“The Irish economy has changed hugely over the past few years,” says Mary Hanafin, Ireland’s minister of education.

That’s putting it mildly. Once a mainly agrarian and impoverished nation wracked by joblessness, Ireland sidestepped the industrial revolution, and its best-known exports were Roman Catholic priests and young adults in search of work overseas. Then, 20 years ago, Ireland decided its future should lie in high technology. That bet eventually paid off handsomely.

Between 1995 and 2003, the Irish economy expanded at an average annual rate of 8.1 percent (in comparison, the U.S. rate was a mere 3 percent). And the Celtic Tiger’s economy remains hot. Its government conservatively predicts 5 percent growth in 2006. Per capita income in the nation of 4 million is $38,300 a year, just a smidgeon under the U.S. average of $40,100. Oh, and today, Ireland is the world’s leading exporter not of priests and economic refugees, but of software—an industry valued at $16.8 billion.

The resulting payoff has given a country weaned on Guinness a taste for a Dom Perignon lifestyle and the means to pay for it. To keep its economy bubbling for years to come, Ireland’s now placing a massive bet on research and development. And to improve its odds, Hanafin’s Department of Education plans to double the number of engineering and science Ph.D.’s it graduates by 2010. “The future Irish economy is based on the ‘knowledge economy,’” Hanafin tells Prism. “And to do that we need highly qualified graduates.” Last year, the Emerald Isle awarded 116 engineering and science doctorates.

It’s a move that the country’s top engineering schools not only applaud but claim has long been a goal of Ireland’s academy. “It is a recognition that we need a significant increase in the number of master’s degrees and Ph.D.’s,” says Vincent Cunnane, vice president for research at the University of Limerick, which has a College of Engineering with a total enrollment of 842. Adds Brian Foley, dean of Dublin’s Trinity College School of Engineering: “If the government is serious about putting Ireland at the forefront of the knowledge economy, we need to increase the number of Ph.D. graduate students.”

Ireland may be the land of Leprechauns and four-leaf clovers, but it wasn’t just good luck that dramatically overhauled the Irish economy. It lured investment and jobs from high-tech and pharmaceutical multinationals by offering low corporate taxes (12.5 percent) coupled with a young, well-educated, flexible and English-speaking workforce.

In the mid-1980s, Microsoft was the first American high-tech company to establish a beachhead in Ireland, seeing it as a splendid gateway to the European market. Other companies, ranging from Apple and Hewlett-Packard to Merck and Pfizer, soon followed. And the investment bonanza continues. Google is adding 600 jobs to its European headquarters in Dublin, raising its total number of employees there to 1,400. Intel recently announced plans to invest $1.8 billion in new facilities in Ireland. Investments like those demand in return a highly educated workforce, Hanafin says. “With that kind of commitment, we need to respond by investing in education.” Adds Trinity College’s Foley: “It is through research that the high-tech industry renews itself.”

But ensuring that foreign companies have access to top-notch researchers is only part of the rationale for doubling the number of engineering and science Ph.D.’s. “Ireland can’t rely on the intellectual output of other nations,” Cunnane explains. “We need to capture the intellectual property of our own country.” Once that IP is created, he says, it cannot only be licensed to the existing industrial base—including foreign multinationals—but also be used to seed homegrown start-up companies.

To be sure, a number of successful Irish-owned tech companies whose roots are in academia have already blossomed within Ireland’s verdant landscape. Iona Technologies, a software developer that also has a NASDAQ listing, was co-founded by Christopher J. Horn, a former computer engineering student and lecturer at Trinity College. Trintech, an e-payment security provider, was co-founded by brothers John and Cyril McGuire, the former a Trinity engineering graduate, the latter a graduate of its business school.

And new startups continue to mushroom. Two University of Limerick mechanical engineers recently formed Stokes Bio with $1.2 million of venture capital funding. They’ve developed a “microfluidic” system for early diagnosis of some cancers, primarily childhood leukemia, that could someday replace bone marrow analysis with much less intrusive blood sampling. And a Limerick biomedical engineer created Crescent Diagnostics around a simple fingernail test for osteoporosis that he developed. The government is hoping to see a lot more of these kinds of startups hatched by entrepreneurial academics, Cunnane says.

Paying for It

An initiative as ambitious as Hanafin’s will certainly not come cheaply, though no one has actually put a price tag on it yet. Most of the money will come from Ireland’s National Development Plan (NDP), a $62.4 billion war chest of public, private and European Union cash created to invest in health services, education and infrastructure over the period 2000 to 2006. The NDP budgeted $3 billion to fund R&D, primarily in the areas of biotechnology/ bioengineering, and information and communications technology. There are expectations that that amount will double in the next NDP.

R&D spending was an alien concept in Eire before 2000. That year also saw the creation of Science Foundation Ireland, a $774 million R&D investment fund. In 2004, total R&D spending in Ireland was $2.14 billion, or 1.2 percent of GDP, with 59 percent of that amount coming from the private sector. R&D spending increased an average of 7.3 percent a year between 2001 and 2004. Ireland also created 25 research centers—most linked to universities—that employ 1,600 people. For example, there’s the Digital Enterprise Research Institute at the National University of Ireland in Galway, which has $19.2 million in funding and a partnership with Hewlett-Packard. The National Center for Sensor Research at Dublin City University has $28.8 million in funding and research links with the Georgia Institute of Technology and Cornell University.

Cunnane says that for Limerick to double the number of engineering Ph.D.’s it churns out, it would likewise have to double its crop of post-docs and increase its faculty by 30 percent. “There would be significant infrastructure issues as well,” he adds. Indeed. To accommodate a 100 percent increase in its intake of doctoral candidates, Limerick would need more offices, classrooms, labs and equipment. That’s likely to be true at other universities, too.

Another missing piece of the Ph.D. puzzle in Ireland is the number of grad schools. Basically, there aren’t any. Ireland’s universities graduate Ph.D.’s on an ad hoc basis. So also on the drawing board is a plan to create a number of graduate schools from scratch. Hanafin says the government has earmarked $360 million to fund their construction. And, she adds, universities are being asked to set aside competitiveness and work as partners in creating the schools.

Another hurdle will be finding enough qualified students. It can be done, Foley says, “but we would have to work on it.” Foley adds that most top students are open to doing graduate work. “We have no problem attracting the best students.” But even if the brightest engineering and science students are attracted to graduate programs, there may not be enough of them. As in many other Western countries, undergraduate enrollments in science and engineering have declined. Hanafin says the government is taking a long-term approach. It hopes to interest students in science at an earlier age and has introduced new and practical-based science curricula at both primary and secondary school levels. It’s also spending $480 million to purchase new lab equipment for the schools.

Civil engineering is a particular problem area, even though it’s bristling with students at the undergraduate level. Explains Trevor Orr, director of graduate studies at Trinity’s School of Engineering: “Ireland has an infrastructure deficit.” That’s resulted in an ongoing building boom as the nation brings its motorways, hospitals, schools and water and sewage facilities into the 21st century. Ergo, good-paying jobs in industry are often a stronger lure than a graduate degree to newly minted civil engineers.

In the short term, Ireland is also welcoming foreign students to help meet the Ph.D. demand. Trinity, for example, currently has 145 engineering doctoral students, and about half of them are from overseas, and roughly half of those are from non-European Union countries. Hanafin was part of delegation to China in early 2005, and in January of this year, she expected to join another one to India. Ireland recently opened visa offices in Beijing and Delhi to make it easier for Chinese and Indian students to enroll in Irish schools. And several of its universities have forged partnerships with universities in China and India.

Ireland’s tech-based economic turnaround is as amazing as it is inspiring. And its plan to invest in R&D and to double its cohort of Ph.D.’s makes sense, despite the costs. It’s an investment the Celtic Tiger’s roaring economy can easily afford. And one it can’t afford not to make.

Thomas K. Grose is a freelance writer based in Great Britain.