Business Opinion:Later this month the next national development plan will be unveiled. Along with all the roads, schools and hospitals that will be promised, there will also be a big dollop of cash for research and development.
It is pretty much a common case that the future of Ireland's economy is dependent on how successfully it can make the transition from being about low tax and low costs to what is euphemistically referred to as knowledge. This seems to come down to focusing on things that can't be done by low paid, unskilled and uneducated workers in China and other places.
And, equally, it is common case that the best way to do this is to encourage indigenous and multinational firms to concentrate on high-end activities that require significant amounts of innovation.
In order to facilitate this the State is prepared to pump millions of euro into the economy in the form of grants for research and development to both third level and to companies themselves.
Before the next big dollop gets announced, it is probably worth asking just what sort of return has the taxpayer got for the money spent to date. And it will be a big dollop - the Strategy for Science Technology and Innovation (STI) published last year by the Government estimates that an additional €1.88 billion on top of what the Government could be expected to spend will be needed between now and 2013. Government expenditure in this area currently runs at close to €700 million a year.
Just what sort of a return we are getting for this money is a difficult question to answer as many of the benefits are intangible or indirect or both. But an answer of sorts comes courtesy of the Green Party who have been torturing Micheál Martin, the Minister for Enterprise, Trade and Employment of late about one particular scheme: the commercialisation fund run by Enterprise Ireland. Its purpose is to support third-level research that has a realistic prospect of being commercialised. It is also an example of the sort of "joined-up thinking" which the STI strategy document makes clear has been absent from a lot of policy so far.
Through a combination of Dáil questions and requests under the Freedom of Information Act the Green Party deputy Eamon Ryan has established that some 22 projects funded under the scheme where commercialised last year, as defined by the signing of a licencing agreement.
The scheme costs around €17 million a year to fund, so in very crude terms each successful commercialisation costs just under €800,000, or the cost of an average family home in Dublin. The real difficulty is trying to get a handle on whether this is value for money.
If you bear in mind - as do Enterprise Ireland in a letter to Ryan - that the money would have supported between three and five researchers who acquired skills that are now available to industry - then it's probably not bad value.
But the picture is less clear when you measure up against the stated objective of the STI strategy which is to make Ireland "internationally renowned for the excellence of its research" by 2013, or more specifically to achieve an "increased output of economically relevant knowledge". To do that you would need to know a lot more about the licences, particularly the commercial terms.
It's pretty clear that trying to use definable outputs as a way of judging the value of research grants to third level and industry is far from easy and arguably not very useful. It is also clear that Enterprise Ireland and all the other actors in the system are aware of the problems which were spelt out starkly enough in the Department of Enterprise and Employment's review of expenditure on science and technology in 2005.
It questioned the technological level of the commercialisation projects which were often short term and low risk. It called for a review of schemes such as the commercialisation fund to make them more focused and coordinated. The review also highlighted the need for "the establishment of clear performance indicators and milestones to assess the progress and final outcome of any supports".
The problem then is clear and widely accepted. The issue is how much will is there to fix it. The subtext to a lot of the debate about value for money is to what extent are these research and development schemes really just vehicles for dispensing supports to industry within the restrictions of the EU rules on grant aid. The implication from the departmental review's comments on the commercialisation fund is that this is a big part of what they are about.
If you subscribe to this position then you would have less concern with value for money and more interest on how much is being disbursed. And if success is judged by criteria such as jobs - which is still the yardstick applied to Enterprise Ireland and the IDA - then this sort of pragmatism makes a lot of sense.
A difficulty arises, however, if you are serious about spending something like €7 billion to make Ireland internationally renowned for the excellence of its research in the next six years.
