average. In Northern Ireland and the Republic of Ireland, unemployment rates were
above the EU average until the mid-1990s (Figure 5), but have fallen more recently
reaching 8-9 per cent by 1998 (Table 1).
Some other contrasts between the study regions may also be important in terms of
their impact on regions’ innovation potential. First, higher levels of per capita income
in Baden-Württemberg and Bavaria may mean that firms in these regions face a local
demand for higher quality, more sophisticated and more innovative products than
firms in Northern Ireland and the Republic of Ireland (Gudgin, 1995). Secondly,
population densities, which have been positively linked to higher rates of innovative
activity particularly in high-tech industries (e.g. Frenkel and Shefer, 1998), are
notably higher in the two German regions (Table 1). Thirdly, in 1996, both of the
German regions had higher levels of R&D investment and patent applications per
capita than Northern Ireland or the Republic of Ireland (Table 2). In terms of R&D
spending the most significant differences exist in the business and government
sectors, where R&D expenditure as a percentage of GDP in the two German regions
was double that in Ireland. R&D spending by higher education was more evenly
spread across the study regions at 0.35-0.56 per cent of GDP5.
5. Note that because of the differences in GDP per capita noted earlier these
comparisons tend to underestimate the absolute shortfall between the Irish and
German regions in R&D spending. For example, total R&D spending in Baden-
Württemberg was 1.76 per cent of Baden-Württemberg GDP in 1996. Allowing for
the difference in per capita GDP, an equal absolute level of spending per capita in
Northern Ireland would have required an investment of 2.7 per cent of Northern
Ireland GDP.
6. These are derived by CDM from the 1990 French Innovation Survey and express
whether in the opinions of the firms surveyed demand and technology factors had a
'weak', 'moderate', or 'strong' influence on its innovative activities over the
preceding five years (CDM, p. 121).
7. LR (2001) consider firms' networking during seven activities which form part of
the product development process: the identification of new or improved products;
prototype development; final product development; product testing; production
engineering; market research and marketing strategy.
8. Some care is necessary in interpreting these GDP figures for the Republic of
Ireland due to the importance of profits repatriated by externally-owned
companies. In 1996, this meant that GNP at market prices was only 88.8 per cent
of GDP (Source: CSO, Table 3, NIE Dept of Finance). In 1990 the same figure
was 89.7 per cent. In other words while the GDP figures for the Republic of
Ireland given in Figure 1 overestimate the average level of per capita income in the
Republic of Ireland the growth profile from 1991 onwards does give a realistic
impression of welfare changes.
9. Note that because of the differences in GDP per capita noted earlier these
comparisons tend to underestimate the absolute shortfall between the Irish and
German regions in R&D spending. For example, total R&D spending in Baden-
Württemberg was 1.76 per cent of Baden-Württemberg GDP in 1996. Allowing for
the difference in per capita GDP, an equal absolute level of spending per capita in
Northern Ireland would have required an investment of 2.7 per cent of Northern
Ireland GDP.