Globalisation and the Knowledge Economy the Case of Ireland

Transcription

1 Globalisation and the Knowledge Economy the Case of Ireland Andrew McDowell Chief Economist October 2006

2 The Development of the Irish Economy MAY 1997 MAY

3 Ireland s Economic Transformation Unemployment Rate (per cent) Employment Rate (percentage of working age pop.) Exports ( m) 12,405 32, ,519 Government Debt (as a percentage GDP) Irish GNP per Capita (, current prices) 5,367 11,224 30,726 Irish GNP per Capita (as a percentage of EU- 15 Average)

4 The Global Economic Landscape is Changing More Rapidly than Ever Before Increasing share of services in output and employment, and declining roles of manufacturing and agriculture Growing importance of knowledge flows as a driver of economic growth Greater foreign ownership Greater people mobility (skilled and unskilled) Offshoring 4

5 The Global Economic Landscape is Changing More Rapidly than Ever Before How are these trends affecting Ireland, and how is Irish economic policy responding? 5

6 Change in Employment By Broad Economic Sector Ireland and G7 Countries (Base Year = 2000) G7 Employment in Agriculture (ISIC rev.3,a-b), 2000=100 G7 Employment in Industry (ISIC rev.3, C-F), 2000=100 G7 Employment in Services (ISIC rev.3, G-Q), 2000= Ireland Employment in Agriculture (ISIC rev.3,a-b), 2000=100 Ireland Employment in Industry (ISIC rev.3, C-F), 2000=100 Thousands Ireland Employment in Services (ISIC rev.3, G-Q), 2000=

7 7

8 Manufacturing Employment 1995/2005 Select OECD Economies Share of Manufacturing as % of Total Employment , 2005* 45% 40% 40.58% * 35% 30% 25% 25.84% 30.06% 27.25% 26.27% 25.17% 23.42% 20.88% 20% 18.63% 18.00% 16.78% 15% 10% 11.30% 13.21% 10.11% 5% 0% 8Czech Rep. Poland Hungary Korea Switzerland Ireland USA

9 Employment (000s) within Manufacturing, Manufacturing N.E.C Transport equipment Medical, & Optical Instruments Modern Machinery Electricial Machinery & Euipment Materials & Minerals Chemicals Wood/Paper Textiles/Leather Food& Beverages; Tobacco Number of Employees (000s) 1995 Q Q Q3 9

10 Services Export Performance 400 Growth in Services and Merchandise Exports ( ) Base Year = Merchandise Services

11 Ireland s Global Market Share 3.0% Services Merchandise 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

12 Ireland s Global Market Share Chemicals 4.78% 4.34% Other Services Office and Telecom Food Machinery Travel Services Transportation Services Textiles Fuels and Mining Total Services Total Merchandise 1.40% 1.49% 0.80% 1.17% 0.66% 0.55% 0.49% 0.40% 0.21% 0.30% 0.12% 0.12% 1.23% 1.05% 1.20% 2.15% 2.01% 2.63% 2.26% 4.10% % 1% 2% 3% 4% 5% 6% Ranked by 2005 World Market Share

13 FDI Greenfield Projects Singapore Ireland Hungary Denmark Sweden Switzerland UK New Zealand Spain Finland Poland OECD Netherlands France Germany Korea US Italy Japan Number of Greenfield Projects by Destination (per million of population)

14 Export Performance by Ownership 60 Irish Manufacturing Exports (Agency Assisted Companies) Billions Indigenous Foreign Owned Companies 14

15 Irish FDI Outflows as a % of OECD Outflows Percentage of OECD FDI outflows 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Ireland FDI Outflow as % OECD FDI Outflow s 15

16 10 People Mobility Migrants per 1,000 of population Ireland Northern Ireland EU 15 US NEU 10 Japan

17 Emerging Policy Developments / Challenges Industrial policy Research/ innovation policy Fiscal/tax policy Labour market policy Regional policy/land and infrastructure planning Education and training 17

18 Industrial Policy Continued pro-active / well resourced / highly skilled industrial development agencies Manufacturing no special policy supports FDI no backlash after 2000 downturn New EU state aid disciplines gradual shift to environmental/ R&D /skills supports Mobile R&D investments - IDA/SFI partnership Smaller indigenous industry policy emphasis on export promotion, mgt. development, risk capital market development and R&D supports Outsourcing policy neutral approach some soft support for ODI for market development 18

19 Research / Innovation Policy Science Foundation Ireland Creation of 4 th level education system - doubling of PhD graduates by 2013 New university codes for management of IP from publicly funded research Coherence between research funding priorities and industrial strategy SME and services innovation policy? Universities and applied research? 19

20 Fiscal Policy Global competition demands both higher spending on physical/ knowledge infrastructure and social supports and competitive tax rates Greater pressure for public sector efficiencies New financing models for infrastructure (user charges) Shift from direct to indirect taxes (VAT, property) Corporate tax competition Taxation of R&D and intellectual property Extension of tax treaty network 20

21 Labour Market Policy Economic restructuring Current forecasts suggest absolute declines in employment only for farm workers and plant and machinery operators natural demographic churn Immigration Open access to new EU Members since 2004 New green card system for skilled non-eu migrants Hiring and firing New protections against dislocation by immigrants Social welfare replacement rates remain low Application of Danish flexicurity model to Ireland? 21

22 Regional Policy / Land Planning Clustering of high-skilled jobs in urban areas Increasing importance of creating attractive metropolitan areas social/cultural/ recreational infrastructure Rapidly rising urban land prices More integrated land/transport planning National Spatial Strategy Rural economy? Continued direct and indirect subsidies for agriculture, tourism, fisheries 22

23 Education and Training Education Need to address polarisation of education outcomes Need to complement academic system of education with vocational stream Growing demand for graduates 65% of school leavers to go on to higher education Increasing emphasis on soft generic skills communications, team-working, conceptual Upskilling National Training Fund SkillNets 23

24 Responding to Change When the pace of change on the outside exceeds the pace of change on the inside then the end is in sight.jack Welsh 24