Ireland’s Services Sector Post author By Philip Lane Post date September 4, 2011 In the final part of the Irish Times series, Carol Newman writes on the services sector here. Categories In Uncategorized 4 Comments on Ireland’s Services Sector ← Planes, Trains and Automobiles II → Ireland and Europe 4 replies on “Ireland’s Services Sector” How do the CSO come up with figures given the complexity of the globalised world ? Say if I’m employed by a multinational, to service Irish based companies…is that an import ? what if the Irish based company I service…is in fact itself a MNC ? I have to admit that I’m very dubious how the CSO can come up with sound figures… Europe remains the most important destination market accounting for 70 per cent of total services exports, with the UK alone accounting for one-fifth of the total, suggesting that there are significant opportunities in the world market that are yet to be exploited. Maybe but most likely not. The problem with this analysis is that it appears to ignore the key fact that indigenous tradeable sector firms account for less than 5% of services exports and consequently the foreign firms responsible for the exports to Europe may well be taking advantage of the ‘significant opportunities’ elsewhere. It’s a common trap for politicians and commentators on exports. Goods or services, Intel or Microsoft, decisions on the destination of output may not be made in Ireland but what suits official spin and provides bragging opportunities for ministers, becomes the received wisdom. As for opportunities of selling construction related services in the Gulf and SE Asia, while there are always opportunities in the most challenging of markets, 30 years of significant development has resulted in a high base of skills. Irish firms would lack experience in high rise while it wouldn’t be feasible to have very many staff on expat packages. The latest ‘tallest building in the world’ project has been announced for north Jeddah, where I once lived. @ desmond brennan No doubt there’s a lot of guesswork. Profit shifting helps boost that figures. Interest income on inter-company MNC loans would also be an export. An MNC sector like aircraft leasing has about 1,000 staff and over 3,000 aircraft – – so high revenue per capita and export figures. I assume the CSO partly relies on what is booked as revenue by the Irish registered company. In addition to the problems outlined by Michael Hennigan above, there is an invoicing problem. My own experience is that even when providing services to the rest of the world, invoicing is done through somewhere else in Europe or the US. This will show up as an export to Europe or the US without taking account of the final destination of the services. @Michael Hennigan “Maybe but most likely not”. Indeed. I saw Carol Newman’s IT article and welcomed it ( shorn of the “Ireland’s image after the Obama and Queens’ visits”, “smart economy”, Ireland is an important destination for”, “high end clusters” and ” no inherent reason why Ireland can’t prosper in this sector” platitudes perhaps!) for a number of reasons. the reaon we don’t prosper as we “should” is because we have no coherent, realistic strategy! Although it’s a bit of a grab-bag of employment, growth, skills and exports, I saw a relationship with Philip Lane’s recent post on getting people back to work as a priority, particularly as Ms. Newman’s sees the opportunities she identifies, accurate or not, ” IN THE RIGHT POLICY ENVIRONMENT”. Ms. Newman implies, but unfortunately does not state clearly, that we do NOT have the right policy environment or mechanisms right now. I believe that Aidan R. was making a similar point when he recently identified the main “problem”, as far as policy is concerned, as “absence of strategic coordination to ensure investment in skills, growth and employment.” This ( the ability, if willing, to coordinate) is an area we DO have some control over in Ireland) and I’d suggest that it’s critical for our future to get the best bang for our very scarce bucks out of such coordination particularly as this effects present and future emloyment in the “domestic” economy. So, Michael, I was intrigued to read Ms. Newman’s contention that the computer services sector alone represents THREE TIMES the value of the much-vaunted “Irish” food and drinks sector. Why invest in a “branded” food export strategy that has failed miserably? In order to get people back to work, I found myself agreeing with Ms. Newman that, with competition for skills intensifying in the “internationally traded services sector”, we need, as a priority, to address the disturbing skills gaps for those entering, leaving and not taking part in third level education whether they end up in in Ireland or not. (From my own experience of touting for work for Irish construction services companies ( architects, engineers, quantity surveyors and subcontractors) in the ME and Africa thirty years ago, I would feel that we’re priced out by locals, Chinese or other developing country firms and we gave up serious prospecting anyway during the boom years in Ireland. There are many good points in Ms. Newman’s piece, not least the point about “trade in education services” which Australia, for example, has elevated to a $ 25 billion export business with Asia. ( Australia’s third biggest “Export”). However, the two key points in this debate are getting accurate figures on the actual nature and scope (MNC/indigenous services exports) and identifyiing/tasking ONE minister/agency to do the policy COORDINATION work that Aidan R. identified as the “KEY” in Philip Lane’s recent post. Comments are closed.