A recent report from the UK thinktank Demos gave the Republic high marks as one of the fastest improving knowledge economies in Europe. Indeed, the report, which focuses on creative societies and their connection to economic and technological growth, singled out the State for this praise.

According to the report, we have shown the fastest improvement in the shortest time in Europe. We also have seen the fastest growth in Europe - seven per cent -- in what they describe as "creative occupations" - scientists, engineers, artists, musicians, architects, managers, professionals and some random others "whose jobs deal with creative or conceptual tasks as a share of total employment."

I am guessing here, but I'd wager that most of our growth has come in the 'engineers' zone. One only has to look at the growth in employment in the state in the past decade and match that against the expansion of technology industry companies to see how many new jobs sprang up in engineering.

But that's about all the kudos this nation gets in the report. In other indexes - measurements of our ability to use such creativity to forge ahead economically, to build up native entrepreneurialism, to see the growth and development of companies, jobs, a dynamic national environment - we either muddle about in a middle tier of mediocre ability or drag in near the bottom.

Two areas in particular see us creeping in at the tail end, and we should be shocked at our standing in both.

The first is what the report describes as the "Euro-Technology Index", where we slouch in at 11 out of 15 countries, with only Italy, Spain, Portugal and Greece behind us. This index is calculated on research and development expenditures as a percentage of gross domestic product, the number of general patent applications per capita, and a high tech innovation measurement that looks at the number of patents in cutting edge areas like biotechnology, information technology, pharmaceuticals and aerospace.

We do very poorly with, for example, a score of only 0.68 against Sweden at 5.25 in high tech patents (on a scale of 0-15). In R&D, we scrape in at 5.64 against Finland at 13.38 and Sweden at 15. The Scandinavians beat us hands down in all tech-related areas, as do just about everyone else.

Fortunately, this picture is changing. Thankfully, the Government reversed earlier decisions last year to slash R&D funding to some important tech areas, and Science Foundation Ireland has been doing some excellent work in coordinating the Republic's R&D picture.

The commitment of the Tanaiste, Ms Harney, to this endeavour is to be highly commended, as such research is among the best guarantors of the Republic's economic stability in the future. As the report emphasizes: "Nations with strong innovation capacity and strong high-tech industrial sectors enjoy a considerable advantage in generating new commercial products, new wealth, and new jobs while sustaining their growth."

But in another area of key importance we are shamefully remiss: tolerance, especially towards immigrants. Here, we come in second to last in Europe, just ahead of Portugal. Yet the report notes the importance of tolerance to the diverse, robust "creative ecosystems" that nurture economic innovation, especially in cutting edge industries such as technology.

Two major US studies have shown the high correlation between the welcome given to immigrants (as well as gays and lesbians and other minority groups) and regions of high tech industry concentration and innovation, such as Silicon Valley.

With immigrants, one can argue that they directly drive such innovation. One well-known study of Silicon Valley's economy, by University of California, Berkeley professor Annalee Sarenian, noted that a third of Valley companies in the 90s were founded by Chinese or Indian entrepreneurs.

Most of these had come to work first as engineers in established Valley technology companies, for five to 10 years. Then they spun off their own companies, worth$16.8 billion in sales in 1998, giving 60,000 people employment. Business Week estimates that almost 40 per cent of Valley start-ups in the 90s had at least one founder that was Indian, a phenomenal figure.

Thanks to negative international coverage following ugly incidents and unfortunate Government activity here, and confirmed by studies such as this, the Republic now has a global reputation as an unpleasant place to come to live if you do not fall within a narrow band of white nationalities.

Setting aside its general repugnance, such intolerance could be our economic death knell. We do not have the population growth to replace our existing workforce any more, a fact that before long will cause a national crisis of serious proportions because a young workforce pays the taxes that supports the services for those who no longer work.

We also have had steeply declining numbers of Irish students going into science, business and technology studies - precisely the areas where we need an expanding workforce. Both indigenous and multinational technology companies have repeatedly expressed deep concern to Government about this situation.

We need skilled immigrants (and skilled foreign students studying here, who are enabled to stay on to work): their expertise, experience, energy and vision. More importantly, we need the tolerant environment that attracts and retains such people, those who may spend half a decade in Irish companies before founding their own, here, where they will provide jobs and join a bedrock of a creative ecosystem that will benefit all.

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