Taoiseach Enda Kenny speaks to Dr. Gerry McEntee (Consultant Surgeon at The Mater Hospital) at Government Buildings, Aug 30, 2011, at the launch of the inaugural Blue September Ireland. Blue September is a growing global initiative that encourages men to be more aware of their health and more pro-active in protecting themselves against preventable and treatable diseases.

Irish Economy 2011: Far away hills are green; Recent positive international coverage of Ireland is a welcome change from the ignominy of a proud nation going cap-in-hand to international rescue institutions. However, policymakers shouldn't again fall for the delusion that a philosopher's stone has been found to return the economy to a sustainable path of prosperity.

During the Celtic Tiger years many international observers mistook a soufflé for something much more durable and substantial. Today, there are many challenges in changing a failed status quo and four years after the onset of the international credit crunch, only baby steps have been taken so far in preparing Ireland for a changing global economy.  

US based Prof. Jonathan Haughton, a graduate of Trinity College Dublin, highlighted in The Irish Times on Tuesday, positive aspects of the Irish economy and it's important to have an antidote to the drumbeat of negativity from comfortable commentators casually calling for consequential decisions from the safety of the sidelines and status quo.

Nevertheless, while optimism is for example an essential ingredient of entrepreneurship, good policymaking must be grounded on fact and reality.

Unfortunately, the endemic spin among Irish policymakers in the area of enterprise policy in particular, raises the question as to what is believed as fact and what isn't.

For example, references to the annual public science budget of €2.5 billion and the policy aspirations known as the 'smart economy,' are invariably laced with vacuous superlatives but there is little data on results.

In August, Richard Bruton, Minister for Jobs, Enterprise and Innovation, produced a spin classic in response to Central Statistics Office trade data.

His statement included the following gems:

"These trade figures show what our entrepreneurs can achieve when the conditions are right and only encourage me further to pursue this agenda so that we can continue to support export-led growth and recovery/Exports to the United States increased by 11.8% to €9.08 billion. The importance of the U.S. market will be underpinned when Minister Bruton leads a trade mission there in mid September; Exports to dynamic emerging economies and those of Asia show the benefits of helping exporters concentrate more on these markets; exports to India, (where the Minister led a trade mission earlier this year) growing by 30% to €83 million; The Government is devoting considerable effort to the food sector, which is so important for Irish owned firms. It is indeed heartening to see that food exports grew by over 19% to €3.151 billion, while key high technology exports in areas such as medical and pharmaceutical products grew at a very fast pace. We are strengthening our already leading position in that area."

There was no recognition by Bruton that foreign-owned firms, mainly American, are responsible for 90% of tradebale goods and services exports; the Irish government not only has no influence on the destination of these exports, the staff at the Irish units may not either as the shipments would be mainly into a group's global supply chain.

As for indigenous food firms, the Minister apparently did not want to spoil a good story by acknowledging the current international boom in food commodity prices.   

Prof. Haughton recognises the role of foreign direct investment during the early years of the bubble but the challenges and trends also merit attention.

Irish jobs at foreign multinationals in 2010 were at the 1998 level while employment in the Irish-owned tradeable sector was also back to 1998.

The workforce expanded 25% or 400,000 people in the 10 years to 2007 but almost all the net jobs added were bubble jobs in construction, public sector (led by education and health), domestic business services, retail, leisure and distribution.

In 2001, there were 316,000 employed in the internationally tradeable goods and services sectors; there were 321,000 employed in 2007, the last year of the bubble - a net increase of just 5,000.

This year, IDA Ireland's net jobs target (taking account of job losses) is less than 4,000.

Ireland has an existing large volume of foreign direct investment (FDI) but new projects from overseas tend to be on a small scale 

UNCTAD (United Nations Conference on Trade and Development) reports €2.5 billion  of 'greenfield' FDI in Ireland between January and April. However, the 'greenfield' category includes expansions or renewal of investment by existing firms.

Given the fragile state of the large developed economies, we cannot expect FDI to be a jobs growth engine in coming years.

As for the indigenous sector, the attention in recent weeks to the struggle of the unemployed of the private sector to keep their homes, is also a contrast with the 500,000 people comprising staff of the public service, commercial state bodies and staff pensioners, who are mostly an elite group with job security, pay premiums and a much superior pension system to most of the private sector.

Domestic demand will depend on an improvement in the public finances and a recovery in the construction sector.

In contrast with the years after 1987, the open jobs market will result in earnings being kept low, impacting demand.

The 'smart economy' project will produce the odd success to be acquired by a bigger US firm and the sector will never be a jobs growth engine.

It is evident that there is little appetite for significant public service reform and of the protected professional private sector but these are crucial components in developing a competitive modern economy.

It's difficult to be optimistic that the proverbial slow boat to China Croke Park public service reform process will produce credible results while it's striking how quiet all the vested interests are as the Government currently trawls for cost savings.

Swedish MPs can survive on about €72,000 per annum compared with Irish counterparts on a basic of €92,000 and despite reforms, TD expenses are a bonanza by comparison.

Misery in the private sector for many while others seek to retain bubble gains is the reality.

The public service is important but what can justify a State guarantee of job security with several other substantial perks compared with the typical private sector worker?

It would be a shock if university presidents were to offer to have more done for less or for academics who regularly appear in the media to break cover on what is going on under their noses.

The US and Japan are already showing the impact of globalisation on the earnings of large sections of their workforces.

The notion that each generation would do better than the preceding one no longer holds and why would Ireland be immune from that trend?

Maybe Richard Bruton really believes that a few days in India really mattered. He is likely to discover soon enough that there will be no salvation provided by Asia. Annual exports to India are a decimal point and exports to China with foreign firms accounting for about 94%, are less than to Switzerland.

Far away hills are green for both the insiders and outsiders!