A 2005 figure from ‘Economic and Budget Issue Brief’ of the Congressional Budget Office gives a figure of 7.6% for US-Owned Assets Abroad (Direct Investment).

I have seen recent references to the figure for Ireland as being 19%, down from about 24% five years ago.

Is this differential explained in terms of low corporation tax rates together with transfer pricing?

I have yet to see a paper by any Irish academic explaining how US subsidiaries in Ireland are so profitable, despite our weak ‘competitiveness’.

http://www.sgi-network.org/

It is seriously dated. Bertie Ahern is still shown as Taoiseach.
If this is so for one easily verified fact, how reliable is any other evidence on Ireland or any other country for that matter?

I don’t think we are in disagreement. All I was pointing out in my earlier post is that if there are implicit taxes and rent-gouging (resulting from ineffective - or an ineffective application of - competiton and regulatory policy) that increase the cost of doing business, they should be stripped out. I don’t see this as a panacea to enhance economic performance and competitiveness; it’s just something that should be done. I fully accept that a more complex set of factors has a greater bearing and I’m simply interested in seeing how the increased quantification of some of these factors might guide effective policy interventions.

Paul, the stats in the NCC report on many aspects related to our export performance and competitiveness are clearly not understood based on the posts I have seen on this blog site over the last year. if it takes a little work to learn about these important factors, then so be it.

Competitiveness means many, many things, and cost is just one element. If cost was the predominant factor, then forget the Finnish and Danish examples, we should all be mirroring Zimbabwean industrial policy.

Unfortunately, the two elements that are easiest for lazy analysts to track (non-wage costs and exchange rates) are negative for Ireland now, as the NCC report shows. Also unfortunately, rather than do real thinking about the export sector, most domestic and international economists start and end with the Real Exchange Rate, which only judges these two factors.

The value of the NCC report is that it shines a light on other very important competitiveness factors such as regulatory environment, infrastructure, tax rates etc, as well as highlighting measurements of actual performance, such as Ireland’s ability to attract Greenfield FDI etc.

Not diasgreeing with increased quantification, simply looking at how this plethora of metrics may be used to identify interventions that will generate the biggest bang for rapidly diminishing bucks.

As Frank Galton says there are unknowns. These are in fact very well knowns via the worldwide accounting and consultancy companies that thrive in Ireland and can act as recruiters for such industries. This might explain why so many contracts are awarded to these companies by the government. There is an important strategic role played by these companies. They are after all very familiar with tax and other policies and unofficial matters that do not appear in glossy brochures. We compete with Scotland Singapore etc for these industries.

Do we incentivize these companies, whose audit arms are so fallible, adequately? Appropriately?

Misery Index

You might be interested in the “Sustainable Governance Indicators” produced by a group sponsored by the Bertelsmann Stiftung. (I served as a “country expert” for Ireland.)
It is available here: http://www.sgi-network.org/

Obviously we will have to wait for the second volume which will identify feasible policy actions, but, given the seriously straitened fiscal circumstances, it is unlikely that the resources will be available to finance meaningful and effective policy interventions. In this context, however, some indication of key steps, costs and benefits for specific interventions might be useful, as some interventions might simply require the exercise of existing powers - or their more effective enforcement. There is a requirement to give some substance to the Government’s aspiration-loaded “Smart Economy” document from last year.

Having commented frequently on the continuing scandal of electricity and gas prices I will simply note that the Government could issue very simple directions to the relevant semi-states that would result in price reductions of up to 20% for gas and 10% for electricity rather than the 10% and 0% being proposed respectively from 1 October.

Despite the best intentions of the NCC I fear we are facing a protracted and jobless recovery and the gradual pick-up in the international economy will release the emigration safety valve. Why can we not break this continuing cycle of losing those whom we need the most?

In that regard, it’s worth flicking through the report and seeing the 100+ criteria on which Ireland is benchmarked, across all the headings from Knowledge Infrastructure to Labour Supply.

As an ex-NCC staffer, I can hopefully still suggest that the guys in the NCC would also be keen to hear any thoughts on new metrics for benchmarking, as it is an evolving concept of competitiveness.