NCC Publishes Competitiveness Report

by Jason Gorringe, Tax-News.com, London

12 February 2007

The National Competitiveness Council (NCC) last Wednesday launched a new report, entitled 'Ireland’s Competitiveness Challenge'.

The report identifies the main challenges facing the enterprise sector, and the policy responses required to enhance the ability of Ireland’s enterprise base to sell goods and services in international markets.

According to the NCC, the Irish economy continues to grow strongly, with real GNP growth estimated at 6.2% for 2006. Between 2001 and 2006, real per capita incomes have grown by 17% and are now on a par with EU-15 and OECD averages.

The report noted that domestic consumption and construction investment have replaced net exports as the drivers of growth. Supported by high and fast growing private debt levels, construction now dominates employment and economic growth. International trade did not contribute to Ireland’s growth in 2005.

It suggested that:

"These are challenging developments. In the long run, success in international markets is the only sustainable driver of economic growth. A number of international trends are also likely to impact on Ireland’s future growth. These include intensifying competition due to the growing economic importance of China and India, the expansion and development of the EU, and increasing concerns about energy prices, security of supply, and the environmental impact of economic development."

Launching the report, Dr Don Thornhill, Chair of the National Competitiveness Council, observed that:

“Ireland continues to maintain a strong economic performance relative to our peers. As globalisation develops, this provides us with new opportunities. It also creates greater competition. It is vital that the necessary economic conditions are in place in Ireland to take advantage of these opportunities and sustain our competitiveness."

He noted:

“We are in a unique position in terms of our past history to address these challenges. We now have more resources for investment. We also have the confidence - built up over the last twenty years, when we stepped back from economic decline and began what became a remarkable economic recovery."

Dr Thornhill added: “In a small regional economy like Ireland, economic prosperity ultimately depends on our ability to sell goods and services abroad. Our economic performance during the last decade has been outstanding. While we are a still a strong trading nation, our share of world markets has begun to dip as resources have shifted towards domestic consumption and construction."

"Our productivity growth rates have slowed, and growth in domestic demand is being financed by high levels of personal borrowing. The challenge facing us is to reverse those trends, to stimulate productivity growth and regain international market share as key policy objectives.”

The report went on to state that the NCC welcomes the National Development Plan (2007-2013).

Building on progress to date, 'Ireland’s Competitiveness Challenge' outlined key policy recommendations in ten areas that would help to restore Ireland’s international competitiveness.

These areas include: labour force; public income and expenditure; social capital; the education system; innovation and R&D; the productivity of Irish-based firms; the regulatory environment; physical infrastructure; the costs of doing business; and energy.

The full text of the NCC report, 'Ireland's Competitiveness Challenge' can be found in the Tax News Resources section.

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