New figures from the Central Statistics Office show that the total spend on innovation activities in Ireland rose by 18.2% to almost €5.5 billion in 2018 compared to 2016.
The main driver for this increase was a 39.4% rise in expenditure for in-house Research and Development from €2.2 billion in 2016 to €3 billion in 2018.
The CSO said this marked the highest share of spend and accounted for 55.6% of all innovative expenditure.
Acquisition of machinery, equipment and software at €1.1 billion represented 20.7% of the total spend.
The CSO figures reveal that even though foreign owned enterprises accounted for only 17.1% of all relevant enterprises, they accounted for €3.45 billion or 63.3% of all innovation-related expenditure.
This included €1.9 billion on in-house research and development.
Irish owned enterprises, which accounted for 82.9% of all relevant enterprises, spent €2 billion on innovation related activities in 2018 or 36.7% of the total, of which €1.1 billion was spent on in-house R&D.
The figures also reveal that 37% of all businesses spent money on innovation in 2018. 36.4% of all small enterprises and 35.5% of medium enterprises reported expenditure on innovation, while 47% of large companies also invested on innovation.
Meanwhile, total innovation spending in the Eastern and Midland region was in excess of €3.8 billion in 2016-2018 which accounted for 70.3% of all expenditure.
The remaining 29.7% - which accounted for €1.6 billion of the total spend - was spent in the Southern region (€1.1 billion or 19.4%) and in the Northern and Western region (€560m or 10.3%) respectively.
The CSO said that 59% of all innovation spending in the Eastern and Midland region can be attributed to in-house R&D, while the corresponding figure for the Southern region was 44.5%.
Meanwhile, Ireland is ranked 11th with an innovation rate of 57.3%, of all countries for which data was published.
This was higher than the average EU-28 innovation rate of 50.6%.
