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News : Irish Economy Last Updated: Feb 13, 2015 - 2:39 PM


Irish Medium-Term Economic Strategy 2014-2020: Government says expect aspirations not strategy - - Part 6
By Michael Hennigan, Finfacts founder and editor
Dec 10, 2013 - 6:43 AM

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Source: OECD; medium size firms are represented by the red triangle

Irish Medium-Term Economic Strategy 2014-2020: We said in Part 1 of this series that the omens suggested that the "strategy" document, which is to be published next week will be a promotional brochure for an international audience with some questionable claims and omissions, rather than what is normally referred to as a strategy. We were right: there will be aspirations rather than detailed  plans on how to achieve targets.

Irish policy makers are not too keen on SWOT analysis as they usually scrub consideration of the weaknesses and threats from the 'Strengths, Weaknesses, Opportunities, and Threats' matrix.

On Monday, Harry McGee said in The Irish Times: "The document, which will run to about 40 pages, will not be specific but will set out high-level objectives as well as laying out the overall plan as to how Ireland will meet its fiscal targets."

A Government official told the journalist:

Our main aim is to keep the momentum going in terms of structural reform that will lead to job creation.”

As we outlined in the series, there has been both no significant structural reform nor inspiration that would lead to a credible jobs engine.

Jazzing up forecast jobs figures by including indirect jobs is a practice that was introduced by Fianna Fáil but more glossy brochures will hardly impress the domestic audience.

Increasing exports are seen by many as a key to sustainable growth and in Part 1 we outlined why a big chunk of services exports may vapourise because of expected changes in international tax rules.

Last Friday, the CSO reported [pdf] that Irish industrial production tumbled by 11.6% in October. Production in the pharmaceutical sector was down 23.3% on the month due to the impact of the so-called patent cliff. In contrast, activity in the traditional manufacturing sector rose 0.3% in November, up 1.5% on the year.

A credible strategy for development of indigenous exports would have a time-horizon of up to 20 years as firm size is crucial.

We said recently that Germany has a very strong advantage in the number of its medium size SMEs and large firms compared with France and Italy.

An ECB paper [pdf] says that most new exporters do not survive more than a few years. "They typically start small, and surviving exporters export much larger volumes by the second year, expand to additional markets or export new products...our results show a distinct role for experience and size of exporters."

Medium size firms have 50-249 employees and in 2011, Germany had 2.6% of all firms in this category compared with 0.9% in France, 0.5% in Italy, 1.2% (including foreign-owned) in Ireland. These ratios compared with an EU average of 1.1%.

Germany has over 9,000 large firms - -  more than double the French level.

The OECD-Eurostat Trade by Enterprise Characteristics database (TEC) reveals that 4.5% of US firms sell to foreign markets. On average, there is a similar share of EU firms exporting to other European Union member countries, but only 2.7% of EU firms export outside EU markets

Denmark at 6% of firms, has one of the highest rates for exporting to ex-EU countries.

Ireland is not part of the database.

Goodbody: After the bailout – What Ireland did next…[pdf]

Finfacts:

Irish Medium-Term Economic Strategy 2014-2020: Exports to plunge by €50bn - Part 1

Irish Medium-Term Economic Strategy 2014-2020: FDI, SMEs, New Normal - Part 2

Irish Medium-Term Economic Strategy 2014-2020: Innovation and entrepreneurs? - - Part 3

Irish Medium-Term Economic Strategy 2014-2020: Exports to Japan and emerging markets -- Part 4

Irish Medium-Term Economic Strategy 2014-2020: Change comes ever so slowly in Ireland -- Part 5

Irish Medium-Term Economic Strategy 2014-2020: Government publishes brochure not strategy - Part 7

Irish Medium-Term Economic Strategy 2014-2020: Where will 300,000 net new jobs come from? - - Part 8

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