Professor Peter Clinch:

I thank the Senator, who has asked many questions. I will start with productivity. As I mentioned, Krugman says productivity is everything. Essentially, in the long run it is the best indicator of the sustainability of an economy. It tells us whether we are paying ourselves too much or too little. It is critical for prosperity. Countries that have managed to multiply their productivity, or even nudge it by a small bit, can almost skip a generation with regard to the prosperity of that country. It is absolutely critical. What we see in many developed countries is negative total factor productivity growth. Essentially, the ability to combine capital and labour together is becoming less effective. In other words, we are seeing negative productivity growth. This is one of the problems Ireland must try to avoid so that overall, its productivity growth stays positive.

Ireland has been very successful in keeping productivity high. We have very high productivity growth rates. In the past decade, we have seen a tendency for the productivity gap to concentrate. In the Irish economy, for example, 90% of productivity is delivered by 10% of the companies. The leading companies - those at the cutting edge - are driving all the productivity and then there is a long tail of Irish companies that are static or stagnant or actually have declining productivity. How to help those companies that are the followers rather than the leaders is the big question for policymakers. It is those companies that provide most of the jobs.

As to what is the role of science and research, essentially science impacts directly with its novel ideas and innovations. The theory is that if one invests at the cutting edge and one has lots of smart people doing lots of smart things, there is a diffusion process where that knowledge spills out into the rest of the economy and helps those followers to increase their productivity levels. In addition, when one has really good research-led teaching in our universities with a strong knowledge of science for a good pool of talent, that knowledge diffuses out into the population and it is these people who will drive innovation and direct investment in research and innovation. People are concerned about ensuring that it is not just the leading companies that engage in research and that the ideas arising from research carried out in our public institutions permeate through human capital and lead to a more educated workforce overall. This is critical and relates to Senator Reilly's question around the role of SFI in education and public engagement. I am delighted to see that SFI has a really strong focus on education and public engagement that helps this talent pipeline. It also helps society to participate in discussions on science and on the major challenges we face. Ultimately, it will result in a much more productive workforce, which will also help to lift those companies that have stagnant or declining productivity.

On the question about health, the Senator is absolutely right. One of the challenges in health is that it takes very large investments to be effective. It is an expensive business to do research in health. The centres created by Science Foundation Ireland are structured around developing industry partnerships. Partnerships between industry and public research systems and public sector will significantly advance our ability to be more innovative in that area. We have to reflect on the fact that we have come a long way as we have only been investing in research at this level for 20 years. Science Foundation Ireland is about 20 years old. What we have managed to achieve so far is impressive but there are areas where we can continue to improve.