National Smart Specialisation Strategy for Innovation 2022-2027

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National Smart Specialisation Strategy for Innovation 2022-2027

Contents
Background and Vision 3

Policy Context 6

Methodology 10

Analysis and Findings 12

Regional Strengths and Areas of Opportunity under S3 20

S3 Strategic Goals and Deliverables 23

Monitoring and Implementation of S3 26

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National Smart Specialisation Strategy for Innovation 2022-2027

Background
and Vision

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 National Smart Specialisation Strategy for Innovation 2022-2027

Background and Vision

Innovation — the process of adapting from the old to the new
— is the main source of economic growth and social progress.
In recent years, innovation-led economic growth has been
increasingly centred on technological change, digitalisation and
environmental sustainability. Ireland’s economic policymaking
has adapted to meet these new challenges head on with recent
strategies published to address issues such as Climate Action,
Artificial Intelligence, Industry 4.0 and Digital Engagement.

However, Ireland’s economic growth, while impressive overall, is uneven with

some regions struggling to transition towards new growth opportunities. Regional
productivity and innovation gaps highlight that digital adoption, knowledge diffusion
and sustainable growth are by no means automatic.

To reduce these regional disparities, address economic challenges and deliver a better
quality of life for all, it is important to link Ireland’s regional needs and potential with
innovation policymaking. This is the basis for a Smart Specialisation approach – a
bottom-up, place-based, dynamic process which brings together regional and national
actors to identify opportunities and shape future policy direction. The National
Smart Specialisation Strategy for Innovation 2022-2027 builds on this approach and
highlights the range and depth of Ireland’s research and innovation activities, enabling
greater levels of internal collaboration, while also allowing Ireland to present a more
comprehensive picture of our activities internationally.

What is Smart Smart Specialisation is an innovation policy concept

Specialisation? developed by the European Commission which aims to
boost regional innovation, contributing to growth and
prosperity by helping and enabling regions to focus on
their strengths. This will promote broader benefits,
including innovation-driven growth in regions and the
promotion of sustainable growth models.

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National Smart Specialisation Strategy for Innovation 2022-2027

Our Vision
Ireland’s Smart Specialisation Strategy will embrace a
regional approach to addressing Ireland’s Research,
Development and Innovation (RD&I) challenges. It will
provide a ‘bridge’ between regional and national innovation
strategy building and decision making, bringing coherence
to RD&I planning for the benefit of enterprise and advancing
the RD&I agenda regionally and nationally.

Our Smart Specialisation Strategy will be focused on achieving impact in several

national strategic areas of real significance if Ireland is to advance the RD&I agenda at
regional and national level and achieve delivery of a more digitally connected, greener
Ireland, which serves all of our residents. These national strategic priorities are:

1. Digitalisation and digital transformation.

2. Green transformation for enterprise.

3. Innovation diffusion.

4. International collaboration on Research, Development and Innovation (RD&I).

5. Improving the national or regional enterprise research and innovation system.

The preparation of Ireland’s Smart Specialisation Strategy (S3) through extensive

stakeholder engagement at regional, national and European level, along with our
analysis of findings, has helped clarify a range of high-level strategic goals and
deliverables that will be embraced in national policy and programmes, as well as in the
development of new initiatives. The S3 engagement also examined regional economic
and research strengths, along with emerging areas of opportunity.

This S3 will be monitored and implemented by a multi-level process involving national

and regional stakeholders. Accordingly, a national implementation group responsible
for the management of S3 will be established to ensure all enabling criteria are met
at national level, and that S3 governance and monitoring structures, along with the
role of regional interests within smart specialisation, are identified. This will also bring
additional value to the S3 process by bridging any gaps between national and regional
policies.

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National Smart Specialisation Strategy for Innovation 2022-2027

Policy Context

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National Smart Specialisation Strategy for Innovation 2022-2027

Policy Context
National Economic Context for S3

Smart Specialisation operates within Ireland’s existing economic and innovation

context and builds its priorities on this national picture.

Ireland has one of the most open economies in the EU. Knowledge-intensive
services and high-tech manufacturing are key drivers of the economy with the Irish
Government steering this direction to generate and build on the country’s economic
success. Ireland has demonstrated a strong economic comeback since the 2007-2008
global financial crisis and is set to recover well economically post-COVID. Ireland is
also the most R&D efficient country in Europe, generating more innovation output
per euro of public funds invested than any other country1.

However, Ireland retains several key economic and innovation challenges which will
need to be addressed over the coming period. Irish SMEs are widely reported as
underperforming in RD&I compared to their EU counterparts with similar economies.
This is especially the case for SME productivity, understood to be lacking in impact
relative to RD&I investment, although a positive change was noted from 2018 to
2019. There is a heavy dependence on relationships with, and performance of,
multinational companies (MNCs). The Dublin and Cork agglomerations very strongly
outperform the country’s wider economic and RD&I performance with firms outside
of Dublin and Cork less likely to introduce product/service innovations. Additionally,
the negative impact of the COVID-19 pandemic has highlighted longer term
structural changes facing the workforce, such as digitalisation and sectoral shifts.

Other issues include Ireland’s sensitivity to developments in global value chains

given its comparatively high dependence on foreign-produced inputs in domestic
production of goods for exports; Ireland’s vulnerability to external shocks, such
as changes to the global corporation tax regime and the ongoing impact of Brexit;
and ongoing challenges with digitalisation. Despite a decrease in greenhouse gas
emissions by 4.5% in 2019, the figures indicate that Ireland will exceed its 2019
annual EU emissions allocation by 6.98Mt which makes it highly unlikely that it will
meet its overall 2020 targets, even considering the impact of COVID-19 on emissions
in 2020.

These issues are meaningful at both national and regional level. This makes resilience
planning all the more important, not least in refreshing the strategic framework
underpinning the country’s RD&I approach and S3.

1. 
Shaping Our Future - Science Foundation Ireland Strategy 2025; Eurostat - Government budget
allocations for R&D (GBARD) 2021

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National Smart Specialisation Strategy for Innovation 2022-2027

National Innovation Context and RD&I Policy Priorities for S3

Ireland has increased its investment in RD&I over the past decade, while also
introducing a range of measures to improve commercialisation of research and build
strong linkages between the higher education sector and enterprise. Ireland’s overall
investment in R&D has increased by 79% from €2,564 million in 2011 to an estimated
€4,595 million in 2020. Public expenditure on R&D is increasing and rose to €866.8
million in 2020, representing an increase of €148 million since 2016. Government
allocations for 2021 are estimated at €949.1 million, which will be the highest level
of public expenditure on R&I in the history of the State. However, Ireland is ranked
well below the EU average for Government Budget Allocations on R&D (GBARD)
as a percentage of Government Expenditure. The gap between Ireland and the
EU average in the European Innovation scoreboard over the past decade has also
widened, in particular between Ireland and the innovation leaders.

Relevant strategies and plans with national and regional focus include Impact
2030: Ireland’s Research and Innovation Strategy, the National Development
Plan, the National Economic Recovery Plan, Enterprise 2025 Renewed, SME and
Entrepreneurship Growth Plan, Harnessing Digital - The Digital Ireland Framework,
the National AI Strategy, Industry 4.0 Strategy, Our Rural Future: Rural Development
Policy 2021-2025, the Regional Enterprise Plans, the Regional Spatial and Economic
Strategies and the Climate Action Plan 2021. Ireland’s S3 provides a framework
that leverages these strategies and plans, along with their associated stakeholder
engagement channels and implementation structures, at different spatial levels.

In general, given Ireland’s relatively small geographic scale, along with the key
focus on output excellence and maximising economic and societal impact, our R&D
infrastructure priorities and investment strategies have been set at a national level.
However, important facilities, such as the new Technological Universities, Technology
Centres, Technology Gateways and Research Centres, are located across Ireland
and support regional strengths and future opportunities. S3 identifies the distinct
strengths and areas of opportunities that derive from these regional networks with a
bottom-up perspective.

European Context for S3

Smart Specialisation was developed in 2007 as a European research and innovation

policy approach in the context of the European Research Area (ERA) with the
objective of spending 3% of EU GDP on R&D. Approaches to Smart Specialisation
have developed over the years with guidance and strategic tools developed by the
European Commission to assist countries and regions to identify their strategic
innovation priorities. S3 has several important complementarities with EU
programmes and policies. These include EU Cohesion Policy, the National Recovery
and Resilience Plan, the European Green Deal and Horizon Europe.

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European Fulfilment Criteria for S3

Since the 2014-2020 programming period, developing a Research and Innovation

Strategy for Smart Specialisation has been a prerequisite to receive funding from
the European Regional Development Fund (ERDF). Accordingly, it is imperative that
S3 meets the criteria for acceptance by the European Commission. The fulfilment
criteria for S3s during the 2021-2027 cycle are set out in the European Commission’s
Cohesion Policy legislative package and are summarised below:

1. Up-to-date analysis of bottlenecks for innovation diffusion, including

digitalisation;
2. Existence of competent regional/national institution or body responsible for
the management of S3;
3. Monitoring and evaluation tools to measure performance towards the
objectives of the strategy;
4. Functioning of stakeholder co-operation (Entrepreneurial Discovery Process);

5. Where relevant, actions necessary to improve national or regional research

and innovation systems;
6. Where relevant, actions to manage industrial transition;

7. Measures for enhancing co-operation with partners outside a given Member

State in priority areas supported by S3.

This S3 methodology has been designed around fulfilling these goals.

The European Commission has stipulated that S3 should determine RD&I funding
priorities for ERDF. It is important that the identified RD&I priorities are novel and do
not focus on funding the same ongoing activities, instead looking at how to enable the
transformation of sectoral specialisms identified in S3.

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National Smart Specialisation Strategy for Innovation 2022-2027

Methodology

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National Smart Specialisation Strategy for Innovation 2022-2027

Methodology
Ireland used a two-stage consultation process (entrepreneurial discovery process)
for S3. At a regional level, Smart Specialisation has been integrated as a thematic
area in the consultation process to develop the new Regional Enterprise Plans (REPs)
to 2024 and is a part of the statutory Regional Spatial and Economic Strategies
(RSESs). The stage-one consultations took place as a part of the REPs process in
the nine NUTS 3 areas, giving local insights into regional priorities. The stage-two
online consultation engaged key innovation stakeholders who may not have been
represented at the REPs Steering Committees and provided broader insights.
Numerous recent studies and policy documents were also considered in the context
of this strategy. S3 draws together the relevant findings of these policies, as well as
the insights gained during the two-stage consultation process.

This process was overseen throughout by a steering group of key Government

stakeholders, providing governance of S3 during strategy creation. The steering
group’s role included ensuring that all the criteria for S3 were met, identifying S3
monitoring structures, along with regional and national interests within S3, thus
bridging any gap between national and regional policies.

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National Smart Specialisation Strategy for Innovation 2022-2027

Analysis and Findings

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National Smart Specialisation Strategy for Innovation 2022-2027

Analysis and Findings

In line with the fulfilment criteria set by the European Commission, the following
have been identified as the national strategic priorities for S3 (the industrial
transition aspect of the requirements being split into digital transformation and green
transformation):

1. Digitalisation and digital transformation (addressing fulfilment criteria 1 and 6);

2. Green transformation for enterprise (addressing fulfilment criterion 6);
3. Innovation diffusion (addressing fulfilment criterion 1);
4. International collaboration on RD&I (addressing fulfilment criterion 7);
5. Improving the national enterprise research and innovation system (addressing
fulfilment criterion 5).

Digitalisation and Digital Transformation

Digitalisation refers to the use of digital technologies, data and applications to deliver
scale, productivity and innovation advancements in both established and emerging
sectors. Ireland has, in recent years, been a strong and consistently improving digital
performer in Europe. Ireland ranks fifth out of 27 EU Member States in the 2021
Digital Economy and Society Index (DESI).

Challenges to digitalisation include encouraging greater investment by enterprises

in research, development, innovation and digital skills. It also requires new business
strategies to guide digital transformation, as well as forming specialised teams to
exploit opportunities that will arise.

There are numerous policies and initiatives that already support digitalisation in
Ireland. These include the National Broadband Plan, Industry 4.0 Strategy, the
National AI Strategy, the National Cyber Security Strategy 2019-2024, the National
Recovery and Resilience Plan, the CAP Strategic Plan 2023-2027, the upcoming
European Digital Innovation Hubs, numerous EI programmes, the Disruptive
Technologies Innovation Fund, EI/IDA Technology Centres and EI Technology
Gateways, SFI Research Centres, Tyndall National Institute, the EuroHPC
Competence Centre, the Quantum Learning Platform and the nine Regional Skills
Fora

Consultation Findings
There was overall agreement that much remains to be achieved to harness the
potential of digital technologies in the manufacturing sector and among SMEs with
many organisations lacking the digital skills necessary to lead in the adoption of
technologies or the ability to act as digital-change leads. There is also room for further
enhancing digital adoption, innovation, and entrepreneurship across enterprises, both
large and small. A key challenge which may emerge will be to ensure an appropriate
pipeline of skills and expertise to meet current, as well as future, labour market
demand in emerging technologies and sectors.

In general, stakeholders felt that while there were considerable public supports
in the area of digitalisation, there needed to be greater focus on digital skills and
simplifying the range of offerings available to enterprise. Specific proposals, such as
regulatory sandboxes, the upcoming European Digital Innovation Hubs and the new
Construction Technology Centre, were also proposed and discussed.

It is felt that further access to digital opportunities must be promoted with enterprise
engaged through meaningful mechanisms to ensure the delivery of these actions.
There must also be investment in initiatives and strategic, integrated infrastructure
which will support further understanding, technology diffusion, skills and training
development, along with research commercialisation to enhance innovation and
employability across sectors and regions.

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Supporting Ongoing Digitalisation and Digital Transformation with S3

In the context of Smart Specialisation, where national initiatives are designed to
harness regional strengths, as well as to capitalise on opportunities of convergence
between dissimilar industry sectors, it is imperative to have well-mapped operational
boundaries and clearly defined mandates among stakeholders. Clustering initiatives
offer a great deal of potential to act as catalysts for business growth through the
formation of business-to-business, as well as business-to-RD&I centre initiatives.
The national network of RD&I centres offers a variety of resources across the
technology readiness level (TRL) spectrum while Government agencies offer support
mechanisms to financially de-risk strategic investments. To realise the goals of S3, it
is essential to have defined mandates and co-ordination surrounding the mechanisms
designed to harness the potential opportunities of digitalisation.

These mechanisms will include Future Manufacturing Ireland, clusters, European

Digital Innovation Hubs, remote working hubs and the goals of the actions of the
AI strategy. Improved co-ordination between these existing mechanisms and new
supports financed by ERDF will promote the adaption and deployment of digital
technologies.

Green Transformation for Enterprise

In 2018, Ireland had the third worst emissions of greenhouse gases per capita in
the EU at 12.6 tonnes of carbon dioxide equivalent per capita. Ireland’s emissions
were 53% higher than the EU 28 average of 8.2 tonnes2. The enterprise sector is
responsible for 12.9% of Ireland’s total greenhouse gas emissions, the majority of
which are accounted for by large energy-using companies (alumina, cement, food,
pharmaceuticals) operating in the EU emissions trading scheme (ETS)3.

The Department of Enterprise, Trade and Employment (DETE) contributes to

Government targets for greenhouse gas emissions from 2021 to 2030 and to
achieving net zero emissions by 2050. The Climate Action Plan 2021 outlines steps to
reduce emissions from the enterprise sector as part of its commitment to achieving a
net zero carbon energy systems objective.

As part of its regional development strategy, DETE and its agencies will
encourage new sustainable investments in the regions and promote the growth of
entrepreneurial activity with a focus on the green agenda. As part of the development
of the nine Regional Enterprise Plans to 2024, climate action and transition to a
low-carbon economy were key themes at stakeholder consultation in each region.
In addition, the National Recovery and Resilience Plan aims to contribute to a
sustainable, equitable, green and digital recovery effort. This will be achieved through
grants from the Recovery and Resilience Facility to drive actions such as accelerating
the decarbonisation of the enterprise sector and a National Grand Challenges
Programme which will address climate change.

By 2030, Ireland will have taken significant steps to address the climate crisis, which
threatens our safe future on this planet, by more than halving our greenhouse gas
emissions over the course of the decade.

In recent years, several initiatives have been developed to support enterprises in their
green transition. These are not only delivered by DETE and its agencies, but also by
the Department of Further and Higher Education, Research, Innovation and Science
(DFHERIS), the Department of the Environment, Climate and Communications
(DECC) and the Department of Agriculture, Food and the Marine (DAFM). Some of
the more notable programmes for enterprise RD&I include various EI programmes,

2. CSO Environmental Indicators Ireland 2020

3. Ireland’s Final Greenhouse Gas Emissions 1990-2020 - Environmental Protection Agency

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National Smart Specialisation Strategy for Innovation 2022-2027

including the Climate Enterprise Action Fund; EI/IDA Technology Centres and EI
Technology Gateways, including the Dairy Processing Technology Centre, IMR
and CREDIT; SFI Research Centres, including BiOrbic, MaREI and VistaMilk; LEO
supports, such as Green for Micro; the Department of the Environment, Climate and
Communications Climate Action Fund, the Sustainable Energy Authority of Ireland
Energy Academy, Sustainable Energy Authority of Ireland Grants and tax incentives,
Skillnet and Springboard+ training; and Bord Bia’s Origin Green. In addition, the
recent third call for the Disruptive Technologies Innovation Fund (DTIF) included
“Economic Impact and Sustainability” as a new criterion for selection.

Consultation Findings
All submissions agreed Ireland must develop a more environmentally sustainable
economic model. With increased investment and smart targeted measures, Ireland
has the opportunity to become a global leader in sustainable enterprise and green
innovation.

Several submissions highlighted renewable energy production as a main area of

opportunity for regions. In the long term, several submissions saw significant export
opportunities in this area with, for example, the distribution of Ireland’s future
surplus offshore wind supply to mainland Europe, as well as hydrogen generation
and storage at international scale. The need for investment in RD&I to address areas
where solutions do not already exist is also important as adequate investment will
lead to new industries of the future. These areas include geothermal energy, energy
management and storage technologies, hydrogen production plants, a decarbonised
and climate-resilient agrifood industry for sustainable food production, autonomous
vehicle development, sustainable construction, and the circular economy.

Nonetheless, several challenges to the green transition are identified in S3 and

elsewhere. These include the cost of decarbonisation measures, lack of knowledge
and the low-carbon economy skills deficit. Measures proposed to address these
challenges include targeted RD&I, financial incentives and new training opportunities.
Other supports referred to in submissions included leveraging existing industry
clusters and expertise to help businesses develop new circular products and services,
as well as directing research into ways of reducing the costs of viable but prohibitive
technological solutions to environmental challenges such as hydrogen and advanced
biobased products and fuels. On a more local scale, it will be important to harness
the potential for commercial and community renewable energy projects which can
provide significant benefits for local communities and enterprise from providing low-
cost energy to enhancing economic competitiveness.

Supporting Ongoing Green Transition with S3

In the coming years, the accelerating impact of greenhouse gas emissions on our
climate will significantly alter the way all global economies operate with such trends
requiring policymakers to deliver major policy and legislative changes that will
facilitate a low — and eventually — a zero-carbon future. As a result of such trends, it
is likely that the low-carbon economy and its associated sub-sectors will be uniquely
positioned to achieve critical mass within the next seven years. The green transition
for enterprise is a cross-cutting priority and, in particular for Ireland, it will cut across
sectors and borders.

In order to support this, S3 will assist leveraging opportunities for funding through
the next ERDF programmes 2021-2027 to give strengthened financial support to
enterprises in reducing their carbon emissions and integrating smart technologies for
lower carbon processes. It will also support enterprises to operate from lower carbon
buildings (retrofitting), integrate green infrastructure and nature-based design
solutions within their property and site assets, as well as developing and accessing
skilled workers to work within green industries.

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S3 over its lifecycle also supports the goals of several other strategies and
programmes. These include Our Rural Future: Rural Development Policy 2021-
2025, Food Vision 2030, the National Recovery and Resilience Programme, the
EU Just Transition Fund and the Climate Action Plan 2021. S3 also recognises the
opportunities presented for all-island collaboration in this area and the potential of
regions to collaborate in cross-border green transformation activities.

Innovation Diffusion
Innovation does not only take place by creating knowledge, for instance through
research and development, but also by learning from others. Such learning processes
enable the diffusion or transmission of innovation which can, in turn, help companies,
regions or countries to catch up to higher productivity levels. Innovation diffusion
is of particular importance for SMEs and start-ups and reflects the process through
which these firms gather knowledge, information, and innovations from outside and
use them to introduce their own innovative products or processes. It is, therefore, of
critical importance to the goals of S3.

Innovation diffusion is supported by underlying framework conditions, including the

standards and regulatory environment supported by NSAI, the intellectual property
environment, access to financial support, RD&I infrastructure, EI/IDA Technology
Centres and EI Technology Gateways, EI Campus Incubation, SFI Research Centres
and National RD&I Institutes, Teagasc Pilot & Demonstration facilities (for example,
Moorepark, Grange, Ashtown, Oakpark), intermediary organisations (including EI,
IDA, KTI, LEOs, SFI, the National Digital Research Centre and clusters and business
networks) and channels (including academic-business collaboration, researcher
mobility and knowledge intensive business services).

Despite these supports, barriers remain to innovation diffusion in Ireland. These

include lack of collaboration between indigenous enterprises and multinational
companies in RD&I; low level of investment in R&D activities by indigenous
enterprises; proportionally low levels of public R&D expenditure; lack of awareness of
the R&D tax credit initiative and RD&I supports among SMEs; and the complexity of
the RD&I support environment.

Consultation Findings
All submissions agreed that, generally, there appears to be a good relationship
between higher education/research institutions and MNCs. However, several
additional supports and measures would further improve this environment. These
include supports extended to increase the capacity of the third level sector to
engage in knowledge transfer activities; a strong talent pipeline; multiple channels
for collaboration; and greater collaboration between MNCs and indigenous SMEs,
including through clusters.

Other measures identified include the continued funding of Technology Transfer

Offices (TTOs) in the HEIs under the Technology Transfer Strengthening Initiative
(TTSI); increased use of national template agreements to simplify and speed up
contracting with HEIs, as well as bringing more consistency for companies and
innovators; supporting the collection and publication of information on the facilities,
equipment and supports available to companies to access within the third level and
State-funded research base at national and regional level; the need to orchestrate
existing and emerging capacities in regional areas and to raise the profile nationally
and internationally; continuity of industry-academic collaborations beyond a
completed project to help companies to bring a project’s innovations to market; and
the expansion of R&D tax credits to cover a wider variety of innovation activities.

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Supporting Innovation Diffusion with S3

Through S3 national implementation group co-operation, developing new funding
instruments through ERDF and feeding into Impact 2030: Ireland’s Research and
Innovation Strategy, S3 will stimulate enhanced innovation diffusion and represent
the specific sectoral RD&I needs of the regions in national conversations.

The S3 national implementation group will work with DFHERIS towards the co-
ordination and scaling of research institutions in Ireland in order to increase capacity,
supporting Knowledge Transfer Ireland (KTI) through ERDF in embedding knowledge
transfer within the public research system and promoting the need for developing
entrepreneurial and research skills to support commercialisation of RD&I.

International Collaboration for RD&I

International co-operation maximises the impact of international and national
investment in research and innovation. It contributes to the development of Ireland as
a research and enterprise partner, underscoring and enhancing the excellence of our
research and innovation system and facilitating engagement with the Irish diaspora.
A key plank of Ireland’s engagement in international co-operation is participation of
its researchers and enterprise in the EU Framework Programmes for Research and
Innovation. Ireland has performed well in winning competitive funding under these
Programmes, the majority of which is secured by our HEIs, with the balance being
won by enterprise and public bodies.

DFHERIS has policy responsibility for the majority of Ireland’s international RD&I
collaboration initiatives. New metrics, targets and actions for these initiatives are set
out in Impact 2030: Ireland’s Research and Innovation Strategy.

There are numerous supports and programmes that engage in international and
collaborative endeavours and support enterprises and researchers in their efforts
to do so. These include participation in the EU R&I framework programmes,
including Horizon Europe and Interreg Europe; bilateral country co-operation,
including the US-Ireland Partnership; a variety of all-island initiatives and agencies,
including InterTradeIreland, SFI programmes, HEA programmes, INTERREG VA and
PEACEPLUS; a range of programmes that target enterprises, including EUREKA, the
European Space Agency, the Digital Europe Programme, European Digital Innovation
Hubs, EuroHPC, EuroCC, the European Cluster Collaboration Platform and
Important Projects of Common European Interest (IPCEIs).

Ireland is also a member of several international research organisations including the

European Southern Observatory, the European Molecular Biology Laboratory, the
European Molecular Biology Conference, COST, CECAM, EOSC, ELIXIR and LOFAR.

Consultation Findings
In general, submissions were positive about Ireland’s competitive advantage in
international collaboration on RD&I. Several submissions highlighted how important
it will be to concentrate on areas which will be important for Ireland in the future
such as climate change, offshore electricity generation and decarbonisation, along
with other areas which will have significant international implications such as
quantum engineering and microprocessor production. Increased participation by Irish
enterprise in IPCEIs in cutting-edge sectors was promoted in several submissions.

The need was highlighted for Ireland to embrace a greater diversity of funding and
co-funding options in international research collaboration, particularly with the
recent agreement on an EU recovery budget of €1.8 trillion earmarked to support
investment.

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Supporting International Collaboration with S3

It is intended, over the lifetime of this strategy, that the S3 national implementation
group will work to identify opportunities to collaborate and build synergies with
other countries in the enterprise RD&I space. For the first time, the S3 national
implementation group will bring together regional and national policymakers in
the enterprise RD&I space, thus bridging a previous gap in Irish policymaking.
It is intended that this will lead to better and more coherent outcomes for
Ireland’s participation in EU and international programmes and that regional level
recommendations will feed up into the national policymaking space.

Improving the National Enterprise Research and Innovation System

Ireland is considered a strong innovator4; however, there is significant room for
improvement. The country continues to lag other EU countries in the level of
investment in RD&I and there is a significant innovation gap between large MNCs
and indigenous SMEs. There is scope to improve the innovation potential of Irish
SMEs by addressing some of the hampering factors to RD&I activity, which can
include lack of funds, innovation costs and lack of skilled employees. Even though
grant aid exists, innovation policy emphasises tax credits to stimulate firm-level R&D
investments. These tax credits are effective but might not be as useful to start-ups
and innovative young firms in emerging sectors. There may be other tools needed
such as innovation sprints, loan guarantees, risk finance instruments or initiatives for
developing innovation capabilities. This is an active policy and programming space in
Ireland which has seen the development of several new funding initiatives such as the
Irish Innovation Seed Fund Programme and the Brexit Impact Loan Scheme. Improved
RD&I grant initiatives could be explored which would also address low Government
R&D funding levels. Recent, novel RD&I grant initiatives, such as the Disruptive
Technologies Innovation Fund, have bolstered Ireland’s direct funding intensities. The
popular take-up of such instruments demonstrates the demand in Ireland’s economy
for such modes of intervention.

Consultation Findings
Submissions agreed that, while Ireland is considered a strong innovator in the EU
context, it falls behind other EU countries in terms of the level of investment in
RD&I. In short, public expenditure on RD&I has not kept up with increasing business
investment in the area, resulting in Ireland scoring significantly below the EU average
for Government investment in research and innovation. Furthermore, the COVID-19
pandemic brought the need for greater investment in the research ecosystem into
sharp focus.

The driving forces identified in the submissions which could be used to generate a
stronger and more unified RD&I ecosystem are the TTOs and regional Research
Performing Organisations (RPOs). Submissions noted the need to bring together
large companies, SMEs and HEIs to identify common areas for research and
development; collaboration on shared innovations when they are developed;
an extended system of mentoring of SMEs by larger firms; the development of
supply-chain partnerships; and more comprehensive funding mechanisms. Several
submissions placed an emphasis on cross-collaborative approaches to RD&I with
policymakers, research institutions, academia, communities and industry to address
cross-sectoral areas such as enterprise, energy and transport. Cross-disciplinary
collaboration could best be achieved through the creation of hybrid innovation
clusters and hubs.

4. 
European Innovation Scoreboard 2021

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National Smart Specialisation Strategy for Innovation 2022-2027

Many submissions highlighted the reasons for the low uptake of RD&I in the
indigenous SME sector. Numerous challenges were highlighted including long-term
sustainability, lack of awareness, the focus on a firm’s immediate survival, a lack of
dedicated personnel and time on the part of senior management, as well as concerns
over costs against return and loss of market share. In turn, potential partnerships
between SMEs and HEIs were largely untapped. It is also difficult for smaller
businesses to navigate the research landscape in Ireland and to understand how they
might benefit from the wealth of intellectual property (IP) and expertise on offer in
RPOs.

Submissions called for increased infrastructure investment and industry-academia

collaboration, along with financial supports for SMEs, such as feasibility grants and
enhanced tax supports for R&D, to encourage their innovation, as well as to build
connections and capability. Other suggestions included a place-based emphasis,
refining funding models and tax credits, along with developing an organisational
structure to better utilise collaboration between research and enterprise.

Supporting Improved RD&I with S3

Ireland’s current enterprise support framework promotes collaboration, clustering
and linkages between HEIs and enterprises. Clustering is also a strategic focus for
both Enterprise Ireland (EI) and IDA Ireland as a mechanism to promote balanced
regional growth and to strengthen enterprise linkages and spillovers. S3 strongly
supports the upcoming National Clustering Policy and Framework and will be an
important input into that strategy through the identification of regional sectoral
strengths, capabilities and opportunities.

The new network of Technological Universities (TUs) will be a critical component of

the higher education infrastructure, particularly in a regional context. The TUs will
develop unique market-led research offering which will build on the priorities and
regional sectoral specialisations identified in S3. This will be supported by ERDF.

The requirement for investment to enhance the digitalisation capacity of the regions
is evident. However, there are many facilities and opportunities available across the
region not being optimised due to lack of visibility or complexity of accessing. This lack
of communication and signposting was noted as a barrier throughout the stakeholder
consultation. The S3 national implementation group will endeavour to communicate
the need for an easily navigable RD&I system at the appropriate fora.

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National Smart Specialisation Strategy for Innovation 2022-2027

Regional Strengths
and Areas of
Opportunity
under S3

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National Smart Specialisation Strategy for Innovation 2022-2027

Regional Strengths and Areas of

Opportunity under S3
Realising the enterprise and innovation potential in all regions, and thereby reducing
disparities between regions, is a key aspect of S3.

The European Commission has classified two of Ireland’s NUTS 2 regions, Eastern
and Midland (EMR) and Southern (SR), as “More Developed”, based on their GDP
per head of population relative to the EU 27 average. These two regions perform
strongly in European terms in certain areas. In 2021, Eurostat noted the highest
average labour productivity in the EU was €161,700 per person employed in Dublin
which was nearly three times as high as the EU average. Eurostat also noted the
largest increase in labour productivity relative to the EU average was observed in the
SR, where productivity relative to the EU average increased by 170.4 points while
the second largest increase was in the Irish capital region, EMR, up 65.8 points. This
picture is also reflected in economic output. In 2019, economic output per inhabitant
was at least twice as high as the EU average in the EMR and SR. Regional GDP per
inhabitant is typically highest in capital regions. One of the few exceptions is the SR.

However, the European Commission has re-classified the Northern and Western
Region (NWR) from a “More Developed Region” to a “Transition Region”, due to its
economic performance and drop in GDP per capita. The difference between the
richest and the poorest NUTS 3 areas in Ireland in terms of GVA per capita doubled
between 2000 and 2016. With the location of globally competitive multinational
companies (MNCs) around the main urban areas of Dublin and Cork, these areas
offer increasingly favourable business and innovation environments while areas in
the NWR, predominantly rural and remote, increasingly fall behind. It is critical that
the potential for economic growth in the NWR is realised and that there is an overall
lift in its economic performance and sustainable job creation in order to restore the
region to the status of a “More Developed Region”. There are particular challenges to
be overcome given the NWR’s rural structure, along with its relatively peripheral and
border location. Addressing regional disparities will also have the effect of relieving
unsustainable pressures in the Greater Dublin Area which risk undermining the
overall performance of the national economy.

This regional economic context is mirrored in the regional innovation context. In

the 2021 results of the European Commission’s Regional Innovation Scoreboard,
the NWR is now the only NUTS 2 Region in Ireland to be classified as a “Moderate
Innovator+”, recording an innovation index score between 70% and 100% of the EU
average, whereas the SR and EMR are classified as being “Strong Innovators”.

The Regional Assemblies and the Regional Enterprise Plans (REPs) Steering
Committees are key stakeholders in the regional S3 process. The REPs are important
vehicles in translating national level policies and strategies, including S3, into regional
and local impact. Smart Specialisation was one of the four thematic areas considered
during development of the REPs to 2024, alongside resilience and recovery, transition
to a low-carbon economy and new ways of working.

Smart Specialisation is one of the key economic principles adopted in each of the
statutory Regional Spatial and Economic Strategies (RSESs) developed by the
Regional Assemblies. S3 will complement the work of the RSESs in creating an
effective place-based and market-led business ecosystem, allowing all regions to fully
utilise their competitive advantages with respect to enterprise innovation and to fully
maximise growth in their economies.

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 National Smart Specialisation Strategy for Innovation 2022-2027

Accordingly, the priorities identified by the REPs and RSESs are central to this
strategy. They, along with the findings from the S3 consultation process, have allowed
us to identify existing and emerging sectoral areas of strength. At a high level, these
are:

Northern and Western Region Eastern and Midland Region Southern Region
Sectoral Strengths and emerging areas of opportunity
Advanced Manufacturing and Engineering Advanced Manufacturing Advanced Manufacturing
AgriFood and AgriTech Audiovisual Automotive/Aerospace
Audiovisual/Creative Biopharma/Life Sciences Design
ICT and ICT Services Engineering Financial Services
Life Sciences, MedTech and Medical Financial Services/FinTech Food/AgriTech
Devices
Marine and Blue Economy Food/AgriTech ICT
Renewable energy, Climate Change ICT Marine/Maritime
mitigation and sustainability
Pharma/MedTech

Renewable Energy

S3 also identified subsectors and niches within these which are considered to be of
specific importance to their regions and areas. These vary by region, dependent on
the specific resources and infrastructure available to regions and are dealt with in
more depth in the individual regional chapters in the main S3 document.

These sectors are a critical component of S3 and highlight where stakeholders felt
that investment should be focused over the next cycle of ERDF.

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National Smart Specialisation Strategy for Innovation 2022-2027

S3 Strategic Goals
and Deliverables

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 National Smart Specialisation Strategy for Innovation 2022-2027

S3 Goals and Deliverables

Considering Ireland’s strengths, challenges and opportunities to 2027, several
strategic goals for S3 have been identified. These goals will support Ireland’s ongoing
efforts to rise to the challenges of the future identified by our stakeholders by
supporting the Smart Specialisation process in all aspects. They are accompanied
by high-level deliverables which will ensure these goals are met. These goals and
deliverables will be further supported by a more granular list of actions set out in a
future annexe. S3 goals and deliverables are:

High Level 1 3
Our new Smart Specialisation Smart Specialisation will improve
Strategic Goals Strategy for Ireland will link research and innovation capacity in
national and regional enterprise and Ireland’s regions.
innovation policy, connecting the
statutory RSESs, Regional Enterprise This will be achieved through:
Plans, Impact 2030: Ireland’s
Research and Innovation Strategy ƒ Increasing the intensity of Business
and other national policies and will R&D that takes place across all
bring greater policy coherence at regions, with a particular focus on
multiple levels of governance. underperforming regions, through
delivering new and enhanced
This will be achieved through: agency interventions with a
particular focus on strengthening
ƒ Convening a national Smart industry-academic collaborations
Specialisation Implementation across Ireland.
Group to bring together
regional and national innovation
policymakers;
ƒ Continuing to focus on identifying
linkages and exploiting synergies 4
between relevant national and Smart Specialisation will encourage
regional strategies; and more regionally dispersed RD&I,
ƒ Providing input, informed by smart strengthen the enterprise base
specialisation insights, into the and identify emerging areas of
development of new strategies and opportunity.
policies over the lifecycle of S3.
This will be achieved through:

ƒ Leveraging and building on the

analysis of regional strengths and
2 emerging areas of opportunity
Smart Specialisation will support the undertaken as part of the
adoption of the European Regional development of Ireland’s S3;
Development Fund in Ireland by ƒ Addressing gaps in existing regional
supporting policy objective 1 ‘A innovation infrastructures and
Smarter Europe’ systems through new funding, by
supporting projects aligned with
This will be achieved through: the nine Regional Enterprise Plans
to 2024 (REPs); and
ƒ Approval of Ireland’s Smart ƒ Seeking out opportunities to
Specialisation Strategy by the enable inter-regional collaboration
European Commission. through the REP Implementation
structures.

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 National Smart Specialisation Strategy for Innovation 2022-2027

Smart Specialisation deliverables

5 7 are to be extensively supported by
Smart Specialisation will increase Smart Specialisation will encourage Ireland’s ERDF programmes, subject to
the regional uptake of new advanced the maximising of sectoral strengths European Commission approval, that
technologies to increase the through clustering and the scaling of aim to enhance RD&I activity through
reach of the twin green and digital Ireland’s existing areas of research new collaboration supports, improved
transformation throughout Irish excellence. HEI R&D capacity and novel innovation
enterprise. grant initiatives. It is also intended to
This will be achieved through: bolster regional entrepreneurship
This will be achieved through: through investment in the Technological
ƒ Supporting the development Universities, leveraging the role
ƒ Enhanced supports prioritising of a new National Clustering of further and higher education
knowledge transfer and industry- policy framework through the institutions as anchors for enterprise
academic collaboration, informed identification of regional and and for regional growth. The ERDF draft
by our smart specialisation analysis national sectoral strengths, programmes have been extensively
and findings including interventions capabilities and opportunities; and informed by this strategy and include
with a particular focus on ƒ Supporting the scaling of Ireland’s specific programme level metrics to
strengthening industry-academic existing network of national ensure targeted impact. Supporting the
collaborations across Ireland. R&D facilities and clusters by work of these programmes will provide
establishing a coherent national new and additional value for Ireland
framework for S3, and by setting and push forward future regional and
out opportunities that exist within national advantages across a variety of
Ireland’s regions. areas.
6
Smart Specialisation will drive the More broadly, S3 will assist in guiding
development of skills needed for the focus of a range of other funding
enhancing innovation activity across 8 mechanisms across Government,
the economy Smart Specialisation will lead to a including Horizon Europe, aimed at
greater visibility and coherence of driving increased collaborations across
This will be achieved through: the innovation system in Ireland’s research and innovation, industry and
regions both nationally and in the higher education sector, and in
ƒ New and enhanced supports based Europe. ensuring their alignment with ERDF.
on creating the necessary skills for
‘needs led’ innovation, informed by This will be achieved through:
our smart specialisation analysis
and findings ƒ The establishment of an S3
monitoring implementation
procedure and governance at local,
regional and national level;
ƒ The incorporation of S3 goals,
approach and priorities into Impact
2030: Ireland’s Research and
Innovation Strategy;
ƒ Ongoing engagement with
S3 in Ireland by the European
Commission.

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National Smart Specialisation Strategy for Innovation 2022-2027

Monitoring and
Implementation of S3

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National Smart Specialisation Strategy for Innovation 2022-2027

Monitoring and Implementation of S3

Ireland’s S3 will be monitored and implemented by a multi-level process involving
national and regional stakeholders.

National
Implementation
Group

NUTS 2 Co-ordination
S3 Monitoring & Analysis,
EDP Co-ordination,
NUTS 2 Implementation
(leveraging the 3 Regional
Implementation Committees
at NUTS 2 level)

Regional Stakeholders - NUTS 3

Implementation & Entrepreneurial Discovery
(leveraging the 9 Regional Steering Committees
for the Regional Enterprise Plans at NUTS 3 level)

It is recognised that the REPs will be important vehicles in translating S3 into regional
and local impact. These stakeholder groupings will also ensure regular EDP feedback.
Identified S3 priority areas will be an agenda item for discussion led by the Regional
Assembly member at the REPs Steering Committees. The Regional Assemblies will sit
on each REP Steering Committee, ensuring S3 priorities (both agreed and emerging)
remain a live consideration at a local level.

The REPs are an excellent forum for this engagement as regional and local agents
are better equipped to understand regional strengths, identify trends and monitor
regional developments. S3 will be an item in the mid-term and final REPs progress
reports. In addition to these reports, an update will be provided by DETE’s Regional
Enterprise Plans and Initiatives Unit to the S3 national implementation group.

The NUTS 2 co-ordination will be managed by three regional implementation groups,

which will have three roles:

1. Utilise monitoring indicators and tools such as, but not limited to, the Regional
Assemblies’ “Regional Development Monitor” which is being developed by the
All-Island Research Observatory (AIRO) at Maynooth University, to inform their
work on regional innovation trends and developments, monitor progress on S3
implementation, and present findings to the S3 national implementation group.
This corresponds to the European Commission’s recommendation to make use
of analytical and informative tools.

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National Smart Specialisation Strategy for Innovation 2022-2027

2. Through participation on the nine REPs Steering Committees, the Regional

Assembly member will (a) ensure alignment with national and regional priorities
and support the identification of new regional priority areas based on their
analysis, regional insights and focused stakeholder engagement, and (b) gather
cross-regional insights and information on S3 related developments and regional
level implementation, co-ordinated and reported to the national implementation
group. These insights will be considered and discussed by the S3 national
implementation group.

3. Regional implementation groups can perform further analysis on selected

regional priority areas, co-ordinated and led at NUTS 2 level, as necessary to
inform the S3 national implementation group’s deliberations and regional level
implementation. The groups will also provide implementation support at NUTS
2 level for delivery of S3 national and regional strategic priorities as agreed with,
and consistent with, the work of the national implementation group.

These groups will meet prior to the S3 national implementation group’s six-monthly
meeting to facilitate its reports to the latter. The three regional implementation
groups will also report ongoing S3 alignment with ERDF spending and broader results
through indicator monitoring and other research as relevant. This will take the form
of a written submission to the S3 national implementation group. Additionally, a full
mid-term review will take place during the lifecycle of ERDF which will allow for the
monitoring of NUTS 2 regional indicators relevant to S3 implementation.

As per European Commission regulations, a national implementation group

responsible for the management of S3 will be established. This national
implementation group will ensure all enabling S3 criteria are met at national level. It
will ensure S3 governance and monitoring structures, along with regional interests
within S3, are identified. This will bring additional value to the S3 process by bridging
gaps between national policy and regional implementation. The group will also be
responsible for ensuring coherence and promotion of S3 principles across the whole
of government.

It will oversee the delivery of S3 national and regional strategic priorities by bringing
together relevant policy leads, as well as related agencies and bodies directly involved
in implementation as required. It will focus on prioritisation and action planning to
identify emerging regional consensus on cross-sectoral economic and innovation
developments, ensuring continued alignment between national enterprise and
innovation policies and S3.

The S3 national implementation group will meet every six months, based on regular
updates from the REPs and Regional Assemblies. Along with their own monitoring
results, the S3 national implementation group will prepare a biannual report outlining
how S3 is progressing in the national and regional contexts.

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National Smart Specialisation Strategy for Innovation 2022-2027

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National Smart Specialisation Strategy for Innovation 2022-2027

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