Dáil Éireann Debate, Tuesday - 21 March 2023
1021. Deputy Rose Conway-Walsh asked the Minister for Further and Higher Education, Research, Innovation and Science the reason for scaling back the Governments research and development target from 2.5% of GNP to 2.5% of GNI*; and if he will make a statement on the matter. [12991/23]
View answer1022. Deputy Rose Conway-Walsh asked the Minister for Further and Higher Education, Research, Innovation and Science the reason for scaling back the governments R&D target from 2.5% of GNP set out in Innovation 2020 to 2.5% of GNI* in impact 2030; and if he will make a statement on the matter. [12992/23]
View answerI propose to take Questions Nos. 1021 and 1022 together.
Ireland’s policy of investing in our research and innovation (R&I) capability over the past twenty years has had a significant impact on our industrial development, contributing to job creation and economic prosperity. As a result of a sustained commitment to research, development and innovation, Ireland has successfully built-up research capacity and an international reputation for research excellence.
Ireland’s previous research intensity ratio committed to increasing overall (both public and private) investment in R&I to reach 2.5% of Gross National Product (GNP), and was adopted as part of the Europe 2020 strategy in 2011 and restated in Innovation 2020 in 2015.
During this period, Ireland’s total public and private expenditure on R&I (i.e., Gross Expenditure on R&D or GERD) has increased significantly in real terms, from €2.6 billion in 2011 to an estimated €4.6 billion in 2020, a 79% increase in value.
Despite this, a key challenge to reaching the target is that increases in R&I investment are not keeping pace with Ireland’s economic growth, which has increased at a rate well above the EU average. Over the period 2011 to 2020, Gross Domestic Product (GDP) increased by 117%, GNP increased by 105% and Modified Gross National Income (GNI*) increased by 57%.
GNI* was developed to provide a better approximation of the size of the Irish economy. It is an important indicator for fiscal purposes, especially for ‘ratio analysis’ where it provides significant added value. For example, the Department of Finance has frequently highlighted the shortcomings of the debt-to-GDP ratio as a measure of the debt burden. Now that the modified measure is available, the Department of Finance supplements the Government’s European budgetary requirements with debt-to-GNI* figures.
Similarly, R&D expenditures as a percentage of GNI* provide a more reliable benchmark against other countries. This is in addition to the calculations as a percentage of GDP and GNP. Because of this, during the development of Impact 2030: Ireland’s Research and Innovation Strategy, it was decided through consultation with the Department of Finance to tie our national research intensity target to GNI*.
Research intensity as a percentage of GDP, GNP and GNI* will continue to be reported in the annual Research and Development Budget Survey, the latest edition of which will be published by my Department shortly.
The change from GNP to GNI* does not represent a scaling back in our ambition to increase the levels of both public and private investment in R&I. Government investment in R&I is now approaching €1 billion per annum. As part of our overall research intensity rate target of 2.5% of GNI*, we will continue to increase public investment in order to deliver the solutions, the people and the academic-enterprise collaborations that will support a strong and sustainable economy that addresses key economic and societal challenges.
