Irish finance minister, arrives for an emergency meeting of Eurogroup
finance ministers on the Greek crisis, Brussels, June 27, 2015|
The Greeks and the Irish are Europe's worst exporters but the only way Greece
can grow is to emulate Ireland's successful inward investment model, whether or
not the country remains a member of the single currency.
That was the message that Taoiseach Enda Kenny should have conveyed to Greece
last week rather than making dubious claims about taxes during the Irish
bailout. Earlier this year, Mario Draghi, European Central Bank president, said
that the Greek tax burden at 34.2 per cent of economic output in 2013 was well
below the euro zone and EU28 average. The Irish level was 33.6 per cent of
gross national product in 2013.
Official unemployment rates alone show that the human toll of austerity has been
greatest in Greece and beyond current wrangling with creditors, the country
desperately needs a credible growth plan with a focus on making exporting a jobs
“If you go into the shops here when you’re doing your weekly shopping, apart
from feta cheese, how many Greek items do you put in your basket?”
Noonan, finance minister, asked in a 2012 interview. Greek goods imports to
Ireland in 2014 were valued at €34 million — the same level as imports from
Bulgaria, the EU's poorest country.
Last year the European Commission published research which showed that Greece
was Europe's worst exporter with a goods and services export ratio of 30 per
cent of gross domestic product (GDP) in 2013. Refined fuel is the biggest goods
export but it relies on imports while Greece is a leader in merchant shipping
but the crews are mainly foreign .
Ireland's export ratio exceeds 100 per cent of GDP and about forty big American
firms account for two-thirds of the total — the foreign-owned sector accounts
for 90 per cent of Irish tradeable exports.
It is far from an ideal situation that Ireland has only an estimated 4,0000
exporting firms compared with for example Denmark's 30,000 but it illustrates
that even with a strong foreign presence, it's very difficult to develop an
indigenous exporting base where a tradition of exporting is lacking. Export
performance is also mainly dependent on firm structure rather than a country's
national policy — Germany for example has a high ratio of large and medium
Nevertheless, a small country without significant natural resources should take
advantage of foreign direct investment to keep talent at home, increase
employment, and in the case of Greece boost a key sector such as tourism.
Greece's record in attracting foreign direst investment (FDI) has been dismal
and much lower than its regional neighbours.
Inward FDI as a percentage of Greece’s GDP averaged only about 1 per cent from
2004 through 2010, according to Boston Consulting Group, while the EU average
was 3.7 per cent. Despite Greece's better infrastructure than its neighbours,
Turkey, Romania and Bulgaria had an average of 8.1 per cent.
China's overseas investments are set to triple by 2020 while
only €99m from €46bn in direct investments in European Union (EU) countries in
the period 2000-2014, according to new research — the US is the dominant foreign investor in Ireland.