Issues

Increasingly competitive

Ireland’s global competiveness is growing but some areas still need to be improved.

 The World Economic Forum’s (WEF) Global Competiveness Report, a report that provides an assessment of factors driving productivity and prosperity across 140 countries has ranked Ireland as the 24th most competitive location in the world. This ranking is an improvement on last year’s 25th position. There was further good news for Ireland as the WEF also ranked the country as the eighth most competitive in the euro zone and the 11th most competitive amongst the 28 member states of the European Union.

Ireland’s competiveness ranking declined during the economic downturn, in 2011 and 2012 the WEF ranked Ireland 29th in the world. However, as the report shows a direct correlation between highly competitive countries and those that have made a swift recovery from the economic crisis, Ireland’s improving position is proof that improved macro-economic conditions and a more stable fiscal performance exists in Ireland, but what is driving this improvement?

The WEF global competiveness report index analyses performance across 12 “pillars of competiveness.” These are: institutions, infrastructure, macro environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial markets, technological readiness, market size, business sophistication and innovation.

Ireland performs particularly well in relation to goods market efficiency (7th), institutions (12th), health and primary education (12th) and labour market efficiency (13th). Ireland is also ranked within the top 10 in relation to intellectual property, investor protection, quality of education, exports and productivity levels. However, there are clear weaknesses in relation to Ireland’s infrastructure (27th), market size (57th), financial matters (61st) and its macroeconomic environment (87th).

Ireland’s National Competitive Council is not alarmed by these low scores, attributing the infrastructure rating to “poor perception-based scores on the quality of infrastructure,” while they feel the market size ranking is “exogenous” and not impacted on by policy. They also feel that Ireland’s macroeconomics scores are somewhat distorted by the government deficit and debt and claim that there is a lag in data so Ireland’s ranking should improve over the coming years. They are however worried about the poor ranking in relation to their financial markets and note that Ireland performs particularly poorly when it comes to accessing loans (116th) and the soundness of Ireland’s banks (126th).

As part of the global competitiveness ranking process, an executive opinion survey is conducted to capture the opinion of business leaders on a broad range of topics for which data sources are limited or non-existent, including an appetite for entrepreneurial risk and levels of corruption. The factors identified by Irish respondents as problematic included access to finance, inadequate infrastructure, tax rates and insufficient capacity to innovate.

These findings will help the policymaking process and support the development of targeted actions and will be taken into consideration by Ireland’s National Competiveness Council in their submission to the Action Plan for Jobs 2016.

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