The Friday Interview: Martin Cronin, Forfás

28 Oct 2005

While no one in the Government or elsewhere has a crystal ball about how the Irish economy will fare over the coming years, it is the job of Martin Cronin (pictured) to take as much of the guesswork as possible out of the exercise. Chief executive officer of industrial policy think-tank Forfás since 2002, his brief is to frame the industrial policies that will see the Irish economy good for the next couple of decades.

In that sense, it is no surprise that Cronin takes a refreshingly long-term perspective on the issue. Where public companies can barely see past the next quarter and politicians the next general election, Cronin sees Ireland’s shift from a manufacturing economy to a knowledge-based economy as a long-term exercise.

“It may take a generation,” he stresses. “We started to get into ICT in manufacturing in the early Seventies but it wasn’t until the mid-Nineties that we could say we had a stable, sustainable ICT production base.”

He adds: “The trick is to believe you’re heading in the right direction and hang in there. If you look back to the early Eighties, we were educating a lot of people and the traditional industries were suffering. But the right thing to say was, ‘The long-term trend is towards technology and we’ve got to stick with it’. We need the same kind of commitment now to the research agenda.”

But Cronin acknowledges that moving up the value chain – as Ireland’s new economic mission has become known – is not the answer on its own. He believes that, to continue to be successful, Ireland will have to couple its intensive research and development (R&D) focus to an enterprise strategy that capitalises on its core strengths in certain niche areas. Citing the examples of the overlap between medical devices and ICT and between financial services and software, he notes: “There are businesses where Ireland is as far up the learning curve as any other country. Software, value-added food products – we’ve been doing these as long as anyone else and doing world-class stuff and we can build on that.”

He continues: “The idea is not to take on India head-on or China head-on but to focus on areas that may be too small for them to be seriously interested in but where we can become a leading player internationally … As a small country we can’t be the best at everything. The trick to survive in a globalised environment is to be one of the best at whatever you are doing.”

While Cronin sees this as Ireland’s ultimate role, he recognises that assembling all the ingredients for this successful economic recipe is going to be a major challenge. For example, the massive government investment that’s being made in R&D under the National Development Plan needs to be more than matched by the private sector if Ireland is to increase its gross national expenditure on R&D from its currently rate of 1.4pc of gross domestic product to its target of 2.5pc of gross national product by 2010. Cronin feels it is important to encourage both multinationals and indigenous firms to increase their R&D activity.

Putting the expenditure in perspective, he notes that Ireland’s entire research spending is less than the budget of a major multinational. Also, a tricky balancing act is needed to invest in R&D effectively: spread your money too thin and you risk failing to get the results you’re looking for; put all your eggs in a couple of baskets and you may miss the boat on surprise successes. This is why Cronin sees it as important to “constantly fine-tune the mix” when it comes to R&D investment.

Education is another area of concern for him. As the engine for the new economy it is an area that should be given priority billing and it needs to be resourced properly but he worries that there is not universal acceptance of this need. “If you talk about becoming a knowledge economy you have to make the necessary investments. I get concerned when I hear people talking about investment in research or primary education or in secondary. We have to do the whole spectrum of education very well. We can’t afford those type of choices; we’ve got to just pay the price by funding all sectors of education well.”

While education is a long-term investment proposition where “kneejerk changes don’t work” he argues that greater flexibility is needed to keep the system aligned with the changes happening in the global economy. “You’ve got to gradually increase the pace at which you can change curricula, change the channels of delivery and prepare for future requirements in a knowledge economy,” he asserts.

“For example, it took an awfully long time to get science into the Junior [Certificate] curriculum and that pace of change won’t do into the future.”

Cronin’s philosophy could be summed up by two words: flexibility and preparation. Flexibility will ensure that the economy is nimble enough to move with the times; preparation is needed to put in place the building blocks of the future. Despite the current strength of the Celtic tiger economy, the worst mistake we would make is to “leave well enough alone”, he feels.

“We’re at a fairly early stage on the journey to the information society and we shouldn’t let the fact that the economy is doing extremely well weaken our preparedness to take radical measures and get stuck in to make it happen.”

By Brian Skelly