The road back to an exporting economy
The trajectory that led us to the particular circumstances we are now experiencing was becoming evident to some observers by the middle of this decade. It is interesting to quote what was said in the 2006 Annual Report of Ireland’s National Competitiveness Council:
‘While the economy has continued to grow strongly in the first half of this decade, the underlying impetus to this expansion shifted from the broadly-based, and export-led, growth of the late 1990s to a growth pattern that by 2005-06 had become entirely dependent on domestic consumption and investment.’
Of course other countries are experiencing the current recession also, as it is a global phenomenon; but Ireland’s position has been particularly stark. The problem for us is that we have developed a standard of living and a cost base that cannot be sustained on the back of domestic consumption only, as our economy is far too small for that. That fact was obscured for a short while by the abnormal volume of construction, but it was bound to become apparent to us sooner or later as demand for such levels of construction fell. So now we either need to scale back our expectations and living standards quite substantially, or we need to start selling our goods and services again in international markets. But here the problem is that what we were selling 10 years ago is now being sold at much lower prices by others; we are no longer competitive in those areas. So we need to start selling something new.
The goods and services we should now be exporting need to be much higher-value, and need to be innovation and knowledge-driven. We need to be offering new processes, new product design, new intellectual property to others who will then do the basic production. In short, if we are to become an exporting nation again we need to to support and develop the knowledge society.
The government has been right to support and fund high value research. We now need to make sure that this is being conducted in institutions whose overall funding base ensures sustainability. This is the only realistic way out of the recession and back to prosperity for Ireland.
Tags: competitiveness, construction, exports, innovation, Ireland
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