Fostering Ireland’s digital economy

12 Mar 2003

When you attend a conference entitled “ICT Clusters and City Dynamics: Does Policy Matter?” some fascinating questions come to mind. Given that most of the delegates were politicians, academics and consultants, if policy didn’t matter, many of them would be out of a job.

Joking aside, it was interesting to see some of Europe’s leading lights in this area come together at Dublin Castle and offer their thoughts on how governments can help foster a thriving IT sector. The occasion marked the publication of a recent major European research project examining the digital economy in urban areas. The cities of Dublin and Cork were featured in a study, which looked at eight cities across Europe with developed information, communications and technology (ICT) sectors. MUTEIS (macro economic and urban trends in Europe’s information society) is a 30-month research project of the EU’s Fifth Framework Programme that aims to develop a concrete understanding of the dynamics of the digital economy in urban areas. Nexus, a not-for-profit research organisation, compiled the Irish section of the report.

While the report highlights the Irish software sector as a model for future development of the ICT sector in Europe, it also outlines several key issues that may hamper further development of the sector in this country.

Infrastructure was one of the key concerns and Dublin’s traffic problems rated highly. “Internal accessibility is dire,” it states. “Central Dublin’s medieval and Georgian streets are clogged with vehicular traffic, making movement around the city centre difficult except by foot; the hub and spoke street layout makes lateral movement especially onerous.”

The report went on to say that city centre office space is expensive and in short supply; even those firms that can secure premises often face the constraints of long-term leases.

While Michael Stubbs and Eddie Kilbane of Dublin City Council gave a very optimistic presentation of the impact the Digital Hub will have on the city, the report gave a somewhat mixed message about the initiative. “The Digital Hub could be a catalyst for a new stage of development in the cluster…but local firms are so far sceptical of its managed clustering model, while local residents have taken a somewhat cynical view of the project, especially the consultation process,” it states. Another issue highlighted was policy cooperation between the city’s four local authorities, which it says is “non-existent”.

With regard to Cork, it says that the presence of global heavyweights such as Apple, EMC, Motorola and Siemens, combined with an ambitious indigenous software industry supported by an enthusiastic local government, the ICT sector – especially software – is very well organised and diversified. “Lack of scale and competition from Dublin are the main challenges, as is the development of a first-rate knowledge transfer apparatus.”

There is, however, a high degree of cooperation among key actors. The National Spatial Strategy is now also favouring development outside of Dublin, which should be to Cork’s advantage as it has been designated a “gateway” city. Cork certainly has the ambition to develop an international class cluster, but the city and region will have to leverage its considerable economies of scope to compensate for lack of scale,” it states.

One of the main themes of the conference was an attempt to determine the conditions for growth of a healthy IT sector. During the event, presentations were made on the cities of Amsterdam and Groningen in the Netherlands, Helsinki and Oulu in Finland and Stockholm in Sweden amongst others. One of the key similarities between all cities examined was a very strong third-level education presence.

This ought to be of interest to policy makers in Ireland since the report also cited concerns about education in this country. It found that Ireland’s third-level institutions played a key role in developing the sector. However, declining interest in IT amongst students is becoming an issue. “The high profile attached to recent announcements of job losses in the sector has resulted in a decline in students opting for courses that would lead to a career in the IT sector. The total number of people applying for computer-related courses in universities and institutes of technology fell by 25pc in 2002 as against 2001. Secondly, there is an ongoing decline in the number of students at primary and secondary levels pursuing science related subjects, for example, physics and chemistry,” it states.

As for the main question of the event, no clear conclusions were drawn and much of the debate surrounded the level of policy intervention required. Perhaps the most compelling arguments came from those who argued for “policy as catalyst” in order to create the conditions for growth. Strong education, decent infrastructure and public private partnerships in the creation of IT clusters were some of the examples cited.

While it was heartening to see Ireland cited as a growth model, the country shouldn’t be sitting on its laurels. A lot of policy makers in Europe will be paying close attention to the outcome of this study and the country can expect that there will be many others vying for a piece of the action.

Pictured: Mary Hanafin, Minister for the Information Society