National innovation policy and performance: Comparing the small island countries of Taiwan and Ireland

Abstract

Growing from agricultural economies to major regional innovator, both Taiwan and Ireland are regarded as small island countries that performed economic miracles. As such, we believe they should be assessed in different historical and institutional contexts so that key policy lessons might be identified. This study evaluates the differences between these two nations in the production of visible innovative output, and investigates how variations in innovation policy have an impact on performance in both cases. Our research results show that both instances the government’s attitudes toward promoting national innovation capacity play a key role in determining differences. The Taiwanese government adopts a more active top-down approach that makes use of substantial government research funding and resources to develop target industries. In contrast the Irish government takes a bottom-up approach that focuses on creating an innovation environment and encouraging firm-level research and development. Substantial inward foreign direct investment into Ireland over the past three decades has created the potential for substantial learning by locally owned enterprises. We also explore how innovation performance uses feedback to direct policy; policy implications are then drawn from our research findings.