Transcript Presentation Information

Embassy of Ireland, Helsinki
Contents
1. Introduction – Ireland in Summary
2. Changes in the Irish Economy
3. The Drivers of Ireland’s Success
4. The New Challenges for Ireland
5. Resource Slides
1. Introduction – Ireland in
Summary
Ireland - A Changing Country
• Total population: 4.2 million
• Highest birth-rates in EU at 15.3
births per 1000 population
• Relatively young population with
an average age of 35.6 years
• Rapid increase in Immigration
1987: net migration
-44,000
2006: net migration
+70,000
Economic History
► 1922 – 1958
• a basic agricultural economy
• self-sufficiency and protectionism strategy
► 1958 – 1973
• opening up and joining Europe (EEC)
► 1973 – 1987
• some success, adjustments, but crises also
► 1987 to date
• exceptional development and growth
What Changed the Irish Economy ?
The Celtic
Tiger
MAY 1997
1988 –”Poorest
of the Rich”
Europe’s
shining light
1997 – “Europe’s
shining light”
6
2006 –”The luck of
the Irish”
An Economic Snapshot of Ireland, 2007
• GDP
€174.7 bn
• Exports
€138 bn (2006)
• Imports
€120 bn (2006)
• Trade Surplus
€18 bn - 10.6% of GDP
• Total at work
2+ million (was 1.1m in 1990)
• GDP per capita
€40,275
• National Debt
€37,559 million euro
• The average annual rate of increase in Irish GDP has been
5.4% over the 6 year period 2000 – 2006
Source: Central Statistics Office
A Decade of Growth
Economic Performance Indicators
Unemployment %
1995
12.2%
2007
4.4%
Gross Government Debt as a % of
GNP
82%
21.7%
Personal Tax (Lower/Higher Rate)
27/48
20/41
Irish GDP/Capita as a % of EU
GDP/Capita
79%
(EU-15)
119% (EU-15)
Irish GNP/Capita as a % of EU
GDP/Capita
70%
(EU-15)
101% (EU-15)
UN’s Human Development Index ranked
Ireland 5th in 2007
Sources: CSO and Eurostat
Business-friendly policies
► Young, vibrant and highly-skilled workforce;
► Consistent public policies, including low tax;
► Strong developmental focus nationally, with
strong, informal network links;
► Rapid responses e.g. skills development;
► Successful development of high-technology, highproductivity, trade-based FDI;
► Agility, creativity, flexibility and ‘can do’.
Economic Growth
7
6
Average
Annual
% Real
GDP
Growth
5
EU
4
3
US
2
1
0
Ireland
1970-79
1980-87
1988-93
1994-2006
Source: OECD Economic Outlook
The Basis for Success
► Results from development decisions of earlier
decades and from EU membership
► European Single Market and Eurozone
► Social partnership and economic stability
► Demographic gains and education
► Low corporate tax – now 12.5% on profits
► Foreign Direct Investment (FDI)
► Performance of Irish management and Industry
► Export focus and global orientation
Social Partnership
►1987 - a ‘time for reform’
• rising unemployment (17%) and emigration
• public finance deficits and debt (120% of GNP)
• loss of jobs and of national confidence
►National Social Partnership Agreement
•
•
•
•
employers, trade unions, farmers & government
moderate wage increases and tax cuts
consensus on development priorities
shared efforts to achieve national goals
Trade relationship with the Global Economy
Destination of Irish Exports in 2006
Source: CSO /Forfas
Geographic distribution of Irelands Imported Goods
in 2006
Source: CSO/ Forfas
Strategies in place by economic agencies to
increase Irish exports
► Asia Strategy – focused on increasing exports to
the growing economies of the Region
► Targeting existing Markets in Europe and North
America for continued growth
► Targeting the potential of new markets in Mexico,
Brazil, the Gulf, Russia and South Africa
The Drivers of Ireland’s Success
Irelands Open Economy
Key Milestones:
►Industrial Development Authority (1952)
►Dismantling of import tariffs/quotas (early
1960s),
►Ireland joins the GATT (now WTO) (1967)
►Ireland joins the EEC (now EU) (1973)
►Creation of Single European Market (1993)
►Introduction of Euro in physical form (2002)
Ireland Campus
FAB24-2
IR4
FAB14
IR2
FAB24
IR6
FAB10
IR5
IR1
5,000 Staff; $5bn+ invested
– Over 3,000 employed
Competitive - but not at the cost of Irish
Workers – Second Highest Minimum Wage
Source: Eurostat / Federation of European Employers
Industrial Disputes and Social Partnership
Decline in Industrial Disputes
No. Ind. Disputes which began
250
200
150
100
50
0
1980
1983
1986
1989
1992
1995
1998
2001
2004
Source Forfas:
Education, Skills and Research
‘LEADERS
OF
TOMORROW’
Investment in Education and Skills
• 1960s heavy investment in primary and secondary
education begins;
• 1967 free secondary education introduced;
• 7 Universities, 3 in Dublin, 1 in Cork, Galway,
Limerick and Maynooth;
• 14 Institutes of Technology located regionally;
• Increased third level participation over the three
decades.
Post-Leaving Cert/High School Structure of
Irish Education
‘Ladder - Up’ approach to
Advanced Learning
Education and Skills
►57% of graduates are in science, engineering,
computer or business studies
►Government initiatives to meet future needs:
• Expert Group on Future Skills
• Educational Technology Investment Fund
• Focussed technology courses
Full-time Third level students
- 1975/76 to 2004/06 in thousands (000)
100
90
80
70
60
50
40
30
20
10
0
5/7
7
19
6
0/8
8
19
1
5/8
8
19
6
0/9
9
19
1
5/9
9
19
6
0/0
0
20
1
4/0
0
20
Source: Higher Education Authority
6
% Population aged 25-34 having at least
Third Level Education
er UK
m
H an
un y
ga
P ry
ol
an
d
Ita
ly
G
Ir
el
an
Ja d
pa
K n
or
ea
U
Fi SA
nl
a
S nd
w
ed
Fr en
an
ce
50
45
40
35
30
25
20
15
10
5
0
Source: OECD Education at a Glance
Breakdown of Higher Education Graduates
Medical &
healthcare
Arts & Social
12%
Sciences
24%
Info Technology
10%
A rts & So cial Sciences
B usiness & related
Engineering
Sciences
Sciences
Info Techno lo gy
9%
M edical & healthcare
Engineering
Business &
13%
related
32%
Source:HEA
Human capital development objectives…
100%
90%
% labour force
80%
32%
48%
Third & Fourth Level
(Levels 6-10)
70%
60%
50%
Upper
Secondary/Further
Education (Levels 4,5)
40%
40%
30%
45%
20%
10%
0%
28%
7%
Ireland's current Vision proposed
skills profile 2005
by EGFSN for
2020
Lower Secondary or
below (Levels 1-3)
Research & Development
‘LEADERS
OF
TOMORROW’
R&D in Ireland
► Strategy for Science, Technology and Innovation
2006-2013
► Strong Government commitment and funding, to
double both enterprise R&D and doctoral output by
2013
► Science Foundation Ireland (on NSF model) is
attracting world-class researchers to universities
► Strong industry - academic links
► Notable developments with Bell Labs, GSK, IBM,
Intel, HP, Wyeth, Bristol-Myers Squibb and many
other companies
► 50% of overseas medical technology companies have
an R&D responsibility
Irish R&D – who finances it?
GERD = Gross Domestic Expenditure on R&D
R&D Tax Credit
► 20% Tax Credit for “Qualifying Expenditure” on
“Research and Development”
► Research and Development, includes
• Basic research
• Applied research
• Experimental development (including process
development)
► Applies to both Revenue and Capital
► No requirement to retain ownership of resulting IP
in Ireland
Business Sector R&D
Researchers in Higher Education
Source: National Competitiveness Council, 2007
3. The New Challenges for Ireland
The future will be different
► Globalisation, technology and digitisation
► New Markets / New Competitors
► Changes in economic conditions
► New business models and virtual companies –
new patterns of investment
► New aspirations and expectations in society
► Higher value activities and higher skills
► More sophisticated and complex jobs
► Premium on flexibility and responsiveness
Vision and Strategy
► Higher value, skills and knowledge based economy
► Innovation placing Ireland at global leading edge in
clusters or niches, using enabling technologies
► Ireland will differentiate on the basis of:
• performance based on sophistication and quality
of operating environment,
• our expertise and research, and
• flexibility, speed and agility.
Enhancing Productivity Growth
Source: National Competitiveness Council, 2007
Addressing Productivity Growth and
International Competitiveness
► Enhancing Human Capital through development of
education and life-long learning
► Increasing infrastructure efficiencies
► Review and reform of the Public Sector
► Focus on moving up the value chain – private
sector
► Productivity Improvement Fund
► National Competitiveness Council
► Expert Group on Future Skills
Bridging the Infrastructure Gap
National Development Plan, 2007-2013
Raising the Economy’s Productivity Growth Potential
Programme
€billion
Annual % of Current GDP
Economic Infrastructure
€54.7
5.5%
Enterprise, Science &
Innovation
€20.0
2.0%
Human Capital
€25.8
2.5%
Social Infrastructure
€33.6
3.3%
Social inclusion
€49.6
4.9%
Total
€183.7
18%
Human Capital Development
Human Capital Development
► National Skills Strategy, January 2007
► Increase upper secondary completion to
90%
► Increase progression to third level to 72%
► Prepare for occupational changes
► Move 500,000 people in workforce onestep-up the qualifications ladder by 2020
► Full integration of migrants into education
and training system
Positive signs for the future …
►GDP growth has been consistently higher than the
OECD average over the last decade.
►GNP per capita levels are now in line with the OECD
average.
►Ireland maintains an open and attractive environment
for overseas investment.
►Entrepreneurship rates are relatively high and the
Labour Force is very strong.
►Long standing advantages in our tax system continue
to be of benefit.
Corporate Tax Rate
• Stable Corporate Tax Rate of 12.5%
• There is full domestic political support for the low
tax rate
• European Commission has indicated that 12.5% does
not constitute harmful competition
• Ireland has selected the “high road” of “full and
fair competition” and is “setting the example”
(Jeffrey Owens – OECD March 2003)
Comparison of Corporate Tax Rates
Ireland
Netherlands
United Kingdom
China
Belgium
France
Germany
USA
Japan
12.50%
25.50%
30.00%
33.00%
33.99%
34.43%
38.60%
39.50%
39.54%
Source - Deloitte & Touche, 2007
Tax Reform
•
•
•
•
•
•
•
•
Wide base, low rates
Corporate profit taxes
Capital gains taxes
Income taxes
Employer social security taxes
Consumption taxes
Property taxes
Self-assessment system
The Top Pharma Companies are in
Ireland
Energy
• 2007 Energy White Paper Objectives:
• Security of Supply, Environmental Sustainability &
Economic Competitiveness
• Creation of all-island energy market 2008
• 33% of electricity from renewables by 2020 –
(currently 93% of energy from fossil fuels)
• Electricity inter-connection to UK & Europe
• Building additional generation capacity
• All-island gas storage by 2008
• Retain State ownership of transmission networks
• Reduce ESB all-island market share to 40%
• €150m investment in energy research
• Review of regulatory framework proposed
eCommunications
► Strong Progress
• High capacity and competitive international
connectivity
• Strong private sector market participation in
fixed, mobile, wireless and services
• State investment in metropolitan area networks
• Strong rates of broadband take-up
► Government supported regional broadband
programme
► Priorities
• Rapid development of Next Generation Networks
• Pro-competitive regulation
• Reinvigorating eGovernment and Knowledge
Society agendas
Composition of Ireland’s Exports 2000 2005
100,000
90,000
Food, Beverages and other
Animal Products
Chemicals
80,000
Million €
70,000
60,000
Manfactured Goods
Classified by Material
Machinery
50,000
40,000
30,000
Other
20,000
10,000
2000
2001
2002
2003
2004
2005
Source: CSO
Composition and Destination of Irish Service
Exports - 2005
15000
Business Services
12500
Royalties/Licenses
Computer Services
Million €
10000
Finanical Services
Insurance
7500
Communications
5000
Tourism and Travel
Transport
2500
Other
0
Not
Geographically
Allocated
Other Regions
Asia
North America
EMU countries
United
Kingdom
Source:CSO
Geographic breakdown of Ireland’s Service
Imports 2005
17,500
Business Services
15,000
Royalties/Licenses
Computer Services
Million €
12,500
Finanical Services
10,000
Insurance
7,500
Communications
Tourism and travel
5,000
Transport
2,500
Other
Not
Geographically
Allocated
Other Regions
Asia
North America
EMU countries
United
Kingdom
Destination of Irish Outward Direct
Investment – 2005 /06
Developing Asia
Pacific
6%
Developed Asia Pacific
3%
North America
9%
UK
35%
Latin America &
Caribbean
3%
Eastern Europe
16%
Africa
1%
Western Europe ex UK
27%
Human Capital Development
► National Skills Strategy, January 2007
► Increase upper secondary completion
to 90%
► Increase progression to third level to
72%
► Prepare for occupational changes
► Move 500,000 people in workforce
one-step-up the qualifications ladder
by 2020
► Full integration of migrants into
education and training system
Social Partnership Agreements
• 1996 fourth pillar introduced –
social/community pillar
• Current agreement Towards 2016
• Social Partnership grown far wider
than wage negotiations
• 10 year framework to address
‘key social challenges’
• Social partnership is regarded as
having benefited all pillars and as
a major contributor to Ireland’s
success over last 20 years
Enterprise Development
► Indigenous enterprise
• Scaling growth oriented companies, internationally focused and
innovation-led
• Promoting innovation based start-ups and entrepreneurship
• Driving productivity growth, management skills, technology use
and marketing capability in existing enterprises
• Improving access to equity and finance
► Foreign Direct Investment
• High value inward investment in advanced manufacturing,
sophisticated business services and research and innovation
• Gateway approach to regional economic development
► Enhancing our tourism product and developing a market-oriented
seafood sector
► Enterprise networks
► Higher education and enterprise collaboration
► Open competitive markets and regulatory reform
Strategy for Science, Technology &
Innovation, 2006-2013
► Objectives:
• Step-change in enterprise R&D
• Double PhD output to 1,312 by 2013
► World Class Research
• Funding excellence in frontier research
• Investing in core infrastructure, postgraduate
training and early stage researchers and research
collaboration
► Enterprise Research & Innovation
• Holistic in-company R&D support scheme
• Competence centres and higher education
collaboration
• Innovation Vouchers
► Commercialisation and technology transfer reform
► Orienting sectoral research around policy priorities
62
Thank You
Resource Slides