Irish Economy 2014: Eamon Gilmore, tánaiste (deputy prime minister) and
foreign affairs/ trade minister, on Monday launched a report titled, 'Review of
the Trade, Tourism and Investment Strategy,' [pdf], which updates what was a 2010
wish-list. It's a Lilliputian endeavour that characterises much of modern policy
making in Dublin.
The word 'strategy' was common at official level in December when a "medium
term strategy" was
launched covering the period 2014-2020. What was published was a brochure
and the new report is in the same boat.
Key recommendations are:
- the establishment of a ‘new market approach’ by disaggregating Ireland’s
27 priority markets to ensure that Ireland engages with high-growth markets
in Asia, South America and Africa;
- the inclusion, for the first time, of a 2015 target of €900m for
the international education sector from €682m in 2010, in recognition of its growing economic
- the maintenance of existing targets for the creation of 150,000 new jobs
directly associated with exporting enterprises, a 33% increase in exports by
indigenous State agency-assisted companies and 780 new inward investment projects
through IDA Ireland, should be maintained.
- the report says that despite a particularly
strong performance by the tourism sector in 2013, the targets attributed to
this area in 2010 are not likely to be met because of a significant drop in
visitor numbers in the first two years of the Strategy, particularly from
the UK. The tourism target is cut to 7.2m visitor numbers from 8m in the
How many additional places for international students will be required?
The report says "Enterprise Ireland client companies created 42,666 full-time
jobs from 2010 to 2013, while IDA client companies created 50,054 new full-time
jobs in the same period. The IDA expects to meet its target of securing 780 new
investment projects by the end of 2015. Enterprise Ireland expects to have
achieved its end-2015 target of increasing client company exports by 33% by the
end of 2013 and is in the process of developing new export targets for the
period to 2016."
An increase in the number of new jobs directly associated with exporting
enterprises by over 150,000, in manufacturing, tourism and internationally
trading services, and "with the creation of a similar number of new indirect
- IDA Ireland: 75,000;
- Enterprise Ireland: 60,000;
- Tourism: 15,000.
It would be impossible to discern a relevant reality from this political
report that was produced by civil servants to please their political masters (presumably, at least one of them knows why computer services exports surged by almost 50% in five years - - see below):
Jobs in foreign-owned and indigenous exporting enterprises at end of 2013,
were below the level in 2000, when the workforce was 20% smaller:
Full-time jobs in indigenous exporting firms in 2013 below 2000 level
Jobs in Ireland's foreign-owned sector in 2013 below level in 2000
The report says "Ireland is a strong performer in services exports, which
grew by 11% in 2012 and account for 50% of total Irish exports. This
reflects the growth in ICT and e-business sectors with a number of Irish
services companies and large foreign-owned multinationals operating and
exporting from Ireland. Ireland is also home to the service operations of many manufacturing firms as
well as financial services, leasing and computer services firms. Some important
services sectors within the Irish economy include:
- Computer Services: accounting for 40% of total
services exports in 2012, realising a 49% growth over a five year period."
This is a classic example of Irish political spin and fantasy in policy
The rise in computer services exports is overwhelmingly related to the
booking for tax avoidance purposes of big chunks of global revenues in Ireland by companies such as Microsoft, Google and
Facebook. Were 2,200 Google employees in Dublin responsible for over 40% of Google's global revenues in 2012?
Irish Medium-Term Economic Strategy 2014-2020: Exports to plunge by €50bn -
Irish Corporate Tax 2014: How official spin and distortion works - in short-term
This report was produced by civil servants and last year Prof Frank Barry
in a paper, 'Politicians,
the Bureaucracy and Economic Policymaking over Two Crises: the 1950s and Today'
[pdf], compared the disastrous Irish policy making of the Lilliputians of
recent times with the times of giants like TK Whitaker, who was appointed
secretary of the Department of Finance in 1956.
Barry said the philosopher Plato could not explain 'where he would find
the wise men who would govern his ideal state'. Experience since seems to show
the best results come from the paradox of competing sources of power jockeying
for their own advantage.
He says this is the key that draws together the findings of the three
independent reports of 2010 and 2011 into the weaknesses and failures of the
Department of Finance, the Central Bank and Financial Regulator - - besides
'deference and diffidence', the reports refer to 'groupthink'.
Prof Barry says that this is less of a problem of course if the
institution in which it prevails is only one voice in the mix.
The paper says:
As far back as 1987,
TK Whitaker said that he would like to see “a
restoration of the old (civil service) principle that you were independent of
ministers. You gave your views on any new proposals fearlessly, critically,
honestly. You did not care whether your views were likely to commend themselves
to the minister, whether for their own sake or politically. Once a decision was
taken by minister or government, however, you carried it out as loyally and
efficiently as you could. That was my understanding of the function of senior
civil servants but I’m afraid it has been undermined. The young men who are
preoccupied about this generate deep disappointment in me by telling me that
that was an old world that has vanished. In the new world, the civil servant is
all the time trying to please the minister, over-conscious of what might be
politically acceptable, arranging the options so that they will appeal, rather
than in strict order of eligibility”]
It would surely be a good thing!
A Reality Check
What would be worthwhile, would be a warts-and-all analysis of why the
indigenous sector has performed so poorly over the last half century despite low
What size of firm merits public investment in exporting efforts; separating
indigenous geographical market data from supplies by multinational firms to know
the reality of teh hard slog that's involved in developing new markets outside
Europe, would also help.
In relation to China
for example, for indigenous firms, opportunities would be in niche areas and
limited. Their exports account for about 5% of exports from Ireland
company to have export potential, it has to generally first establish a domestic
base/record and unless it has a compelling product/service (in such a case it’s
likely to be acquired by a bigger overseas firm), it needs resources,
perseverance and patience.
Putting Mandarin on the school curriculum is a
typical proposal from armchair ‘experts’ who have no experience of the
challenges of selling in China - - 1.3bn consumers and all we need is a very
tiny slice of the pie!
November 2009, Irish companies were warned by several senior executives who have
had experience of running
some of the country’s most successful indigenous companies, to be cautious about
expanding into emerging markets and focus instead on developed markets.
“More fortunes have been lost than made by
getting in too early,” Liam O’Mahony, former
CRH CEO, told a conference on making businesses international at
UCD’s Michael Smurfit Business School.
O’Mahony, who ran the world’s second biggest building materials company from
2000 to 2008 and was until recently chair of IDA Ireland, said Irish companies should consider
expanding into the US, UK and other mature markets before looking at countries
such as China. “Some
of these markets are very large and there is still scope to grow as long as you
have value propositions,” he
O'Mahony’s advice was repeated by John Moloney, then Glanbia chief executive, and
Seán O’Driscoll, Glen
Dimplex chief . “China
is a long-haul, a slow-burn,” O’Driscoll
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