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11. Summary and implications for developing countries


(1) The main instrument that has been used in Ireland to promote IT innovation and development has been industrial policy.

(2) There has been no coordinating body established to oversee employment creation, research into IT products and processes, education and training needs for the IT sector, and other aspects of IT development in Ireland. Responsibility for these functions has rested with individual state-sponsored institutions, e.g. the IDA, EOLAS, and FAS.

(3) The IDA has been relatively successful to date in attracting overseas investment, within the electronics sector, to Ireland. The main attraction for overseas companies (such as GEC, DEC, Wang) has been the package of incentives available, including grant aid and tax concessions, access to the European market (for non-EC countries like the United States and Canada), and a well-educated and skilled labour force. It is unlikely that these successes in attracting mobile investment could be replicated in most developing countries. (The estimated average cost of creating one new job in new industry was IR£21,080 over the period 1979-1985.)

(4) Irish experience with the electronics industry has been mainly positive. Exports of computers and related equipment accounted for 19 per cent of total Irish exports in 1987/88. Apart from the 16,000 jobs created, the sector has made a significant contribution to economic growth and development in Ireland. However, industrial performance in the industry has been vulnerable to international market fluctuations.

(5) Criticisms have been levelled about the limited range of manufacturing activities performed in Irish electronics plants. Internationally, it is recognized that "off-shore" IT assembly industries contribute much less in terms of value-added, skill development, and employment growth potential than more advanced processes. Conscious of these criticisms, the IDA has focused on attracting "international services," including computer-based services, with export potential to locate in Ireland. This resulted in the very rapid growth in the establishment of foreign and Irish-owned software and computer service companies during the 1980s.

(6) The computer services industry employed some 2,800 people in 1987 in software development, bureau services, consultancy, and training activities. The sector experienced a turnover of IR£160 million. It is growing at an annual rate of 13 per cent. Irish software exports were IR£100 million, and this figure was expected to double within five years.

(7) The restructuring of the Irish telecommunications system has been critical to IT development in Ireland. An investment of IR£800 million was required to provide digital switching and transmission. This has produced an infrastructure, through EIRPAC, to support access to international packet switching networks and many services such as data transfer, electronic funds transfer, electronic mailing, and videotext services.

(8) To date, computer-based manufacturing applications are relatively underutilized in Irish companies. More extensive use is being made of business management (e.g. accounting-based) and office procedure (e.g. word-processing) applications compared with design-based (CAD) and manufacture sphere applications. It is anticipated that the use of manufacturing applications, such as bill of material processing, process control, and numerical control, will continue to grow in Irish manufacturing companies.

(9) The service sector has also been slow to adopt IT even in subsectors such as banking where there are clear international trends in IT use. Government departments have been amongst the earliest adopters of IT, and the manner in which individual departments are adopting IT is changing. The trend is away from an early centralized approach through the Central Data Processing Services to decentralized decisions concerning IT, in accordance with IT Planning Guidelines.

(10) Other services in which IT has been slow to diffuse are retailing and libraries. Only educational and research libraries have automated their holdings and virtually no computers are used in public libraries. This situation can be altered only if adequate resources are made available for hardware/software. In retailing there is a reluctance to adopt point-of-sale equipment and links with the banking system. This is likely to change as scanning, electronic funds transfer, and shopping from home terminals become features of Irish retailing.

(11) Skill levels in the Irish electronics sector are lower than those prevailing in plants in the United States. However, compared with the levels within Irish manufacturing industry, the electronics sector employs a higher percentage of professional and technical staff. Women workers comprise 45 per cent of the Irish electronics workforce. Very few of them are engaged in professional or technical occupations.

(12) IT-related courses in computer studies/science and electronics are widely available within tertiary-level colleges in Ireland. They can be studied at National Certificate, National Diploma, and degree levels. The number of certificate, diploma, and degree students grew considerably in the 1980s, particularly with the introduction of IT courses in Regional Technical Colleges. Hence the education of engineers, computer scientists, and IT technicians is well provided for in Irish institutions.

(13) Virtually all secondary schools have computer facilities in Ireland and students can take computer studies as an option. However, it is not yet an examination subject at secondary level. Only 25 per cent of primary schools have a computer, and there is no policy for the use of computers in the primary curriculum.

(14) IT-related training forms only a small percentage of training places in FAS centres and external training courses. No IT apprenticeships are available. Women trainees have been poorly represented on courses other than electronic assembly, particularly in those run by external agencies.

(15) More attention and resources are being devoted to the promotion of education/industry linkages as a means of promoting IT innovation. It is increasingly recognized that tertiary-level educational institutions have a key role to play in conducting research and providing consultancy services and other forms of cooperation with industry in the application of information technology.

Implications for Developing Countries


Ireland has experienced a major shift, in terms of hardware, from a reliance on large expensive mainframe computers in the 1960s and early 1970s to the mini and microcomputers. In common with many other countries, mainframes have been maintained by bureaus and many large state and private organizations for use in processing large volumes of data, e.g. payroll, personnel records, invoicing, reservations.

With the advent of cheaper and more powerful microcomputers, individuals, rather than departments, have availed themselves of computing power, often for use in a stand-alone capacity. The next anticipated trend, which has already commenced, is towards "networking" of existing hardware. Within universities and larger state institutions this will enable micros to be used as dumb terminals linked to the organization's mainframe or minicomputer. Thus users will have the capacity to tap the more powerful resources of the mainframe in addition to their own micro-based software applications.

It is clearly recognized that in many developing countries there has been a near proliferation of micros. Often these have been purchased out of aid funds for one-off projects. The potential to utilize such hardware, linked into Local Area Networks (LANs) and Wide Area Networks (WANs), is therefore very important, particularly where resources for additional software and hardware are scarce.

Telecommunications Infrastructure to Support IT

Irish experience also reinforces the OECD emphasis on the importance attached to the telecommunications infrastructure for IT innovation. Allied to the networking concept, an underlying trend is emerging towards the use of packet switching networks and leased lines for data transfer. This is already an established facet of banking in Ireland, and will be increasingly used in linking banking (and other financial services) with retailing. The importance of good communications is also critical to obtaining access to international data banks, particularly for developing countries. Such access has been sought and used by the Irish Department of Industry and Commerce and other state agencies.

"End-User" Computing

Allied to the dual developments of miniaturization and networking, the range of personnel in Irish organizations who have been involved in IT has been extended considerably. As in many developing countries, the initial adoption of computers tended to occur with the use of "turnkey" operations, followed, in larger organizations, by the creation and/or extension of a data-processing (DP) department. This had two negative effects in the early stages of organizational adoption:

(1) IT was identified as being the exclusive property of the DP experts;
(2) IT created an additional and costly tier of personnel.

This underwent a complete change in Ireland during the 1980s so that IT has permeated organizations through the use of accounting, spreadsheet, and word-processing software. The current emphasis is on involving the end-user and in minimizing the "exclusive" role of computer specialists. The manner in which IT was adopted in the Department of Industry and Commerce was novel and illustrates the advantages of an end-user-driven IT initiative, based on a networked microcomputer-based system.

Rate of IT Innovation in Ireland

The level of IT usage in Irish manufacturing and service industries is relatively low, representing the lag period prior to full adoption, as represented on the innovation continuum on page 9. The relatively early and enthusiastic take-up of IT in Irish organizations occurred in the coordination sphere. This includes office automation and business management applications.

Viewed in the context of the benefit/beneficiary matrix (fig. 1.6), the commonly used applications of word processing, spreadsheets, accounts receivable/payable, and general ledger represent the achievement of efficiency and effectiveness at the level of the functional unit and by individuals. The full potential for IT use as a strategic resource encompassing the whole organization is not yet evident in most Irish institutions. Recent and proposed developments in banking and retailing, and design applications currently used by some professional companies, are examples of the potential shift towards service enhancement (e.g. ATMs in banking) and product innovation (e.g. shopping from home terminals) that could transform the nature of IT use in innovative organizations. It appears that these stages of early, middle, and later adoption represent IT adoption within the three benefit/beneficiary matrix domains (Fig. 1.6). Irish organizations have tended to follow the predicted pattern, and this may provide an insight for many developing countries into the likely tasks, units, and levels of impact that IT can be expected to influence.

Barriers to IT Innovation

In terms of developing the IT sector within a country, Guy and Arnold have identified three major barriers to participation:

To some degree Ireland has been faced with each of these. The economic entry barriers are those that determine the cost of entering the IT race in the international market. Government policy in Ireland has operated to provide financial inducements, in the form of direct grant aid, tax incentives, and training/infrastructural support, to potential electronics and software companies. Even ignoring the tax revenues forgone, the cost of creating IT-related jobs has been high. In the light of growing criticism, the IDA's grant structure has been altered to relate to actual jobs created rather than those projected. Such costs could not be borne by most developing countries.

Benefit Individual Functional Unit Organization
Efficiency Task Mechanization Process Automation Boundary Extension
Effectiveness Work Improvement Functional Enhancement Service Enhancement
Transformation Role Expansion Functional Redefinition Product Innovation

Fig. 1.6. Benefit/beneficiary matrix (Source: Index Indicators, vol. 2, no. 5, Index Systems Inc., July 1985)

In terms of technological barriers, Ireland has faced a similar situation to that confronting most developing countries today. Added to that is the problem that it is now harder to identify, segregate, and capture single-product niches than had been the case in the 1970s and early 1980s. The trend is towards a concentration of production in larger firms, usually multinationals, which possess the necessary range of technological experience. Developing countries face a dual conflict:

(1) economic entry barriers that support the need for specialization;

(2) technological barriers that indicate that the development of a broad technological base, similar to Ireland's approach, may be advantageous.

There is evidence that firms in lead nations (e.g. the United States and Japan) are becoming less willing to facilitate outward technology transfer to firms in less advantaged nations. Many US companies are retracting even from "offshore" assembly operations owing to the reduction in the percentage of total factor costs accounted for by labour. Such retrenchment may be temporized through government intervention by adjusting tariff barriers as a compensation for information technology transfer.53

Ireland has also experienced the influence of market barriers and used its position as a member of the European Community to attract IT investment from outside Europe. Stability and size are important. For many individual developing countries, the indigenous market would be too small and susceptible to import penetration.

All of these barriers point to the need for appropriate government intervention in developing countries to support R&D activities, to encourage indigenous firms, and to initiate collaboration across industries and between industries and the university sector. The value of the tertiary-level sector to the IT industry is well established in the United States and is a model that is currently being adopted in Ireland. In terms of markets, there may also be a need for government intervention to support home markets and to work towards some form of protected South-South trading relationships and market unity. It is unlikely that Ireland could have succeeded in its current level of IT innovation in the absence of:

Appendix A: IT-related courses in tertiary-level institutions in 1987/88

Institution Course
Degree level  
Trinity College Dublin Computer Science Engineering (Electronics) Computer Science, Linguistics and a Language
University College Dublin Computer Science Electronic Engineering
University College Cork Computer Science Microelectronics Engineering
University College Galway Electronic Engineering Manufacturing Engineering
National Institute for Higher Education Dublin Computer Applications Electronic Engineering Information Technology
National Institute for Higher Education Limerick Computer Systems Electronic Engineering Computer Engineering Electronic Production Manufacturing Technology
Regional Technical Colleges:  
RTC Cork Computer Studies Electronic Engineering
RTC Galway Technology (Manufacturing)
RTC Waterford Applied Computing
Diploma level  
Trinity College Dublin Computer Modelling and Simulation
Postgraduate Computers in Education Computers for Engineering Specialized Technology
University College Cork Postgraduate Computer Science
NIHE Dublin Information Technology
NIHE Limerick Postgraduate Computer Systems
Regional Technical Colleges:  
RTC Athlone Postgraduate Computing
RTC Dundalk National Diploma Computing Electronics (Manufacturing Service) Electronics (Product Development)
RTC Galway ND Electronics Engineering
RTC Letterkenny ND Electronics
RTC Tralee ND Computing
RTC Waterford Postgraduate ND Commercial Computing Computer Studies Electronics Engineering Technology (Manufacturing)
Certificate level  
Trinity College Dublin Computer Science
Regional Technical Colleges:  
RTC Athlone National Certificate Electronics Engineering
RTC Carlow NC Computing and Information Technology Electronic Engineering
RTC Cork NC Electronic Engineering Telecommunications Electronic and Radio Communications Computer Studies
RTC Dundalk NC Computing Electronics (Manufacturing and Service) Electronics (Product Development)
RTC Galway NC Computer Programming and Data Processing Electronics
RTC Letterkenny NC Electronics Computing
RTC Sligo NC Computer Programming and Data Processing Electronics
RTC Tralee NC Computing Engineering (Mechtronics)
RTC Waterford NC Commercial Computing Industrial Computing Electronics Engineering
Plus professional course in Electronics
Rathmines College of Commerce Computer Programming and Data Processing
Other Vocational/Technician Courses  
College of Technology Kevin Street Telecommunications and Electronics Electronic Engineering Electronics Computer Science
Limerick College of Art, Commerce and Technology Engineering (Electronics) Electronics Technician

Source: Adapted from Manpower Consultative Committee, A Guide to Third Level Education Output 1983, Dublin: MCC, 1984, and data sought from educational institutions.

Appendix B: EOLAS innovation support programmes

As part of its new national role EOLAS operates a number of programmes which aim to develop industry by the cost effective application of science and technology. These are:



Joint Industry/Higher Education R&D

Support is available for projects of an immediate or medium term commercial nature, where the bulk of the work is to be carried out using college expertise or resources. Grants are negotiable up to 50% of eligible costs, which include salaries, materials and equipment.

EOLAS can provide a link between college staff and companies.

Further details: DR MARTIN LYES

RTC - Industry Partnership Programme

This programme is restricted to the Regional Technical Colleges. These colleges have not traditionally been involved in interaction with companies, although they undoubtedly have a major role to play in regional development. The programme supports joint R & D between the college and one or more companies in the region.

Further details: DR ANN SAUNDERS


Scientists and Engineers Employment Programme (STEP)

Support is available for the placement of graduates in small and medium sized companies to provide work experience for the graduate and to help upgrade the level of technology in the company.

Such graduates can be placed individually or as part of a technology transfer arrangement between the college and the company. Grant support covers mainly salary costs.

Further details: MS JOAN NOONAN

Teaching Company Scheme

The purpose of this scheme is to help companies to make a significant development in their use of technology. To do this support is given towards the employment by the company of an experienced graduate. The contract is usually for a three year period. Support is also given to allow the graduate and the company to maintain a link with a college or research institute.

Further details: DR MARTIN LYES


National Strategic Research Programme

This programme is aimed at developing and sustaining a viable national competence in technologies which are vital to Irish industrial development in the medium term. Support is available for strategic R&D projects in the areas of:

Information Technology Biotechnologies Engineering/Materials Technologies

Grants are negotiable up to 100% of eligible costs. Industrial involvement is desirable and in cases may be mandatory.

Further details DR MARTlN LYES

Facility Usage Scheme

This is a small scheme to promote the cost effective use of major national research facilities e.g. the National Microelectronics Research Centre and the Telecom Eireann network, by researchers in the Higher Education sector.

Further details: DR BRIAN O'DONNELL.


Co-operative Research Visits

Support is available to fund the travel costs of the Irish researchers who wish to either (i) develop their contacts with European researchers with a view to submitting proposals for EEC Research programmes or (ii) acquire or use skills, techniques, equipment which are of relevance to the needs of Irish industry.

Such visits are usually of short duration and support is only partial.

Further details: DR ANN SAUNDERS

E.E.C. Research Programmes

The European Commission operates a range of R & D Programmes which are open to Irish researchers, and are aimed at developing a technological base for European industry. There are many benefits for Irish researchers including access to European industry, very large research budgets, and the opportunity to make links across Europe. Eolas executives represent Ireland on many of the committees which formulate and administer these programmes and they are prepared to advise and assist researchers who wish to submit proposals.

Further details: MS GRAlNNE Nl UID

4 Major Programmes to Support Innovation


Glasnevin. Dublin 9. Ireland. Tel :- 01-370101
Fax 01-379020 Telex 32501


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