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News : Irish Last Updated: Oct 14, 2009 - 11:13:20 AM

Global Irish Economic Forum: Diaspora "key achievers" due to meet; A gabfest with potential?
By Michael Hennigan, Founder and Editor of Finfacts
Sep 11, 2009 - 6:47:38 AM

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Global Irish Economic Forum: Next Friday, a weekend meeting of representatives of the Irish business diaspora, termed as "key achievers," together with maybe more local residents in number, will begin at Farmleigh House, Dublin, to explore how the Irish abroad, could help the auld sod, in these perilous times. It will be a gabfest with potential or maybe not.

The event is being organised by the Department of Foreign Affairs and the timing could not have anticipated the NAMA "bad bank" debate, which will be in full flight as delegates arrive. The proceedings will of course be a polite affair and ministers will likely believe that their guff on turning the economy around will do the trick but the outgoing clapped-out Japanese cabinet would have had no credibility proclaiming a new dawn and  their Irish counterparts have even less.

Minister for Foreign Affairs Micheál Martin is an exemplar of the type of politics that have doomed the country. He remains a schoolteacher, after 20 years on leave and is never likely to return to a classroom as his public pensions would well exceed his salary as a teacher.  

Ideally, the diaspora forum would have had greater potential after a change of government and the implementation of significant reform.

Nevertheless, the ministers will apparently be in listening mode after years of ignoring warnings that the property bubble wasn't a permanent free lunch.

Windfalls from the boom went into overseas property investment of about €60bn compared to €1bn in venture capital investment in Irish companies with exporting potential.

Post the crash, the mantra is the "smart" economy.

Apart from the irony of Irish politicians using this adjective, Tánaiste Mary Coughlan and Minister for Communications, Energy and Natural Resources, Eamon Ryan, will speak on ‘Greentech & ICT – two building blocks of the innovation island’

It would all be a good thing indeed but it's still unclear after three years, what is the primary goal of public innovation policy: support of foreign direct investment or the development of indigenous enterprises. Increasing the number of PhDs without that clarity can be a gift to other countries.

Eamon Ryan has said 30,000 jobs will be created by greentech and the Trinity College/UCD "innovation corridor" will create 30,000 jobs - - The promoters talked of a potential to create 30,000 new jobs and some 300 new businesses within a decade. There was the vision of creating a new Nokia in Ireland and talk of an enterprise corridor linking the two universities - - traversing some of the most expensive real estate in Europe. It was reported that some in the merger discussions were anxious to claim that up to 75,000 jobs could be created before some wiser counsels intervened.

If only political spoof did the trick of providing jobs like manna from heaven.

The Irish Live Register has risen almost 200,000 in the past 12 months and there needs to be more than "smart" economy aspirations.

A study undertaken by the Swiss Federal Institute of Technology (ETH), one of the world's top 30 universities, shows that out of 130 university spin-offs from 1998-2007 only eight (6.2%) had a trade sale exit and one (0.8%) an IPO exit. Two thirds of these exits were by VC-backed spin-offs, including the one IPO case.

ETH Zurich’s 130 spin-offs incorporated since 1998 had by December 2007 created 918 jobs. On average, every spin-off has therefore created 7.1 jobs if spin-offs that went out of business, or 7.98 jobs if only the ‘surviving’ 115 spin-offs are included.

Data published annually by the UK’s Higher Education Funding Counsel show that the 1,145 university spin-offs in the UK had created  - - until 2006  -- 16,225 jobs, i.e. 14.2 on average per spin-off

According to the Swiss Federal Office for Statistics the average surviving start-up company has created 3.7 jobs after 5 years.

Switzerland has over 40 venture capital firms and private equity funds. Out of a total of 693 European biotech products in the development pipelines of listed companies in 2007, 97 came from Switzerland.

So it's not that Ireland will be without significant competition.

Minister Micheál Martin spoke on Bloomberg TV this week on bringing together "key achievers" at the diaspora forum.

It appears that most of them are hired hands who worked their way up the corporate ladder, rather than as entrepreneurs.

There is a crucial difference in terms of experience and for Ireland, the challenge is to open new markets, which is never easy. 

Irish firms do not have a strong exporting tradition and the ratio of SMEs involved in exporting is much lower than the SME sector in the UK.

Last March, Enterprise Ireland said the 16-country Eurozone offers the best potential for export growth by Irish-owned firms. The countries Germany, France, Benelux, Italy and Spain collectively represent a GDP 3.9 times the size of the UK, yet the non-food exports by clients companies of the agency for these countries, is 40% of that of the UK.

Outside of Europe, there will always be niche opportunities for Irish firms but the markets within the single currency area, have the greatest potential if costs can be brought down.

Next week's forum will be no harm and the potential of providing an input to inspired policy making could be of some help but as Irish writer George Bernard Shaw (1856 -1950) once remarked:  "Christianity might be a good thing if anyone ever tried it."

Finally, having lived and worked two periods overseas, I would find it hard to replicate the enthusiasm of economist David McWilliams, who recently wrote: "This connectivity revolution, where the best salespeople for ideas will be individuals playing a giant game of ‘pass it on’, is ideally suited to dramatic initiatives, and the diaspora is a natural sales force for the country.

The winners will be those countries which have access to the best brains, are open to ideas and allow individuals to travel freely. We should be promoting much freer travel between Ireland and America for people of Irish heritage; we could see our potential workforce increase from four million to 70 million."

It's a concept that should find favour with politicians in search of a vision but the scarcest commodity in the information age is time and as the participants at the Farmleigh shindig, return to their home bases, if they have real work to do, their attention will inevitably return to that.

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