Comparison Environmental Side Policies

Ireland Environmental Side Policies Taiwan Environmental Side Policies a) Financial Introduction Services

b) R&D Expenditure Tax Credits/Relief

c) Equipment/ Firm Infrastructure Grants

d) Commercialization Fund e) Incubators

f) Patent Royalty Tax Exemption g) High Risk R&D Support Program h) Strengthening of Copyright

i) R&D Equipment/Expenditure Tax Relief

j) Tax Relief on Training k) Loan Subsidies

l) Patent Protection

m) Visa Restrictions (negative effect) n) Technology Export Restrictions

(negative effect) o) Research Facilities p) Incubators

q) Establishment of Science Parks r) Development Fund

Strong similarities exist between the two countries with regards to the provision of grants and tax relief on R&D (b, c, f, I j) A number of these policies have specific aims rather than general ones:

• Patent Royalty Tax Exemption (Ireland) – Increase levels of Irish patenting and patent licensing

• High Risk R&D Support Program (Ireland) – Reduce the financial risks involved in undertaking high risk research (high risk research is often associated with radical innovation)

• Tax Relief on Training (Taiwan) - Encourages the further training of technical and managerial staff.

In financial support for R&D another common policy is the setting up of incubators. The implementation of this policy is somewhat different; in Ireland implementation has been undertaken at a national level by Enterprise Ireland (Organization for Economic Co-operation and Development, 2006) and all third level institutes now have incubators, in institutes have been in charge of establishing their own incubators and have been supported by grants from the Small and Medium Enterprise Administration. The results of this difference has been that while incubators in Taiwan have been successful at attracting firms quality of support has varied, firms coming out of them incubators have tended to be of a similar nature, with similar products and little to distinguish them in the market place (Tsai & Wang, An Examination of Taiwan's Innovation Policy Measures and Their Effects, 2005). In Ireland the more

centralized policy has resulted the development of incubators specializing in a number of target industries and more consistent support levels (Forfás , 2006).

The role of the legal system in the innovation is highlighted by the efforts taken by each of their countries in addressing perceived weaknesses in their intellectual property laws. For Ireland this involves the strengthening of copyright rules regarding software and the internet.

In Taiwan's case the changes undertaken were of a more substantial nature addressing the weaknesses of the patent enforcement systems (based on US government criticism) it is also interesting to notice the integration of the Taiwan Intellectual Property Office into the NIS administration structure.

The political situation with China has resulted in visa restriction for mainland Chinese engineers and researchers. Although few visa restrictions are in place for other nationalities the restrictions are of particular significance as the two countries share the same language (a significant amounts of research labs in Taiwan use Chinese as the main form of communication) , China is a major recipient of Taiwanese FDI and to some extent the culture is similar(Wu & Huang, 2003). This restriction contrasts with the liberal visa and immigration policy that Ireland offers as part of its EU membership and its growth strategy.

In a similar vein the use of technology export restrictions against China reflects the current situation of Taiwan, these rules prevent the export of advanced technology to China and Chinese subsidies even for research purposes , and like the visa policy reduce the access of Taiwanese companies to Chinese engineers. However there is some evidence that this restriction is being circumvented (authors experience).

One of the more unusual policies is the direct investment policy which provides financial support to help establish larger companies in key fields. In many free market economies such an action would be unthinkable but in Taiwan it echoes back the beginning of industrialization and the role of state firms in that development stage. This direct investment also results in stock ownership by the government which should enable some of the investment to be returned (or a profit made) but also gives the government some voting rights and the ability to influence the behavior of the firm.

Perhaps the most important difference between environment policy is the establishment of the four large scale science parks in Taiwan. By locating their business in one of these science parks firms are able to obtain generous tax advantages and other benefit. Other smaller parks have been established in orders to replicate the success of the 4 major ones. Clearly theses

parks have formed the basis of the cluster effects seen by many (Sher, 2005)(Porter, The Competitive Advantage of Taiwan , 2001). One example of the effectiveness of the science park system would be Hsinchu Industrial Based Science Park

It could be argued that Ireland’s national tax policies offer many of the financial advantages that are found in the Taiwanese science parks. It should be remembered that the population of Ireland is far less which creates its own form of industry concentration. This argument ignores the impact that many of the other science park facilities (such as high quality infrastructure) have on companies. The government of Ireland has been considering the establishment of large scale regional technology parks (Cogan & McDevitt, 2000) but none have been established that the time of writing.