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Embassy of Ireland, Helsinki. Contents. Introduction – Ireland in Summary Changes in the Irish Economy The Drivers of Ireland’s Success The New Challenges for Ireland Resource Slides. 1. Introduction – Ireland in Summary. Ireland - A Changing Country. Total population: 4.2 million

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  • Introduction – Ireland in Summary

  • Changes in the Irish Economy

  • The Drivers of Ireland’s Success

  • The New Challenges for Ireland

  • Resource Slides

Ireland a changing country
Ireland - A Changing Country

  • Total population: 4.2 million

  • Highest birth-rates in EU at 15.3 births per 1000 population

  • Relatively young population with an average age of 35.6 years

  • Rapid increase in Immigration1987: net migration -44,0002006: net migration +70,000

Economic history
Economic History

  • 1922 – 1958

    • a basic agricultural economy

    • self-sufficiency and protectionism strategy

  • 1958 – 1973

    • opening up and joining Europe (EEC)

  • 1973 – 1987

    • some success, adjustments, but crises also

  • 1987 to date

    • exceptional development and growth

Embassy of ireland helsinki

The Celtic Tiger


shining light

What Changed the Irish Economy ?

MAY 1997

1988 –”Poorest of the Rich”

1997 – “Europe’s shining light”

2006 –”The luck of the Irish”

An economic snapshot of ireland 2007
An Economic Snapshot of Ireland, 2007

  • GDP €174.7 bn

  • Exports €138 bn (2006)

  • Imports €120 bn (2006)

  • Trade Surplus €18 bn - 10.6% of GDP

  • Total at work 2+ million (was 1.1m in 1990)

  • GDP per capita€40,275

  • National Debt €37,559 million euro

  • The average annual rate of increase in Irish GDP has been5.4% over the 6 year period 2000 – 2006

    Source: Central Statistics Office

A decade of growth
A Decade of Growth

UN’s Human Development Index ranked Ireland 5th in 2007

Business friendly policies
Business-friendly policies

  • Young, vibrant and highly-skilled workforce;

  • Consistent public policies, including low tax;

  • Strong developmental focus nationally, with strong, informal network links;

  • Rapid responses e.g. skills development;

  • Successful development of high-technology, high-productivity, trade-based FDI;

  • Agility, creativity, flexibility and ‘can do’.

Economic growth
Economic Growth



% Real



Source: OECDEconomic Outlook

The basis for success
The Basis for Success

  • Results from development decisions of earlier decades and from EU membership

  • European Single Market and Eurozone

  • Social partnership and economic stability

  • Demographic gains and education

  • Low corporate tax – now 12.5% on profits

  • Foreign Direct Investment (FDI)

  • Performance of Irish management and Industry

  • Export focus and global orientation

Social partnership
Social Partnership

  • 1987 - a ‘time for reform’

    • rising unemployment (17%) and emigration

    • public finance deficits and debt (120% of GNP)

    • loss of jobs and of national confidence

  • National Social Partnership Agreement

    • employers, trade unions, farmers & government

    • moderate wage increases and tax cuts

    • consensus on development priorities

    • shared efforts to achieve national goals

Strategies in place by economic agencies to increase irish exports
Strategies in place by economic agencies toincrease Irish exports

  • Asia Strategy – focused on increasing exports to the growing economies of the Region

  • Targeting existing Markets in Europe and North America for continued growth

  • Targeting the potential of new markets in Mexico, Brazil, the Gulf, Russia and South Africa

Irelands open economy
Irelands Open Economy

Key Milestones:

  • Industrial Development Authority (1952)

  • Dismantling of import tariffs/quotas (early 1960s),

  • Ireland joins the GATT (now WTO) (1967)

  • Ireland joins the EEC (now EU) (1973)

  • Creation of Single European Market (1993)

  • Introduction of Euro in physical form (2002)

Embassy of ireland helsinki

Ireland Campus










5,000 Staff; $5bn+ invested – Over 3,000 employed

Competitive but not at the cost of irish workers second highest minimum wage
Competitive - but not at the cost of Irish Workers – Second Highest Minimum Wage

Source: Eurostat / Federation of European Employers

Industrial disputes and social partnership
Industrial Disputes and Social Partnership Second Highest Minimum Wage

Source Forfas:

Education skills and research
Education, Skills and Research Second Highest Minimum Wage




Investment in education and skills
Investment in Education and Skills Second Highest Minimum Wage

  • 1960s heavy investment in primary and secondary education begins;

  • 1967 free secondary education introduced;

  • 7 Universities, 3 in Dublin, 1 in Cork, Galway, Limerick and Maynooth;

  • 14 Institutes of Technology located regionally;

  • Increased third level participation over the three decades.

Post leaving cert high school structure of irish education
Post-Leaving Cert/High School Structure of Irish Education Second Highest Minimum Wage

‘Ladder - Up’ approach to Advanced Learning

Education and skills
Education and Skills Second Highest Minimum Wage

  • 57% of graduates are in science, engineering, computer or business studies

  • Government initiatives to meet future needs:

    • Expert Group on Future Skills

    • Educational Technology Investment Fund

    • Focussed technology courses

Full time third level students 1975 76 to 2004 06 in thousands 000
Full-time Third level students Second Highest Minimum Wage- 1975/76 to 2004/06 in thousands (000)

Source: Higher Education Authority

Population aged 25 34 having at least third level education
% Population aged 25-34 having at least Third Level Education

Source: OECD Education at a Glance

Research development
Research & Development Education




R d in ireland
R&D in Ireland Education

  • Strategy for Science, Technology and Innovation 2006-2013

  • Strong Government commitment and funding, to double both enterprise R&D and doctoral output by 2013

  • Science Foundation Ireland (on NSF model) is attracting world-class researchers to universities

  • Strong industry - academic links

  • Notable developments with Bell Labs, GSK, IBM, Intel, HP, Wyeth, Bristol-Myers Squibb and many other companies

  • 50% of overseas medical technology companies have an R&D responsibility

Irish r d who finances it
Irish R&D – who finances it? Education

GERD = Gross Domestic Expenditure on R&D

R d tax credit
R&D Tax Credit Education

  • 20% Tax Credit for “Qualifying Expenditure” on “Research and Development”

  • Research and Development, includes

    • Basic research

    • Applied research

    • Experimental development (including process development)

  • Applies to both Revenue and Capital

  • No requirement to retain ownership of resulting IP in Ireland

Researchers in higher education
Researchers in Higher Education Education

Source: National Competitiveness Council, 2007

The future will be different
The future will be different Education

  • Globalisation, technology and digitisation

  • New Markets / New Competitors

  • Changes in economic conditions

  • New business models and virtual companies – new patterns of investment

  • New aspirations and expectations in society

  • Higher value activities and higher skills

  • More sophisticated and complex jobs

  • Premium on flexibility and responsiveness

Vision and strategy
Vision and Strategy Education

  • Higher value, skills and knowledge based economy

  • Innovation placing Ireland at global leading edge in clusters or niches, using enabling technologies

  • Ireland will differentiate on the basis of:

    • performance based on sophistication and quality of operating environment,

    • our expertise and research, and

    • flexibility, speed and agility.

Enhancing productivity growth
Enhancing Productivity Growth Education

Source: National Competitiveness Council, 2007

Addressing productivity growth and international competitiveness
Addressing Productivity Growth and International Competitiveness

  • Enhancing Human Capital through development of education and life-long learning

  • Increasing infrastructure efficiencies

  • Review and reform of the Public Sector

  • Focus on moving up the value chain – private sector

  • Productivity Improvement Fund

  • National Competitiveness Council

  • Expert Group on Future Skills

National development plan 2007 2013
National Development Plan, 2007-2013 Competitiveness

Raising the Economy’s Productivity Growth Potential

Human capital development
Human Capital Development Competitiveness

Human capital development1
Human Capital Development Competitiveness

  • National Skills Strategy, January 2007

  • Increase upper secondary completion to 90%

  • Increase progression to third level to 72%

  • Prepare for occupational changes

  • Move 500,000 people in workforce one-step-up the qualifications ladder by 2020

  • Full integration of migrants into education and training system

Positive signs for the future
Positive signs for the future … Competitiveness

  • GDP growth has been consistently higher than the OECD average over the last decade.

  • GNP per capita levels are now in line with the OECD average.

  • Ireland maintains an open and attractive environment for overseas investment.

  • Entrepreneurship rates are relatively high and the Labour Force is very strong.

  • Long standing advantages in our tax system continue to be of benefit.

Corporate tax rate
Corporate Tax Rate Competitiveness

  • Stable Corporate Tax Rate of 12.5%

  • There is full domestic political support for the low tax rate

  • European Commission has indicated that 12.5% does not constitute harmful competition

  • Ireland has selected the “high road” of “full and fair competition” and is “setting the example” (Jeffrey Owens – OECD March 2003)

Comparison of corporate tax rates
Comparison of Corporate Tax Rates Competitiveness

Ireland 12.50%

Netherlands 25.50%

United Kingdom 30.00%

China 33.00%

Belgium 33.99%

France 34.43%

Germany 38.60%

USA 39.50%

Japan 39.54%

Source - Deloitte & Touche, 2007

Tax reform
Tax Reform Competitiveness

  • Wide base, low rates

  • Corporate profit taxes

  • Capital gains taxes

  • Income taxes

  • Employer social security taxes

  • Consumption taxes

  • Property taxes

  • Self-assessment system

Energy Competitiveness

  • 2007 Energy White Paper Objectives:

  • Security of Supply, Environmental Sustainability & Economic Competitiveness

  • Creation of all-island energy market 2008

  • 33% of electricity from renewables by 2020 – (currently 93% of energy from fossil fuels)

  • Electricity inter-connection to UK & Europe

  • Building additional generation capacity

  • All-island gas storage by 2008

  • Retain State ownership of transmission networks

  • Reduce ESB all-island market share to 40%

  • €150m investment in energy research

  • Review of regulatory framework proposed

eCommunications Competitiveness

  • Strong Progress

    • High capacity and competitive international connectivity

    • Strong private sector market participation in fixed, mobile, wireless and services

    • State investment in metropolitan area networks

    • Strong rates of broadband take-up

  • Government supported regional broadband programme

  • Priorities

    • Rapid development of Next Generation Networks

    • Pro-competitive regulation

    • Reinvigorating eGovernment and Knowledge Society agendas

Human capital development2
Human Capital Development Competitiveness

  • National Skills Strategy, January 2007

  • Increase upper secondary completion to 90%

  • Increase progression to third level to 72%

  • Prepare for occupational changes

  • Move 500,000 people in workforce one-step-up the qualifications ladder by 2020

  • Full integration of migrants into education and training system

Social partnership agreements

1996 fourth pillar introduced – social/community pillar Competitiveness

Current agreement Towards 2016

Social Partnership grown far wider than wage negotiations

10 year framework to address ‘key social challenges’

Social partnership is regarded as having benefited all pillars and as a major contributor to Ireland’s success over last 20 years

Social Partnership Agreements

Enterprise development
Enterprise Development Competitiveness

  • Indigenous enterprise

    • Scaling growth oriented companies, internationally focused and innovation-led

    • Promoting innovation based start-ups and entrepreneurship

    • Driving productivity growth, management skills, technology use and marketing capability in existing enterprises

    • Improving access to equity and finance

  • Foreign Direct Investment

    • High value inward investment in advanced manufacturing, sophisticated business services and research and innovation

    • Gateway approach to regional economic development

  • Enhancing our tourism product and developing a market-oriented seafood sector

  • Enterprise networks

  • Higher education and enterprise collaboration

  • Open competitive markets and regulatory reform

Strategy for science technology innovation 2006 2013
Strategy for Science, Technology & Innovation, 2006-2013 Competitiveness

  • Objectives:

    • Step-change in enterprise R&D

    • Double PhD output to 1,312 by 2013

  • World Class Research

    • Funding excellence in frontier research

    • Investing in core infrastructure, postgraduate training and early stage researchers and research collaboration

  • Enterprise Research & Innovation

    • Holistic in-company R&D support scheme

    • Competence centres and higher education collaboration

    • Innovation Vouchers

  • Commercialisation and technology transfer reform

  • Orienting sectoral research around policy priorities

Thank you
Thank You Competitiveness

Resource slides
Resource Slides Competitiveness