Irish experts challenge EU innovation mantra

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A report by a government-appointed expert group in Ireland makes uncomfortable reading for EU policymakers invested in Europe’s ‘knowledge economy’. 

Published this month (July 16), it questions whether Ireland’s investment in science, technology and innovation (STI) is really economically worthwhile and whether producing 20% more PhD students might be counterproductive.

These points are buried in a lengthy report by an academic economist charged with rationalising public spending by the Irish taxpayer. It noted that STI investment is promoted as a key part of the “knowledge economy” that Europe has embraced, but says the hard evidence that this is a good way to spend public money is scant. 

Any return on this public investment “cannot be known with confidence at the outset,” it says, adding: “The evidence adduced to date for the impact of State STI investment on actual economic activity has not been compelling.” 

Europe is firmly wedded to the notion that pumping cash into innovation is the only route to becoming more competitive. This is the central tenet of the Lisbon Agenda, which builds on the acceptance that Europe cannot compete on cost because Asia, Africa and South America will always be cheaper, so the EU invests in brains. 

But even that might not be wise, according to Professor Colm McCarthy, lead author of the report and a lecturer at University College Dublin. Ireland and other EU countries are striving to increase the number of doctorates awarded by its universities. The Emerald Isle wants to double its number of PhDs, but this too may not be supported by evidence, the report says. 

There is no “clear business need” to boost PhD numbers, and McCarthy says forcing an increase in the numbers in ‘fourth level’ education could lead to underemployment. It may even force over-educated young people to emigrate, he added. 

“Indeed some empirical evidence suggests that 20% of new doctorate holders find employment overseas, and of those who remain in Ireland, most find employment in the public rather than the private sector.” In short, these extra PhDs are not being translated into private sector innovation – which was meant to be the point at the outset. 

The report raises concerns that Europe’s exuberance for the “knowledge economy” has led decision-makers to craft public policy decisions that are not evidence-based. 

Part of the rationale for doubling PhD numbers is that India and China are churning out doctoral students in dizzying numbers. But graduates there face underemployment, and become frustrated having invested time and intellectual energy working for a qualification for which there is little demand. 

There are also concerns that a massive explosion in the number of top-flight graduates will lead to reduced quality PhD training, damaging the value of higher degrees. The return on this investment, therefore, is diminishing. 

As Europe debates the future of its Lisbon Agenda for Growth and Jobs, the Irish report calls into question whether investments to date have yielded a return.

The term 'knowledge economy' was popularised by writer and management consultant Peter Drucker in 1969 and described a society where workers produce ideas, information and innovation. The concept has been embraced by developed countries as a means of maintaining competitiveness in a globalised world, where production is often outsourced to low-cost developing economies. 

The EU launched the Lisbon Strategy in 2000, which set the ambitious goal of making Europe "the world's most dynamic knowledge-based economy by 2010". The plan was relaunched in 2005 by European Commission President José Manuel Barroso, placing a greater emphasis on job creation. In keeping with this agenda, 2009 was designated European Year of Creativity and Innovation by the European Commission. 

Most European countries have embraced the idea of investing in higher level education and scientific research. Ireland, for its part, has pumped billions into funding agencies such as Science Foundation Ireland, which supports cutting-edge research. 

Last December, the Irish government published an economic recovery plan entitled 'Building Ireland's Smart Economy,' which focuses on translating knowledge creation into economic return. It also commissioned a group of experts, chaired by university economist Colm McCarthy, to identify sources of wasteful public spending. 

The group became colloquially known as 'An Bord Snip Nua', as its task was essentially to cut expenditure. 

  • 20 Sept. 2009: Likely date for the launch of a wide Internet-based consultation on the Lisbon Strategy post-2010.
  • 12-16 Oct. 2009: 1st European Innovation Summit.
  • 10-11 Dec. 2009: EU summit to review priorities for the post-2010 sustainable development strategy.
  • Late 2009 / early 2010: New Commission to present its formal proposals for Lisbon post-2010.
  • March 2010: EU summit to adopt main policy orientations.
  • March 2010 / June 2010: EU summit to provide more detailed decisions, including integrated guidelines, country-specific recommendations, a new type of Community Lisbon Programme and more developed proposals in specific policy areas (such as the EU's innovation strategy). 

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