Ireland is the EU's biggest percentage exporter of high-tech goods but rates very poorly in terms of State support for research, according to a new European Commission report on science and technology indicators.

The Commission's second report on science and technology indicators highlights the incongruity of Ireland's position as a major technology exporter despite the relatively low level of State support for research.

Ireland invests "no more than 2 per cent" of State spending on research and development activities. The EU average is 7 per cent, according to the report, but this reaches 30 per cent in countries such as the Netherlands and Denmark. Ireland ranks with the "Cohesion-4" countries, including Portugal, Spain and Greece, in terms of the high level of EU support it attracts. Yet it enjoys a vigorous private sector research activity, with 69 per cent of its total R&D carried out by business, the second highest in Europe after Sweden, according to the Commission report. Moreover, another 20 per cent of the total research kitty is provided via the EU's support schemes.

"The Irish Government gives relatively little direct support to R&D activities. The Irish R&D system seems to rely very much on the presence of foreign multinationals," the report suggested.

However, the low State spend on research has not prevented the growth of high technology exports such as computers, software, pharmaceuticals and biomedical products. "As a result of Ireland's strong specialisation in new technology during recent years, high-tech products now account for 37.6 per cent of its total exports," the report stated, the highest in the EU. The UK ranks second at 22 per cent of its total exports, with France third at 16.2 per cent and Germany placed eighth at 11.4 per cent. The EU average is 12 per cent.

The Commission report warned of a "stagnation" in European research compared with other leading research countries such as the US and Japan. The situation was described as "worrying" by Mrs Edith Cresson, Commissioner for research, innovation, education, training and youth.

The scientific and technological gap between Europe and the US "has tended to increase in many sectors which are critical for the future", according the study. EU countries have lower levels of job creation, devote a lower proportion of their collective resources to science and technology as a percentage of gross domestic product, turn out fewer university graduates and have fewer researchers than the US or Japan.

Leading science and technology countries enjoyed higher long-term economic growth, delivering growth rates three times higher than less technologically developed countries, the report stated. "Coupled with a similar trend in per capita wealth, this prefigures a new division of the global economy, based on access to knowledge and the ability to exploit it," the Commission concluded.

"Access to scientific and technological knowledge and the ability to exploit it are becoming increasingly strategic and decisive for the economic performance of countries and regions in the competitive globalised economy."