Are we competitive?

Tomorrow morning I shall be attending a meeting of Ireland’s National Competitiveness Council, of which I am a member. This is a government appointed body with a membership that is drawn from industry, trade unions, economics and other experts – as well as some senior civil servants in attendance. The Council advises the government on issues related to Ireland’s competitiveness. Perhaps I can underscore its significance by pointing out that it was pointing to a serious potential problem with Ireland’s economy long before anyone else was: by 2006 it was noting that we had ceased to base our economic growth on exports and were relying instead on domestic consumption and construction, and that this was unsustainable.

Over the past few years one of the recurring themes of the Council’s deliberations and reports has been the meaning of the concept of ‘competitiveness’. Previously it had always been assumed that, on the whole, competitiveness was to be found in lower prices and higher productivity – and indeed these are important elements. However, over the past decade Ireland has ceased to be cheap in any recognisable sense, while at the same time the significant national productivity gains of the 1990s had slowed down significantly. This elements of competitiveness still need to be brought under control. But we have also recognised that competitiveness has become a much more complex concept.

BusinessDictionary.com defines competitiveness as the ‘ability of a firm or a nation to offer products and services that meet the quality standards of the local and world markets at prices that are competitive and provide adequate returns on the resources employed or consumed in producing them.’ The National Competitiveness Council itself, in its 2003 annual Competitiveness Challenge report, defined it thus:

The ability to achieve success in international markets leading to better standards of living for all. It stems from a number of factors, notably firm level strategies and a business environment that support innovation and investment, which combined lead to strong productivity growth, real income gains and sustainable development.

The latter definition may betray a little the Council’s needs to accommodate the various interests of the groups represented by its members, but it was notable in introducing the concept of innovation as an element in the substance of competitiveness. We are no longer cheap, and we are unlikely ever again to be a preferred location for high volume manufacturing, but if we support and develop innovation indigenous to Ireland we have an opportunity to regain recognition as a competitive economy.

For this to be successful, it requires strong and well-funded universities, who are able to build up and maintain critical mass in areas of importance to the national and global economy. Universities, when properly developed, are magnets for and sources of innovation that can find a quick industrial application. In the decisions we take over the next while, we must ensure that we protect and enhance Ireland’s ability to prosper in global markets. The price of failure would be very high.

Explore posts in the same categories: economy, technology, university

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