R&D spending by Irish businesses surges 24pc to €2.8bn

19 Apr 2019

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Research-led businesses will fuel growth of economy for years to come.

Business expenditure on research and development (R&D) in Ireland in 2017 and 2018 increased 24pc to €2.8bn, according to new figures released by the Central Statistics Office (CSO).

Current expenditure, which comprises labour costs and other current costs, accounted for 90pc of all expenditure in 2017, with capital expenditure accounting for the remaining 10pc or €278m of total expenditure.

According to the CSO, Irish-owned enterprises reported an increase in R&D spend of 6pc or €49m, up from €810m in 2015 to €859m in 2017.

Bigger businesses spend more on R&D

Graph showing level of R&D spend by businesses in Ireland from 2011 to 2018.

Source: Central Statistics Office

The figures revealed that in large enterprises – those with more than 250 employees – R&D accounted for 63pc of spending in 2017, or €1.8bn of the total spend. This was an increase of 43pc on their 2015 spend.

Small enterprises with less than 50 people spent almost €425m on R&D in 2017 which accounted for over 15pc of the spend.

Medium-sized enterprises employing between 50 and 249 people spent just under €595m in the same period, which represented 22pc of total spend.

In 2017, enterprises reported that almost €1.7bn was spent on labour costs, which accounted for 60pc of all R&D expenditure. Other current costs, which include materials, supplies, equipment and overheads associated with R&D, had a spend of nearly €841m which accounted for 30pc of total expenditure.

Foreign-owned enterprises accounted for 69pc of all R&D expenditure, with just over €1.7bn being spent on current expenditure, which represented 90pc of all their R&D expenditure. The remaining 10pc or €183m was spent on capital expenditure.

Irish-owned enterprises in comparison spent almost €859m on R&D, with current expenditure at €764m accounting for nearly 89pc of this expenditure.

Ireland below EU R&D spend average

According to the CSO, Ireland ranked 13th in EU28 in terms of R&D intensity in 2015.

The Business Expenditure on Research and Development survey is carried out in all EU28 member states. The most recent data available from Eurostat is taken from the 2015-2016 survey and allows comparisons across the EU. R&D intensity for a country is defined as the R&D expenditure as a percentage of gross domestic product.

In 2015, the R&D intensity for Ireland, at 0.9pc, was below the EU28 average of 1.3pc. This ranked Ireland 13th in the EU28, a fall from 9th in 2013 and 10th in 2011.

Sweden had the highest 2015 R&D intensity in the EU with a figure of 2.3pc, while Cyprus had the lowest R&D intensity at 0.1pc.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years