Research and development (R&D) is presented not as a primary source of local economic activity but as secondary to fundamental factors influencing corporate survival in small economies. The increasing difficulties of demonstrating causality between levels of Industrial R&D (IRD) expenditure and local economic activity are discussed. It is argued that industry specific, selective support schemes are more likely than generic tax concessions to be effective in periods of rapid trans-national restructuring. Such support appears of limited value unless aligned with a broader policy to assist local enterprises to adapt to competitive forces.