Insight Ireland - Lecture 1

Transcription

1 Insight Ireland - Lecture 1 The Celtic Tiger and her potential economic insights for Japan/China. Dr. Rene H. Duignan Aoyama Gakuin University Sophia University Health Policy Institute Japan Co-Chair - Japan In Context (JIC) Study Group Ireland Japan Chamber of Commerce Speaker contact and feedback japanincontext@gmail.com *The views expressed in this presentation are strictly off the record and are the personal observations of the speaker and do not represent the views of his employers. 1

2 Insight Ireland JIC Ireland Japan Chamber of Commerce Temple University Japan - Institute of Contemporary Japanese Studies International University of Japan Global Communications Platform JIC Study Group japanincontext@gmail.com 2

3 The Economic Engine Room 3

4 Current crisis - not directly on tonight s agenda Global financial crisis real economy and financial sector impact Open economy vulnerable to shocks - Ireland - first EU country into recession Irish bank deposits guaranteed Housing market bubble soft landing? ECB monetary policy and Euro Lisbon Treaty rejection Northern Ireland politics 4

5 Ireland Pre-Celtic Tiger Third-world country on the edge of Europe 1987 Model of economic failure - Mismanagement 18% unemployment, low growth, high inflation, heavy tax (80% top rate), huge public debt 112% Welfare state without income. Drunken lovable losers. IMF or EU set to intervene. Heavy agricultural bias dependant on trade with UK Emigration ( m) (1840-8m) 4m in 2004 (first time since 1871) Brain drain of graduates 36% of students emigrated in Joined EU in 1973 begging bowl mentality CAP Milking EU General sense of doom and gloom widespread poverty 5

6 The Celtic Tiger Transformation EIU best country in world to live quality of life. 4 th richest country in OECD per capita as Japan has fallen down to 18 th. No. 2 in EU, 135% of average EU income. Public Debt/GDP ratio has fallen from 110% of GDP to 30% High global profile disproportional to size. Soft power nation branding. A model for the world and academia to study? Multi-cultural cultural, immigration 14%, secular society. 6

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9 Celtic Tiger Top 16 Factors 1. Political Stability Tallaght strategy Sense of crisis 2. Fiscal discipline pragmatic rather than ideological 3. Trade Unions Social Partnership Social Partnership New Third way Fear of Thatcher-style anti-union policies 4. Low tax regime US election + Google/Microsoft, PSTP 5. FDI attraction Active government agencies, Production disintegration. Knowledge spill-over, linkages, tax revenue, wages, success spreads. 6. Massive investment in Education 7. English language + Strong US ties 40 million Irish Americans Closer to Boston than Berlin 8. EU Regional Funds Education + Infrastructure (Greece) Heritage Foundation + Cato Institute reports inefficient? 9

10 Celtic Tiger Top 16Factors 9. EU Market 500 million consumers 10. Irish Diaspora Irish bars Soft power 11. Demographics youthful and dynamic 12. Women s s participation in labour force Secular society. Growing middle class, consumerism 13. Housing boom Wealth effects boost consumption 14. Competition and deregulation improving productivity 15. Peace process - Northern Ireland? Tourism dividend 16. Creative, independent, pragmatic people 10

11 1) Governance and management Two party politics or playing politics DPJ? Little ideological difference between main parties in Ireland Years of mismanagement Tallaght Strategy Company level - GE or Nissan revival, top management, strategic planning-implementation, training. Improve governance decisions, 2 nd 3 rd Generation Political classes. 11 out of 17 cabinet minister 50% of the Diet in Japan Credible fiscal policy consumption tax 11

12 2) Education Ireland and Japan Education is not filling a bucket but lighting a fire W.B. Yeats. Third world country - first world education allowed rapid transformation University level - a world apart from personal experience. Complacency on behalf of professors and especially students in Japan. Mature students, freeters, neeters second chance? Japan - Patriotic education versus quality affordable education Not unpatriotic to learn English language University branding University branding Todai or Keio life path too soon reenforcing class structures not equality of opportunity. 12

13 Education spending as % of GDP 13

14 English language skills in Asia 14

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16 3) Women in management in Japan Recommended Report: Womenomics K. Matsui - Goldman Sachs 16

17 4) Immigration as an economic boost EU Accession States in 2004 Irish doors open. Large immigration inflow 15% of population Alleviating labour market bottlenecks Polish Plumbers Keeps Ireland attractive for MNEs Lower labour costs Questions as regards civil society cohesiveness Integration Language problems and recognizing qualifications. Phillipino nurses great success Japan immigration Entertainers Visa OK Nurse Visa difficult 17

18 5) Foreign Direct Investment Ireland 9 of top 10 Pharmaceutical firms, 16 of top 20 medical devices, 7 of top 10 software companies. 1. Employment 2. Tax revenue 3. Expertise 4. Global networks. By receiving FDI, the domestic economy can promote greater economic efficiency by tapping the capital, technology, management know-how, sales, and procurement networks of foreign companies. Also, foreign company entry leads to greater competition, improving in management efficiency of domestic firms Ambitious Japanese plans for FDI expansion FDI 2.2% of GDP in 2005, 5% in 2010 target. Very low base. Dejima accusation from EU Trade Commissioner. 18

19 6) Financial Services Dublin ranked 13 th on global list, in Top 5 European financial centres. 10 th for asset management, 7 th for insurance. Tokyo aspirations to be a global financial centre Emerging pattern of systematic defensive behaviour regressive Poison pills, METI proclamations, Court ruling of abusive investors, shareholder votes, diluted triangular mergers. METI vice Minister stupid, greedy, adulterous, irresponsible and threatening. Cabinet Office in 2007 targeted 50% boost to productivity M&A a driver Head of the TSE criticized J-corporate governance 19

20 7) Health Policy 20 Mainichi Shimbun - English - ndex.html

21 Health Policy VAT 21% in Ireland Consumption tax 5% Sin taxes - Cigarettes 1,200 yen in Ireland 12,000 yen to say hello to the Doctor in Ireland More private hospital care private + public. More foreign nurses and Doctors needed. Lack of Patient voice in Japan Cancer refugees. 21

22 Insight Ireland - Conclusions Improve governance Two party politics or playing politics Raise educational achievement Universities + English Credible fiscal policy consumption tax? Encourage rather than block FDI Unified Approach Increase female participation in the labour market Increase immigration inflow language + integration Increased trade with neighbours environment + transport Reform agricultural sector improve productivity Improve service sector productivity 22