Mary Harney The Irish miracle combines high growth rates, high employment in better-paying jobs, low unemployment, and net immigration . We have now got a very healthy budget situation, and a very healthy economy. Technical education and joining the EU made the difference Undoubtedly the economic recovery in Ireland was facilitated in part by the introduction of free second-level (secondary) education in the late 1960s. The education reform resulted in a substantial increase in enrollments and shifted its focus away from the traditional humanities coursework to technology-oriented curricula in the third-level (colleges and universities) education. Close links were established between the industry and educational institutions, especially with the Institutes of Technology (formerly known as Regional Technical Colleges, RTC). The increased investment by the government in education created a skilled base of human capital that would eventually become one of Ireland's competitive advantage factors as a nation. For the past three years , spending on education has increased by 40% to account for 28% of all government spending. It shows a strong commitment of the Irish government to ensure the future in the information age. Today, the Republic of Ireland boasts four universities and 11 Institutes of Technology located throughout the country, with a student population of 53,400 and 35,500, respectively. Ireland has since emerged as the most favored industrial location for foreign investment, particularly in the high-tech sectors. When we joined the EU in the early 1970s, it was a big step for us, because until then we were very insular, and very protectionist. Our only trading experience was with the U.K. We exported agriculture and imported manufactured products. Because of our history with our nearest neighbor, we had a huge inferiority complex and a chip on the shoulder. Joining the EU was making a big statement. Now Ireland was going to be outward looking. It was going to look at the opportunities, instead of trying to protect ourselves in the world ” protectionist policies don't work anyway ” we are going to become part of something much bigger. And that opened up our minds and attitudes. At the same time, we began to invest very heavily in education. Until the late 1960s, the only people who really could get a full second-level education right to the age of 18, were the people who were reasonably well-off, or people who were educated by the religious. And for a long number of years, the religious filled a vacuum not filled by the state. They educated young people free of charge. And indeed there are many examples of people joining the nuns, the priests, and the brothers ” to be educated, and subsequently maybe leaving the church . So, the introduction of free second-level education was the beginning of the focus on education. At the same time, we started to reorient our education system away from being humanities-oriented to a much more science and technology and engineering focus. Many used to argue that we were educating for foreign countries . We had massive brain drain, particularly to Germany, Japan, the U.K., and the U.S. These were among the debates we were having at the time. Technology provides leverage in other economic sectors It would be wrong to think that all our eggs are in one basket . Yes, we've become very technology-focused, but we've become so across the board. For example, consider an Irish company called Kerry Ingredients, which was started on the southwest coast of Ireland in a very small town in county Kerry. It is now the second-largest food ingredients company in the world. From a very peripheral base, it started in 1973. The two big reasons they've grown are technology and people. Every year they've been able to hire, through a graduate placement program we run, highly talented people. So they've acquired companies all over the world, and they've been able to surpass their competitors in places like Malaysia and Australia. This is the filtering effect of embracing technology even in a very traditional sector like food. Nobody would have said, a few years ago, that Ireland could become a world leader in food. It's so competitive, and so labor- intensive . And yet, through the use of technology and young people, it's happened . And that's what we're trying to do, to instill that culture across the sectors. But equally, we have our eggs in a few baskets . We're very successful in financial services. Half of all the large insurance companies in the world have a facility here. A very high percentage of the biggest banks in the world are here. We concentrated software to where we have become the world's largest exporters. Social partnership In the wake of serious economic downturns in 1980s ” large budget deficit, high taxes, unemployment, and mass emigration ” Ireland had developed a system of social partnership among government, employers , unions, and voluntary groups. Under this framework, they strived to agree on the priorities for economic and social development, which gained strong public support, thus creating national cohesion toward common goals. Recently, e-business has been seen as the new end of the business. Ireland seeks to provide infrastructure and competition and to get players into the market. In order to encourage Global Crossing to provide the broadband, the Irish government went 50/50 on a PPP (Public Private Partnership), because it would not have been economically viable for Global Crossing to take the risk of supplying broadband to a small country. Ireland strongly believes that, in order to promote competition and free trade that result in economic efficiency and consumer choice, the government should only regulate where necessary. The Electronic Commerce Act, 2000 is the subsequent effort of partnership between government and the private sector. It formulates a legal framework for e-business activities in terms of business, private law, and public administration. If you ask foreign companies why they are here, they will tell you it is because Ireland is a very pro-business environment; unlike many mainland European countries, Ireland is very loosely regulated . We are not over-bureaucratized; not big into red tape. Because we're small, businesses find they can have easy access to government, both locally and nationally. They can get decisions made quickly; they can get speed-to-market. So, you've got to continue to remain competitive. Moving up the value chain With a tight labor market now, here as it is worldwide, we're moving up the value chain. We are not attractive to basic manufacturing. Neither is anywhere else in Western Europe. We've seen several examples in the textile industry, for example, in basic, low-scale employment, where it's moving offshore to Morocco, or to Asia, or to some African countries. That is why we have moved to providing both the infrastructure for e-commerce and e-business, and also the skills. And for the first time in our history, we're now establishing a foundation in science. We're going to spend a considerable amount of money, for us, on basic research in both ICT (information communications technology) and biotechnology. These are two sectors where we believe we need to go, which is the seedbed of serious researchers. Ireland never had money before to go into basic research. Attitude contributes to competitiveness In the era of globalization and the rise of the knowledge economy, competitiveness is key to the nation's economic success. What makes Ireland competitive are its multifaceted skills, education, taxes, regulations, innovation, and flexibility. It takes more than simply a good educational system and infrastructure. Flexibility and adaptability also play major roles in attracting inward investment in a country that is not overly regulated or heavily prescribed. As such, with the education, administrative, and physical infrastructures in place, Ireland is able to take advantage of the opportunities presented at each corner of the challenges in the environment. Taxation will now be standard for all companies In Ireland we are going to have a standard rate of corporate tax of 12.5%. We used to have 10% on manufacturing and international trade services. The EU objected that is a subsidy for those sectors, so it must be up to their standard rate. So we decided to bring our standard rate for all corporate taxes down to 12.5%. We take the view that it's better to take 12.5% of something big, rather than 40% of nothing. Lower taxes and certainly education, particularly for small countries that don't have a big market internally, are factors that will give you a competitive advantage. The industry of the future is all about people, really. |
