaning and disinfection applications and the company is working globally with many of the biggest names in the drinks sector. Foreign multinationals have long been the backbone of our economy. However we must urgently address innovation investment by indigenous businesses. Trustwater is competing on the global stage with innovations that originated in Ireland. We need to encourage more Irish firms to invest in innovation in order to compete at this level.