Written Answers - Economic Competitiveness.

Wednesday, 2 November 2005

Dáil Éireann Debate
Vol. 609 No. 69

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  141.  Mr. Durkan  Information on Bernard Durkan  Zoom on Bernard Durkan   asked the Minister for Enterprise, Trade and Employment  Information on Micheál Martin  Zoom on Micheál Martin   his plans to counteract job leakage to lower wage economies; and if he will make a statement on the matter. [31543/05]

Minister for Enterprise, Trade and Employment (Mr. Martin): Information on Micheál Martin  Zoom on Micheál Martin  Ireland no longer operates as a low cost location for investment; our strengths and competitive advantages have inexorably changed. High output and productivity together with high returns to labour in the form of wages, salaries and better living standards now typify Ireland’s economy. The low technology production that characterised our economic output in the past is being replaced by higher technology and services enterprises. A more attractive cost environment abroad will inevitably entice some firms that are unable to generate their required return from the modern enterprise economy into which we are transforming ourselves. A continuing structural evolution of our economy is both unavoidable and necessary to maintain present levels of growth and low unemployment. Part of this evolution entails some inevitable plant transfers and other adjustments, but where relocation has occurred to date, it has largely been limited to relatively low-technology, labour-intensive activities.

We have become a more sophisticated and developed economy where the application of technology and intellectual endeavour is becoming more important than simple cost competitiveness as the foundation for growth and prosperity. We now have one of the most open economies in the world where trends in world trade, global business investment and consumer decisions directly influence the pattern of economic growth, company development and job prospects in Ireland more so than probably in other developed economies. Pro-enterprise policies have helped propel economic growth and employment expansion and these have encouraged deeper and stronger links to both the enlarging EU markets and internationally. The consequent ability of entrepreneurs to operate more profitably in and from Ireland has seen both Irish enterprise and Irish society grow prosperous.

To circumvent the competitive threat from lower cost competitor economies, our policy is to encourage a move to higher levels of competitiveness and value added products and services. [175]Our focus is on the creation of sustainable employment. Such employment will be driven by companies with higher profitability that are more technologically advanced and prove a better fit with the competitive characteristics of our economy and that are consequently less likely to move on the basis of simple cost influences. We are continuing to develop those infrastructures, both physical and intellectual, to create and maintain an attractive environment for investment and expansion in Ireland. Such investment will be sourced by a combination of developing existing clients and new investors in existing or new activities or sectors. Given the critical mass of FDI in Ireland and its linkages with indigenous companies, one of the greatest potential contributions will come from developing companies already operating here. The enterprise development agencies are continuing to encourage companies into more sophisticated activities, reducing the likelihood of our competitive advantage being eroded by cost based competition.


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