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Embassy of Ireland, Helsinki

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  1. Embassy of Ireland, Helsinki

  2. Contents • Introduction – Ireland in Summary • Changes in the Irish Economy • The Drivers of Ireland’s Success • The New Challenges for Ireland • Resource Slides

  3. 1. Introduction – Ireland in Summary

  4. 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

  5. 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

  6. The Celtic Tiger Europe’s 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”

  7. 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

  8. A Decade of Growth UN’s Human Development Index ranked Ireland 5th in 2007

  9. 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’.

  10. Economic Growth Average Annual % Real GDP Growth Source: OECDEconomic Outlook

  11. 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

  12. 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

  13. Trade relationship with the Global Economy

  14. Destination of Irish Exports in 2006 Source: CSO /Forfas

  15. Geographic distribution of Irelands Imported Goods in 2006 Source: CSO/ Forfas

  16. 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

  17. The Drivers of Ireland’s Success

  18. 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)

  19. Ireland Campus FAB24-2 IR4 FAB24 IR6 FAB14 IR2 FAB10 IR5 IR1 5,000 Staff; $5bn+ invested – Over 3,000 employed

  20. Competitive - but not at the cost of Irish Workers – Second Highest Minimum Wage Source: Eurostat / Federation of European Employers

  21. Industrial Disputes and Social Partnership Source Forfas:

  22. Education, Skills and Research ‘LEADERS OF TOMORROW’

  23. Investment in Education and Skills • 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.

  24. Post-Leaving Cert/High School Structure of Irish Education ‘Ladder - Up’ approach to Advanced Learning

  25. Education and Skills • 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

  26. Full-time Third level students - 1975/76 to 2004/06 in thousands (000) Source: Higher Education Authority

  27. % Population aged 25-34 having at least Third Level Education Source: OECD Education at a Glance

  28. Breakdown of Higher Education Graduates Source:HEA

  29. Human capital development objectives…

  30. Research & Development ‘LEADERS OF TOMORROW’

  31. R&D in Ireland • 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

  32. Irish R&D – who finances it? GERD = Gross Domestic Expenditure on R&D

  33. R&D Tax Credit • 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

  34. Business Sector R&D

  35. Researchers in Higher Education Source: National Competitiveness Council, 2007

  36. 3. The New Challenges for Ireland

  37. The future will be different • 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

  38. Vision and Strategy • 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.

  39. Enhancing Productivity Growth Source: National Competitiveness Council, 2007

  40. 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

  41. Bridging the Infrastructure Gap

  42. National Development Plan, 2007-2013 Raising the Economy’s Productivity Growth Potential

  43. Human Capital Development

  44. Human Capital Development • 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

  45. Positive signs for the future … • 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.

  46. Corporate Tax Rate • 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)

  47. Comparison of Corporate Tax Rates 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

  48. Tax Reform • Wide base, low rates • Corporate profit taxes • Capital gains taxes • Income taxes • Employer social security taxes • Consumption taxes • Property taxes • Self-assessment system

  49. The Top Pharma Companies are in Ireland