Ireland’s Competitiveness Challenge Post author By Philip Lane Post date December 2, 2010 The latest report from the National Competitiveness Council is available here. Categories In Economic Performance Tags NCC Ireland 10 Comments on Ireland’s Competitiveness Challenge ← Exposure Fears for “Irish” Banks ? → Blog is Two 10 replies on “Ireland’s Competitiveness Challenge” Once again a veritable feast of the “briathar saor”, as in (p27): ” – A systematic, planned approach to ensure that competition law applies to all sectors of the economy is necessary. A rigorous review of laws, rules and customs governing locally traded sectors is required to identify barriers to enhance competition; – The State should use its purchasing power to exert downward pressure on costs within locally traded sectors and mandate all State bodies to negotiate further reductions in fees for business and professional services; – In the longer term, there is a need to review the overall coherence of all independent regulators in delivering public policy objectives; and – Regulatory structures and systems should be strongly oriented towards consumer interests rather than producer interests to promote cost competitiveness and drive efficiencies.” We know all this – and have been listening to this guff for years without any action, but where is it in the MOU with the Troika when there might be some possibility that action will be taken? I’m having a major deja-vu as I read it. Do they just change the date on these reports and then reuse the same text as last year? On page 9, having referred to the fact that services account fro 45% of total exports (with Irish firms accounting for about 5% of this), it tells us that ‘the NCC is concerned that our institutional structures and mindsets towards export opportunities are rooted in the past’. What concerns me more are the outdated mindsets which continue to dominate our understanding of Ireland’s changing role within global production networks and global value chains. We have little or information on the role of intra-firm trade, and continue to rely mainly on import/export statistics. The most disappointing aspect of the report, having made it clear the extent to which the FDI sector accounts for export activity, is that the only response is an introverted look at how to improve the very weak indigenous sector. In relation to data on direct expenditure into the local economy, much is made in these reports about the fact that indigenous companies have higher rates of expenditure relative to their sales compared with foreign-owned companies: yet both sectors in 2009 spent the same amount, which was €19bn. The trends, however, appear to show the increasing role of global procurement, generally, something that IDA Ireland have encouraged to ensure competitiveness. But the mindsets are still wedded to the endogenous growth model and local embeddedness. @Seamus Grimes, You make very valid points, but I fear you may be labouring under the misapprehension that reports of this nature contribute directly to the formulation of public policy which is then scrutinised, enacted and implemented. This report is part of the plethora of reports, taskforces, working groups, etc. (which still exists) that contributed to the ‘groupthink’ that the Celtic Tiger was in fine fettle – and which led to the current economic and financial debacle. Insofar as they highlighted any problems it was always “someone, somewhere should do something about this”. But nothing was ever done; the fact that a problem was mentioned in a report in the public domain was considered sufficient. More waffle from a government source. 38 pages of it to boot. On page 27 — Manage Irish inflation in the euro area: As a member of a currency union, Ireland is now suffering the consequences of excessive price rises in recent years. While a wide range of factors drive inflation (many outside government control), it is critical that government policy seeks to ensure that price inflation remains low, addressing in particular high price levels and inflation in administered and locally traded sectors. — Even a mild browse throught any real data will show that government services are consistently the reason for rising inflation faster than any other factor. Not once does the document seek to address any of it’s concerns by way of a solution. Ah sure that is for another useless government body to determine. Paul I did have an opportunity some time back to get involved in the process in relation to the report on the future of the services sector: it was a real education in itself, but also quite a frustrating experience. Obviously this whole process will always have a political dimension to it (both in terms of what the government would like to hear, and also in terms of the role of different agencies), but one would hope that the best interests of the country would also drive a greater openness to innovative thinking. @Seamus, Thank you for the bit of useful background. I don’t think it’s a lack of openness to innovative thinking; quite a charming and old-fashioned civility is employed when dealing with submissions and opinions/views offered. The challenge is to get these ideas into the decision-making process, to subject them to thorough scrutiny, to discard the unworkable ideas, to improve the more promising and to integrate them into policies that may be implemented. We need to move beyond the current approach where policy is formed in a huddle of a minister, special advisers and senior department officials – with occasional inputs from tame consultants who know the answers they are expected to provide. We can only live in hope. How can we get change, when the status quo personally benefits the decision-makers? It is surely possible–how do we get from here to there? Shouldn’t there be a quality _ cost study to see where cost can be reduced at a minimun consequence to quality? From the leaving cert costs to …… whatever “Being average only works when you want average living standards”. I had to laugh at that in the conclusions. In its current outlier status Ireland would love to be more average right now. Comments are closed.