In its End Year of Statement 2006 published today, the Government's enterprise and science advisory agency Forfás reported another strong year of growth in the internationally trading enterprise sector of the Irish economy, with increases in employment, exports and enterprise research and development (R&D) performance being achieved.
Both the indigenous and foreign-owned sectors recorded growth in exports and employment in 2007 and the outlook for continued growth in 2007 is positive based on the investment pipelines of the development agencies.
“2006 was another strong year for the Irish economy and the enterprise sector, with the ESRI estimating an increase in GNP of 6.2 percent. While international trade has been central to the success story of the Irish economy, economic growth has been driven more by strong consumer and government demand in recent years. In particular, employment in the construction sector has more than doubled in the last eight years. In the long run, continued economic growth depends on the performance of our exporting sector. Ireland is well placed to meet the challenge of achieving continued export-led growth in the medium term” according to Martin Cronin, Chief Executive of Forfás.
Forfás says Ireland is continuing its evolution towards a knowledge-based economy and is catching up in terms of research and innovation activity. R&D expenditure in the enterprise sector recorded a strong ten percent increase in 2005 and is forecast to continue growing at the same rate into 2006. This can also be seen in the high quality of inward investment that Ireland witnessed in 2006, including R&D investments by firms such as Amgen, Cisco, GlaxoSmithKline, PepsiCo and Servier. Among indigenous companies in 2006, more than 550 companies invested €100,000 or more in R&D, with major R&D investments announced by companies ranging from Dawn Farm Foods, Qumas and Foamalite. However, recent work by Forfás in conjunction with the HEA indicates that notwithstanding the significant investment in research since 1998, weaknesses remain in the higher education and national research infrastructure in terms of the facilities and equipment available for excellence in education and research.
“These weaknesses in our research infrastructure must be addressed in the context of the increased investment in R&D under the Government Strategy for Science, Technology and Innovation (SSTI) if Ireland is to achieve its full potential”, according to Martin Cronin.
Enterprise Statistics at a Glance 2006
Forfás today also launched its first annual ‘Enterprise Statistics at a Glance’ Report for 2006, in conjunction with its End of Year Statement. Key points from this Report include:
- Goods export performance. Exports of goods by indigenous manufacturers continued to grow in 2006. Overall since 2000, the cumulative growth in goods exports has lagged behind the growth in world trade volume, resulting in a fall in Ireland’s global market share.
- Services export performance. Exports of services are estimated to have increased by over 15% in 2006, and now account for almost two-fifths of total foreign earnings.
- Local economy expenditures. Total expenditure in the Irish economy by firms supported by the enterprise agencies, excluding corporation tax receipts, amounted to €34.2 billion in 2005, which consists of €11.3bn on payroll costs, €13.2bn on Irish produced raw materials and €9.7bn on Irish services.
- Employment growth. Employment growth in the wider economy continued to increase, with construction, public administration, education and health accounting for 53,000 of the 83,000 jobs increase in 2006. During 2006, employment levels supported by the development agencies (Enterprise Ireland, IDA Ireland, Shannon Development, and Údarás na Gaeltachta) increased by 5,927 to 305,062 – 2,913 permanent full-time jobs in foreign-owned companies, and 3,014 in Irish-owned companies.
- Inward direct investment. The cumulative stock of inward direct investment in Ireland was US$211 billion in 2005, which is triple the EU average in terms of its proportion of GDP. Over half of this investment comes from the US and a quarter from the UK.
- Foreign direct investment. Ireland also has a larger stock of outward direct investment as a percentage of GDP than most EU countries amounting to US$118 billion in 2005.
- R&D and innovation. Enterprise R&D expenditure rose by almost ten percent between 2004 and 2005 to €1.33bn, reflecting a robust R&D spending performance by both Irish and foreign-owned firms. Innovation performance in the business sector is also strong, with 52 percent of all firms operating in Ireland classified as ‘active innovators’ in 2005, which is close to the EU average.
Outlook for 2007 and beyond
“2007 promises to be another strong year for the Irish economy. The latest OECD economic outlook predicts that global economic growth is likely to remain strong, and against this positive backdrop Ireland needs to continue to take measures to promote export-led growth and increased innovation in the development of products and services for world markets”, said Martin Cronin, Chief Executive of Forfás.
“While the short-term prospects for the world economy remain broadly positive, there is considerable uncertainty about medium-term prospects, principally due to concerns over the size and sustainability of US trade and budget deficits. Key international economic risks include a slowdown in key non-eurozone economies and weaker demand, further appreciation of the euro, increasing eurozone interest rates and volatility in Irish and international house prices. As a country we must remain focused on improving our cost competitiveness and developing more knowledge intensive and higher value-added activities”, said Martin Cronin.
Among the key policy requirements to sustain our competitiveness and to promote enterprise development into the future identified by Forfás include:
- Building on the growth over recent years in Irish services exports, and continuing to focus on the internationalisation of Irish services companies in world markets. We need to ensure greater competition in all services markets to promote productivity growth and innovation.
- Developing a pro-competitive and pro-investment energy policy and regulatory framework for the future that ensures competitively priced and secure energy supplies.
- Prioritising investment in the essential economic infrastructures necessary to develop the nine gateway centres in the National Spatial Strategy so as to promote balanced regional growth.
- Full implementation of the next National Development Plan to ensure that key enterprise needs such as waste management, transport and telecommunications infrastructures are addressed.
- Full implementation of the Government’s Strategy for Science, Technology and Innovation 2006-2013, to develop the research infrastructures and services needed to support excellent research teams, and the facilities needed for enterprise-higher education collaboration and the commercialisation of research results.
- Harnessing the full potential of the small business sector for wealth creation and economic growth in Ireland through promoting the take-up of management development initiatives, improving companies access to finance through mechanisms such as the Business Expansion Scheme (BES) and the rapid adoption of information and communications technologies (ICTs) to improve productivity.
