EXIT STRATEGY - SMART ECONOMY:Ireland has a lot of what's made Silicon Valley so successful - a good quality workforce, angel investors and appropriate infrastructure

THE APPOINTMENT last week of a 28-strong innovation taskforce aimed at making the "smart economy" a reality has been met with a mixed response. Is the taskforce, which will advise the Government on how it can foster innovation and entrepreneurship, a credible effort at helping to restructure Ireland's economy, or just another quango, the last thing the country needs right now?

The taskforce marks the latest step in the Government's attempt to implement its plan for economic recovery, Building Ireland's Smart Economy: a Framework for Sustainable Economic Renewal, published late last year.

One of the key areas outlined in the report is the establishment of Ireland as an innovation hub and, drawing on the success of the IFSC - which required a national co-ordinated effort between government, business and other sectors through the setting up of the Taoiseach's Clearing House Group - the Government decided a similar approach was necessary now.

The taskforce has been charged with advising the Government on how it can foster innovation and entrepreneurship, and ensuring investment in science, technology and research translates into high-value jobs and sustainable growth.

Chaired by the secretary general of the Department of the Taoiseach, Dermot McCarthy, who also chairs the IFSC body, the group will hold its first meeting on July 17th and will report back within six months.

The taskforce will be asked to identify policy measures which might be necessary to support the concept of Ireland as an "international innovation development hub", including in the areas of legislation, educational policy, intellectual property arrangements, venture capital and immigration policy, and it will support development of the Innovation Alliance between Trinity College Dublin and University College Dublin, which aims to create up to 300 new high-value companies of scale over the next 10 years.

The group will examine options to increase levels of innovation and rates of commercialisation of research and development on a national basis, and to ensure a cohesive innovation and commercialisation eco system.

The members of the taskforce are optimistic about potential for the initiative. Mark O'Donnell, a director with investment banking boutique Raglan Capital, says the initiative will be about trying to identify who the potential winners will be, and supporting their need to grow fast and scale up, with the aspiration being that in three to five years, Ireland will have its own indigenous multinational corporations (MNCs).

"Ireland has quite a unique opportunity," he says, adding that it already has a lot of what's made Silicon Valley so successful - good universities, a quality workforce, angel investors, large corporate investors such as Intel Capital, successful capital markets and appropriate infrastructure, including cheap space, which will be more available going forward. O'Donnell sees a significant competitive advantage for Ireland in leveraging linkages which indigenous firms have with multinationals.

Fellow taskforce member Dr Brian Kelly, founder and chief exectuive of Celtic Catalysts, which began life in 2000 as a spin-out from UCD's School of Chemistry and Chemical Biology, says there is a lot of potential for universities to spin off more companies. He will be proposing better facilities be made available for such start-ups, particularly in the life-science sector.

Implementation of the taskforce has not been met with widespread approval. Declan Jordan, a lecturer in economics at University College Cork (UCC), says he is "very underwhelmed" by the initiative, and doesn't think it will have any real impact.

"It's just a rubber stamping body, leaving Ireland's science policy as a sacred cow that can't be touched - but we can't afford to have any sacred cows," he says.

There has been criticism of the 28 panellists chosen. Noting that eight members are heads of public sector agencies or Government departments, while a further two are leading government action groups, Jordan says the taskforce is "overweight on insiders", sharing a similar perspective. He rues the fact it has just two female members, indicating a distinct lack of diversity and openness to new ideas.

The sheer volume of members is causing concern in some quarters. It is not unrealistic to expect a panel with so many members to have difficulty in coming to decisions - although Jordan feels the "group think" which will emerge will solve this issue.

A Government spokesman says it is anticipated the taskforce will operate through a number of smaller working groups focusing on specific aspects of the innovation chain, and that they will meet more regularly and report to the plenary group.

The lack of an economist - on a panel working towards a "smart economy" - concerns Karl Whelan, professor of economics at UCD.

"If I led a team of economists in writing a report on neurosurgery, it wouldn't take long for someone to point out the need for a neurosurgeon on the team," he says.

Whelan argues that the focus on innovation and start-ups loses sight of other important reasons why research is good for an economy.

"There are reasons to sponsor PhD-led research and to believe that it's good for the economy, but the notion of relying on these people to start up their own firms to boost the economy, when by and large the evidence is that most spin-off/start-up firms aren't successful, is incorrect.

We need to think in the broader sense than just these start-ups," he says. "It might be also good to train PhDs to help attract MNC investment and to keep what we have."

Another issue is that the panel is very much focused on science and technology, but innovation drives all types of businesses and services. As Jordan says, "Innovation is a business concept - not a science". The panel is also heavy with academics, with five members either heads of third-level institutes or the universities' association.

As such, Jordan maintains the report will suggest more money should be put into universities to drive innovation, but that such an approach has been discredited. "There is no evidence that putting money into universities leads to greater innovation, but this is the way they're approaching it," he says.

While Jordan agrees with the need to fund science in universities, he isn't sure that much innovation will come from it. Instead of spending €8.2 billion on science and technological innovations, which the Government intends to do as part of the smart economy framework - "a big gamble that they will discover a Nokia" - Jordan says it would be much better to spend money on giving a laptop to every child in secondary school. "If even 20 per cent of the students engaged with the technology, it would be much better than putting their money into research labs," he adds.