As Ireland officially emerges from its worst recession for 70 years, the government's commitment to reduce its economic reliance on tourism and agriculture and to develop a knowledge-based 'smart economy' is in peril. The threat comes from cuts in public-sector research funding and from the rationalization of scientific industry, notably in the pharmaceutical sector.

It was revealed in July that some 950 graduate student and postdoctoral research positions, crucial to the development of Ireland's smart economy, will be lost this year (see http://go.nature.com/3tXbVU). These posts represent a 33% cut in just two years in the number of researchers funded by Science Foundation Ireland (SFI), a state body entrusted with the implementation of the government's strategy for science, technology and innovation. Last year, the SFI's budget for new researchers dropped by 80% from the previous year, and the trend is set to continue (Nature 463, 410–411; 2010).

Ireland's researchers are not alone in such experiences, but it is alarming that the cuts come at a time when multinational drug companies are undergoing large-scale rationalization of their global workforces. The country has long been a hub for this sector because of its major tax incentives, good infrastructure and pool of talent.

Numbers of job losses are in the thousands as a result of recent acquisitions. For example, 18% of Pfizer's cuts this year of 6,000 jobs worldwide were in Ireland. The country is being displaced by emerging economies such as those of India and the Far East, where costs are low.

The Irish government needs to reposition itself as a major player in this area by re-evaluating its commitment to research funding and to attracting foreign investment. Reviving the smart economy will improve the prospects of thousands of Irish scientists and engineers currently staring into the abyss of unemployment and emigration.