Forfás, the Irish State policy and science advisory agency today reported a resilient performance in the internationally-trading enterprise sector of the Irish economy during 2007, with the exporting sector strong, employment remaining stable and firms stepping up measures to improve productivity performance. It also noted that while overall economy performance was positive, the year did pose difficulties for enterprise with a loss in international price competitiveness due to the appreciation of the euro and higher inflation rates in Ireland relative to our trading partners.
|Martin Cronin, Chief Executive Officer of Forfás|
Martin Cronin, Chief Executive, Forfás commented “We are facing a more testing international economic environment which presents further challenges to the success of enterprise and economic sustainability and growth. 15 years of economic success, however, has provided Ireland with resources and strong enterprise foundations which mean that we are now better placed than ever before to tackle issues and successfully progress to the next phase of economic development. Substantial challenges for enterprise will persist but Ireland is well placed to address them.”
Economic Progress - the Exporting Sector
“Over the last five or six years Ireland’s economic growth has been driven by domestic demand and not by our international competitiveness. Projected lower domestic demand for 2008 has reinforced the absolute need to revitalise other sources of economic growth. The way this can be achieved is to focus on the development of Irish enterprises supplying goods and services abroad. To reorient the economy towards export led growth we will need to be both innovative and competitive.”
“Services now account for 40% of our total exports and at current growth rates will exceed 50% of export earnings by 2010. The Forfás Services Strategy Group will publish recommendations during 2008 to ensure enterprise policy continues to provide a supportive environment for the expansion of this key sector. It is also timely to ensure that our national trade strategies are oriented to best support the internationalisation of Irish services enterprises and services exports from Ireland. The EU Services Directive will open new opportunities for Irish services businesses to increase their trade internationally.”
“Outward direct investment will increase in importance for firms who are expanding sales overseas. Multi country presence has become international practice for fast growing companies and an important strategy in keeping domestic companies globally competitive. Companies can gain advantage by investing in overseas operations and by accessing foreign market opportunities and lower cost production inputs.”
“High and increasing costs are a challenge that Ireland needs to face head on in 2008. 2007 saw a loss in Ireland’s international price competitiveness due to the appreciation of the euro and wage increases ahead of productivity growth rates. A further weakening of sterling or the US dollar, together with anticipated moderation of economic growth in our main trading partners would result in an even tougher international trading environment. Irish exporters will need to continue to develop contingency plans for these eventualities, in particular with a focus on developing into the euro-area and emerging markets.”
“Forfás agrees with the National Competitiveness Council in its proposal for a national programme to restore cost competitiveness including the setting of a national inflation target close to the ECB two percent target.”
Research and Innovation
“Innovation is key to increasing our export growth. The transformation of the Irish science and innovation system over the past ten years has been dramatic. Forfás research and innovation expenditure data shows Ireland has reached the EU average spend on Higher Education R&D as a proportion of GNP, and business R&D expenditure continues to grow. The Government’s Strategy for Science, Technology & Innovation has ambitious targets for doubling the number of firms doing R&D and thereby increasing returns to enterprises from innovation by doubling the high-end skills and researchers available from humanities, social science and science and technology disciplines to undertake research and manage innovation in firms.”
“The fundamentals are in place and the challenge now is to ensure that firms can effectively absorb the ideas and the high skills from investment in research to serve customer needs better and compete in international markets.”
Finfacts article: The Irish Mind and the Knowledge Economy: Should we bank everything on fuzzy leprechaunic political dreams?