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Volume 1
Annual CompetitivenessReport 2007
Benchmarking Ireland's Performance
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Introduction to the NCCThe National Competitiveness Council was established in 1997 as a Social Partnership body. It reports to An Taoiseach on key competitiveness issues facing the Irish economy, together with recommendations on policy actions required to enhance Ireland’s competitive position.
Each year the NCC publishes the two-volume Annual Competitiveness Report.
Volume One, Benchmarking Ireland’s Performance, is a collection of statistical
indicators of Ireland’s competitiveness performance in relation to 16 other economies
and the OECD and EU averages.
Volume Two, Ireland’s Competitiveness Challenge, uses this information along with
the latest research to outline the main challenges to Ireland’s competitiveness and the
policy responses required to meet them.
As part of its work, the NCC also publish other papers on specific competitiveness issues.
This report is Volume 1, Benchmarking Ireland’s Performance. This report analyses
Ireland’s competitiveness performance using over 140 competitiveness indicators. These
range from measures of the successes of past competitiveness, such as economic growth
and quality of life, to the policy inputs that will drive future competitiveness, such as
the regulatory environment and public spending on infrastructure. Drawing primarily on
data from international sources including the OECD, the UN and Eurostat, this report
benchmarks Ireland’s performance, comparing and ranking it to that of our economic peer
group and tracing its evolution over time.
The National Competitiveness Council hopes that this report will, as a reference
document, stimulate further debate and discussion on the competitiveness challenges
that face Ireland.
Ireland’s Competitiveness Challenge examines these challenges facing Ireland’s exporting
sectors in particular in more detail. It highlights policy directions that will sustain
Ireland’s competitiveness so that Ireland can continue to be successful over the next
decade.
Volume 1
Annual CompetitivenessReport 2007
Benchmarking Ireland's Performance
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Council Members
Dr Don Thornhill Chairman
Mr Rory Ardagh Director, Telecom Property Holdings Limited
Mr Brendan Butler Director of Strategy, Trade, EU and International Affairs, IBEC
Mr Donal Byrne Chairman, Cadbury Ireland Limited
Mr Shay Cody Deputy General Secretary, IMPACT
Mr Martin Cronin Chief Executive Officer, Forfás
Mr Pat Delaney Director of Sectors and Regions, IBEC
Ms Thia Hennessy Economist, Teagasc
Ms Annette Hughes Economist, DKM Economic Consultants
Mr Seamus O’Morain Assistant Secretary, Department of Enterprise, Trade and Employment
Mr William Prasifka Chairperson, Competition Authority
Mr William Slattery Chief Executive Officer, State Street International (Ireland)
Mr Paul Sweeney Economic Adviser, Irish Congress of Trade Unions
Mr John Travers Consultant and Former Chief Executive Officer, Forfás
Prof Ferdinand von Prondzynski President, Dublin City University
Council Advisers
Mr Paul Bates Assistant Secretary, Department of Arts, Sports and Tourism
Ms Ruth Carmody Assistant Secretary, Department of Education and Science
Ms Mary Doyle Assistant Secretary, Department of An Taoiseach
Mr Eamonn Molloy Assistant Secretary, Department of Communications,
Energy and Natural Resources
Ms Mary Moylan Assistant Secretary, Department of Environment, Heritage, and Local Government
Mr John Murphy Assistant Secretary, Department of Transport
Mr Liam Nellis Chief Executive, InterTrade Ireland
Ms Ann Nolan / Mr John O’ Connell Assistant Secretary, Department of Finance
Research & Secretariat
Mr Jason Cleary
Mr Adrian Devitt
Mr Declan Hughes
Forfás
Wilton Park House
Wilton Place
Dublin 2
Tel: 01 607 3000
Fax 01 607 3030
Email: ncc@forfas.ie
Web: www.competitiveness.ie
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Foreword by An TaoiseachIreland’s international competitiveness has played a critical role in our successful
economic performance. As economic growth and social progress are intrinsically
linked, this economic success has brought many benefits to our society. As this
report highlights, Ireland has experienced significant and widespread improvements
in living standards and continues to create high quality jobs. It is for these reasons
that competitiveness remains a key priority of Government policy as we seek to
continually improve the living standards of everyone in Ireland.
Since the mid-1990s, Ireland’s economic performance has been excellent and current predictions for
the next five years suggest that the Irish economy will continue to perform well. However, it is clear that
we are entering a period of more challenging economic conditions. The challenge is to restore Ireland’s
internationally trading firms in manufacturing and services as key drivers of growth. It is important, therefore,
that we focus our efforts in the development of policy and programmes, and in social partnership, to restore
and renew our competitiveness across all dimensions.
This is core to the new Programme for Government. As the Council’s ‘Competitiveness Pyramid’ shows, it
encompasses policies on the regulatory environment, including taxation, competition and the labour market,
on Ireland’s physical infrastructure, including transport, ICT and housing, and on Ireland’s knowledge
infrastructure, including all levels of education as well as R&D.
The National Competitiveness Council is well positioned to contribute to our understanding of a rapidly
changing global environment. On my behalf and on behalf of my colleagues in Government, I would like to
thank the Council for its valuable work, and I am pleased to introduce Benchmarking Ireland’s Performance,
2007.
Bertie Ahern, T.D.
Taoiseach
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Chairman’s PrefaceThe economic context to this report is generally positive. The Irish economy continues to
perform very well. There was further strong growth in the numbers employed, supported
by strong inward migration as well as natural population increases. Government finances
are healthy and there continues to be steady flows of foreign direct investment into the
economy. Overall, figures from the Central Statistics Office suggest that Irish GNP grew
by 7.4 percent in 2006 (and GDP by 6.0 percent), compared to the estimated average
of 3.1 percent in the OECD. However, as noted by the Taoiseach, we may face greater
difficulties in the future as domestic driven growth slows. Maintaining and growing our
international competitiveness is essential.
The aim of this report is to provide an objective evidence base, particularly so that growing or potential
weaknesses in the factors contributing to Ireland’s competitiveness can be identified. While Ireland fares
well in many aspects of competitiveness, there are three main areas of concern that arise from this report:
1 The composition of Ireland’s economic growth is troubling. In general, with a small open economy and a
young, growing and increasingly better educated population, one would expect the sources of economic
growth to be a balance between trading and domestic sectors and between employment and productivity
growth. Ireland’s growth has shifted from export-led and productivity-led growth to domestically driven
growth, dependent on new jobs in construction and public services for increases in GDP. A symptom of
this is Ireland’s increasing deficit on its current account with the rest of the world.
2 Ireland’s price and cost environment remains distinctly unfavourable both to firms and to households.
General cost levels are among the highest in the EU-15 and this situation is worsening, with inflation rates
still among the highest in the EU-15 also. In response, labour costs are growing across a range of sectors
at a rate well above EU-15 average, raising the threat of a wage-cost spiral. Across a range of non-pay
costs, too, Ireland is expensive, including property rental or purchase and domestics services including the
legal and accounting professions.
3 The physical infrastructure in Ireland remains poor and despite high levels of investment, Ireland’s
international rankings have not improved significantly since 2000. Ireland’s transport, energy and ICT
infrastructures in particular – upon which so many of our exporting sectors depend – appear to lag
counterparts across the OECD.
I would like to thank Council members and the advisors from the relevant government departments for their
work on this document, as well as their counterparts from previous years. The structure of the analysis in this
report reflects the evolving thought process of past and current members of the Council. I would also like to
acknowledge the Forfás Secretariat for the work that they have done in preparing material for consideration by
the Council.
Dr Don Thornhill
Chair, National Competitiveness Council
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Contents Foreword by An Taoiseach iii
Chairman’s Preface iv
1. Overview of Ireland’s Competitiveness 11.1 Ireland’s Recent Economic Performance 21.2 Ireland’s Trade Performance 41.3 Productivity, Prices & Costs 51.4 Drivers of Future Competitiveness 61.5 Conclusions 71.6 What Is This Report and How To Read It 7
2. Sustainable Growth 132.1 National Income 162.2 Quality of Life 20
2.3 Environmental Sustainability 21
3. Essential Conditions 253.1 Business Performance 303.1.1 Investment 30
3.1.2 Trade 32
3.2 Productivity and Innovation 343.2.1 Productivity 34
3.2.2 Innovation 38
3.3 Prices and Costs 413.3.1 Prices 41
3.3.2 Pay Costs 43
3.3.3 Non-Pay Costs 47
3.4 Labour Supply 533.4.1 Overview 53
3.4.2 Employment 54
3.4.3 Labour Supply Characteristics 56
4. Policy Inputs 614.1 Business Environment 624.1.1 Taxation 64
4.1.2 Regulation and Competition 69
4.1.3 Labour Regulation 72
4.1.4 Finance 73
4.1.5 Social Capital 75
4.2 Physical Infrastructure 774.2.1 Investment in Physical Infrastructure 79
4.2.2 Transport and Energy Infrastructure 81
4.2.3 Information and Communication Technology (ICT) 84
4.2.4 Housing 86
4.3 Knowledge Infrastructure 894.3.1 Education: Overview 91
4.3.2 Pre-Primary and Primary Education 92
4.3.3 Secondary Education 93
4.3.4 Tertiary Education and Life Long Learning 96
4.3.5 Research and Development 98
5. Appendices 105 Appendix 1: ACR Data Sources 106
Appendix 2: Glossary of Terms 109
Appendix 3: NCC Publications 111
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Overview of Ireland’s Competitiveness
Sustainable
Growth
Essential
Conditions
Policy
InputsBusiness
Environment
Physical
Infrastructure
Knowledge
Infrastructure
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1. Overview of Ireland’s Competitiveness
Ireland has made remarkable economic progress over the past 15 years. In that period, there have been
two different phases to Ireland’s economic growth. The first phase, which started in the early 1990s, was
set in motion by high levels of investment in Ireland by multinational companies, attracted to Ireland by
our membership of the European Union and pro-enterprise Government policies in areas such as taxation,
education, international trade and industrial relations through social partnership. By the late 1990s,
export success combined with low interest rates and rising national confidence stimulated household and
government spending.
From 2000 on, Ireland’s national competitiveness declined. During the past few years, domestic growth
has driven the economy and to some degree overshadowed evidence of our weakening international
competitiveness. Currently, the domestically driven boom is decelerating, as increasing Eurozone interest
rates combine with high household debt levels to reduce domestic demand. For sustainable long-run
wealth generation, Ireland needs to return to a phase of export-driven growth. This report by the NCC
presents an assessment of our current competitiveness strengths and weaknesses, and highlights areas
for concerted national focus.
1.1 Ireland’s Recent Economic Performance
The Irish economy continues to perform very well by the standards of other developed countries, according
to indicators that assess income levels, economic growth rates and measures of quality of life. Irish income
per capita has converged with the OECD average. The ESRI predicts that the Irish economy will grow by 4.7
percent in 2007 and 2.7 percent in 2008 (GDP), above the EU average1. Ireland’s rankings in the UN’s
Human Development Index (HDI) also continue to improve. Ireland is now ranked fourth in the world based
on strong improvements in income per capita, life expectancy and education levels.
Figures 1 (a) and (b). Ireland’s Growing Debt Levels
1 Quarterly Economic Commentary ESRI, Autumn, 2007
1 (a). Household debt per capita (E), selected
countries, 2003 and 2007
1 (b). Ireland’s current account balance (Em),
2000-2007
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Source: European Central Bank; Central Statistics Office, ESRI.
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As highlighted in previous NCC reports, the nature of Ireland’s economic growth has changed dramatically
in recent years, from export-led growth to a situation now where domestic sectors are driving the Irish
economy. In particular, consumption and construction, supported by high levels of overseas borrowing, are
driving our performance. Given Ireland’s increased wealth, it is not surprising that consumption is playing
a more prominent role. Also, the additional construction activity is welcome as it is addressing Ireland’s
housing and broader infrastructural deficits. However, the domestic consumption and construction boom
has led to large increases in Ireland’s debt. Irish households are spending more than they are earning,
and in the process are building up foreign liabilities on a scale that cannot continue (Figures 1 (a) and
(b)).
Ireland’s current account balance, the balance between Ireland’s foreign earnings and expenditure, has
slipped into a large and growing deficit. At a more tangible level, Ireland’s debt per capita has increased
very rapidly in recent years. Apart from Luxembourg, Ireland is now the most indebted Eurozone member,
both relative to national income and on a per capita basis. With house prices increasing dramatically
since 2000, household borrowing more than doubled between 2003 and 2007 and the average Irish
person is almost E35,000 in debt by 2007. Debt levels continue to grow - private sector credit growth,
while slowing, grew by 19.5 percent in the year to September 2007, despite higher Eurozone interest
rates.2
One of the great successes Ireland has had in the last decade has been the generation of large amounts
of jobs, virtually solving Ireland’s long-term unemployment problem. Ireland continues to create many
thousands of new jobs every year and is now attracting labour from elsewhere in the EU. Since 2000,
the bulk of Ireland’s new jobs have come from non-trading sectors, in particular public services and
construction (Figures 2 (a) and (b)). Manufacturing, both traditional and modern, and agriculture lost jobs
over the same period. It should be noted that the bulk of job losses in manufacturing occurred between
2000 and 2003. Construction now accounts for over one in seven workers, compared to one in seventeen
in the US, which itself is more dependent on construction than other OECD economies.
Figures 2 (a) and (b). The Nature of Ireland’s Employment Growth
2 Source: Central Bank of Ireland, September Statistics, November 2007.
Source: European Central Bank; Central Statistics Office, ESRI.
2(a). Sources of employment growth
(000s jobs), Ireland, 2000-2006
2(b). Construction as proportion of total
employment, Ireland & USA, 2000-2007
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l There are strong signals that construction growth is slowing.3 This slowdown in the construction sector
is inevitable – domestically driven growth cannot sustain itself indefinitely in a small open economy.
Naturally, construction will continue to remain an important part of the economy, particularly given that
Ireland’s per capita housing stock still remains below the EU average. In addition, the latest National
Development Plan (NDP) envisions expenditure of approximately E100 billion in capital investment in
infrastructure and social housing over the next seven years, compared to about E40 billion during the
previous NDP. It is critical, then, that exporting sectors, both goods and services reassume a greater role
in driving Ireland’s long-term growth.
1.2 Ireland’s Trade Performance
Achieving success in international markets is the core of the NCC’s definition of competitiveness. Due
in part to policy and in part to its small size, Ireland is one of the most open economies in the world.
Ireland’s trade performance has been mixed in recent years:
Total exports of Irish-owned firms amounted to ■■ E9.6 billion in 2005, with a nominal growth rate of
six percent between 2004 and 2005. Food and drink exports continue to account for the largest
share of indigenous manufacturing exports (54 percent), while about one-fifth comes from software
development and other internationally traded services.
Total exports of foreign-owned manufacturing and internationally traded services amounted to ■■ E79
billion in 2005. The largest exporting sectors were chemicals (E22 billion), electrical and electronic
equipment (E20 billion), and software development (E17.3 billion). Overall, exports of foreign-owned
manufacturing grew by 5.8 percent between 2004 and 2005.
CSO data indicates that merchandise exports grew by just 0.8 percent in 2006, which is disappointing,
given strong growth in our key international markets. Services exports are performing better, with exports
of services increasing by 14 percent in 2006. In 2000, the export of services from Ireland accounted
for 15.9% of total foreign earnings. By 2006, services earnings were 27% of total foreign earnings, with
growth driven by exports in computer services, business services (including consulting) and insurance.
Figures 3 (a) and (b). Ireland’s Export Performance
3 CSO figures on the number of planning permissions for new dwellings peaked in 2004, while the total size (in square metres) of plan-ning permissions peaked in 2005. Completions figures, albeit based on estimates, point to a year-on-year slowdown in activity starting in December 2006.
3 (a). Growth in Exports of Goods and Services
(%), 2000-2006
3 (b). Ireland’s Share of World Trade (%),
2000-2006
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Source: World Trade Organisation; OECD
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The NCC is concerned that growth rates in exports have fallen below those in peer countries. Ireland’s
growth in exports during the 2000-2003 period was well above the OECD average, but Ireland’s relative
position has worsened considerably in the 2003-2006 period (Figure 3(a)).
The consequence is that Ireland is losing some of its share in world markets, driven by merchandise
trade, where Ireland’s share has fallen gradually since 2002 (Figure 3(b)). Latest figures indicate that
Ireland’s share of world services trade, a smaller but growing component of Irish trade increased in 2006
after a slight decline in 2005. Ireland’s overall loss in world market share is not simply a reflection of the
growing role of developing economies in world trade. While China continues to gain market share globally,
a range of developed economies also continue to grow their internationally trading sectors strongly
including Germany, Japan, the UK and the US.
1.3 Productivity, Prices and Costs
Productivity levels are important for enterprise as they measure the value added by a typical hour’s work.
In the long run, productivity is the key determinant of living standards. Figures from this report highlight
that Irish productivity levels have converged with the OECD average.4 It is growth rates in productivity,
however, which are important for facilitating international competitiveness and sustainable wage
growth. Productivity growth can come about due to investment in physical or human capital, and greater
efficiency due to improvements in organisational management or the use of technology.
Irish productivity growth has slowed in recent years. Average productivity growth was just 1.4 percent
during the period 2003-2006, below the OECD average of 1.7 percent and well below the Irish average
between 2000 and 2003 of 3.3 percent. As in other advanced economies, Ireland’s productivity is
strongest in a small number of high technology export-oriented manufacturing and services sectors.
While productivity growth has slowed in these high-tech sectors, large and growing domestic services
sectors continue to perform poorly in terms of productivity growth. Many domestic services are more
labour-intensive and less exposed to international competition, with less opportunities and incentives for
automation (through the greater use of ICT for example) and for innovation.
Figures 4 (a) and (b). Ireland’s Pay and Productivity Performance
4 This convergence holds even allowing for some distortion of Ireland’s productivity figures due to the presence of many multinationals here.
3 (b). Average Growth in Output per hour Worked,
Slected Economices,2000-2006
4 (b). Average Growth in Labour Cost, Selected
Economies, 2000-2007
Source: European Central Bank; Central Statistics Office, ESRI.
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l As Irish productivity growth rates have been slowing, Ireland’s cost base has been rising. Based on the
consumer price index data, Ireland is now the second most expensive location for consumers in the EU-15
and has the third highest inflation rate in the EU-15. This inflation performance is being driven by sectors
such as housing, utilities, education, health and catering. There is a risk that high inflation rates are becoming
embedded in the Irish economy. Combined with this, Ireland’s harmonised competitiveness indicator
(combination of prices and exchange rate development) has worsened considerably since 2000, although the
bulk of that change occurred between 2000 and 2003.
As inflation remains a problem, so too do increases in labour costs. Unit labour costs in manufacturing, one-
eighth of the workforce, have not increased significantly on average since 2003. However, in sheltered sectors
of the economy, including utilities, catering and communications, labour costs are rising at a rate at least twice
the Eurozone average. This is of serious concern, as prices and costs in non-traded sectors quickly feed into
the cost base of internationally trading firms who purchase goods and services in the local economy. Examples
include labour services frequently purchased by trading sectors, such as accountancy, IT and legal services,
where figures show Ireland – and Dublin in particular – to be very expensive. Other non-pay costs in Ireland
also compare poorly with those in competitor countries across a range of cost types. These include property
costs, both purchase and rental, utilities costs from electricity to water and waste, and communications costs,
in particular mobile telephony.
1.4 Drivers of Future Competitiveness
Improving competitiveness will not be easy. Ireland’s future competitiveness will depend heavily on decisions
made today in key policy areas that affect Ireland’s business environment (e.g. taxation, regulation, finance and
social capital), physical infrastructure, and knowledge infrastructure, as represented by the bottom layer of the
competitiveness pyramid.
Ireland’s business environment compares well on average to OECD counterparts. The taxation regime is
favourable to corporations and workers, although consumers – including tourists – pay relatively high rates of
VAT. Despite relatively low corporation tax rates, the tax take from corporations as a percentage of GNP is above
the OECD average. It is notable that other countries are replicating our strategy.
In relation to competition legislation, perceived efficiency has weakened relative to other countries in recent
years and competition remains weak in many sectors of the economy, including utilities and professional
services. Labour market regulations are perceived to be increasing in Ireland, with the employment framework
here considerably less flexible than in economies such as the UK and Denmark. Overall, access to capital in
Ireland is not perceived to be a barrier to enterprise in Ireland. Finally, social capital, such as trust in political
and social institutions, is good, although there are perceived weaknesses in the accountability of Ireland’s
political system.
Ireland’s physical infrastructure remains a source of acute competitive disadvantage, with a lack of investment
in the 1980s combining with huge growth in the economy and the population since the 1990s to bring about
infrastructural bottlenecks. Across transport networks, energy, information and communication technology and
housing, Ireland’s stock of infrastructure lags those of comparable countries elsewhere in the OECD. However,
government investment in infrastructure is significantly higher in Ireland than in most developed economies.
Finally, Ireland’s housing infrastructure remains an issue, with house prices increasing dramatically since 2000
and household borrowing more than doubling between 2003 and 2007. By 2007, the average Irish person is
almost E35,000 in debt.
Ireland’s knowledge infrastructure fares better. Average educational attainment in Ireland has increased
steadily in the last two decades, with younger cohorts of the population now as well qualified as their OECD
counterparts. However, participation in pre-primary education in Ireland is well below the EU-15 average and
although participation rates in life long learning in Ireland have increased significantly in recent years, there is
still a significant gap between Ireland and the leading countries.
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While educational participation rates are generally strong, except for pre-primary and lifelong learning,
concerns remain about the quality of the outputs. At primary education level, the amount of time spent
on the key subjects of maths, science and technology lags most other OECD countries. At secondary
education, where international benchmarks exist, reading, mathematical and scientific literacy of Irish
students ranks 6th, 16th and 13th consecutively in the OECD. At third and fourth level, based on data
from The Times Higher Education Supplement, none of Ireland’s institutions are ranked among the best
in the world. The use of ICT also remains relatively poor in Irish education.
While Ireland can be regarded as an impressive latecomer in recognising the importance of sustained
investment in R&D, current employment and expenditure on R&D remain well below leading comparator
countries, in both higher education and in enterprise. In terms of global triadic patents granted per
million of population, which is one way of measuring output from R&D, Ireland ranks 19th in the OECD.
1.5 Conclusions
Ireland has made remarkable economic progress over the past 15 years. The first phase was set in
motion by high levels of investment in Ireland by multinational companies, attracted to Ireland by our
membership of the European Union and pro-enterprise Government policies in areas such as taxation,
education, international trade and industrial relations through social partnership. The second phase saw
export success combine with rising national confidence and low interest rates, to stimulate household and
government spending. Over the past few years, this domestic growth has driven the economy and to some
degree overshadowed evidence of our weakening international competitiveness. Currently, the domestic
driven boom is peaking as higher Eurozone interest rates on high debt levels reduce domestic demand.
While there is much to be proud of in terms of our recent economic performance, we must not become
complacent. Ireland needs to enter a new phase of economic growth, one where Ireland regains its
international competitiveness. To remain at the forefront of international trade and competitiveness,
we must display a singular commitment to promoting a competitive business environment. Ireland’s
Competitiveness Challenge 2007 examines the policy requirements in detail, and highlights the key
policy directions that are needed today to ensure that Ireland can be as successful over the next decade,
as it has over the past decade, to sustain improvements in standards of living.
1.6 1.6 What Is This Report and How To Read It
Who is the NCC and what is its purpose?The National Competitiveness Council (NCC) was set up in 1997 under Ireland’s social partnership
process. Its purpose is to advise An Taoiseach and other government ministers in relation to Ireland’s
current competitive performance and the policy measures required to enhance Ireland’s performance.
To fulfil its purpose, it prepares an Annual Competitiveness Report in two volumes, of which this is
Volume 1, Benchmarking Ireland’s Performance. Based on this report and other analysis, Volume 2,
Ireland’s Competitiveness Challenge, makes recommendations on the public policy actions needed to
improve the competitiveness of Ireland’s enterprise base. The NCC also issues other policy statements
periodically on issues of importance to Ireland’s national competitiveness.
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l What is competitiveness? Competitiveness refers to the ability of firms to compete in markets. Ireland’s national competitiveness
refers to the ability of the enterprise base in Ireland to compete in international markets. The NCC uses
a ‘competitiveness pyramid’ to outline the framework within which it assesses Ireland’s competitiveness
(Figure 5).
At the top of the pyramid is sustainable growth in living standards. This is the fruit of past competitiveness
success. Below this are the essential conditions to achieving competitiveness, including business
performance (such as trade and investment), productivity, prices and costs and labour supply. These can be
seen as the metrics of current competitiveness. Lastly, there are the policy inputs, which cover three pillars
of future competitiveness, i.e. the business environment (e.g. taxation, regulation, social capital, etc.),
physical infrastructure, and knowledge infrastructure.
Figure 5. The NCC Competitiveness Pyramid
Sustainable
Growth
Essential
Conditions
Policy
InputsBusiness
Environment
Physical
Infrastructure
Knowledge
Infrastructure
Source: National Competitiveness Council
Why does the NCC measure competitiveness?
Competitiveness is not an end in itself; it is a means of achieving higher and sustainable living standards
(Figure 6). As is set out in Towards 2016, Ireland’s aim over the next ten years is to develop “a dynamic,
internationalised, and a participatory society and economy with a strong commitment to social justice,
where economic development is environmentally sustainable and is internationally competitive”. Ireland’s
national competitiveness, therefore, has been identified as a key objective for the next ten years. Without a
strong enterprise base able to compete in international markets, many of Ireland’s other goals become more
difficult to achieve.
Ireland’s competitiveness is, therefore, a topic of national importance. With this in mind, the NCC measures
competitiveness, as it believes that policymaking should be evidence-based, i.e. making decisions using the
best possible information.
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Figure 6. National Competitiveness and Higher Standards of Living
Policy Inputs
Performance
Outputs
Outcomes
Knowledge Infrastucture Business Environment
National Competitiveness
Employment Growth
Economic GrowthFamily, social,other factors
Higher standardsof living
Growth from Trade/Income(international/domestic)
Growth from wealtheffects (eg property)
Physical Infrastucture
Productivity Growth
Source: National Competitiveness Council
What type of metrics does the NCC use to measure competitiveness?
Benchmarking Ireland’s Performance is divided into three main sections, sustainable growth, essential
conditions for competitiveness and policy inputs, which correspond to the various components of the
competitiveness pyramid. This report uses internationally comparable metrics, with the OECD, the EU,
the UN and the WTO the sources for the vast bulk of indicators. Indicators from specialist international
competitiveness bodies (e.g. from the WEF’s Global Competitiveness Report and the IMD’s World
Competitiveness Yearbook) are also used. Where further depth is of benefit, national sources such as the
CSO, the Central Bank, Forfás and the ESRI are used.
To whom do we compare ourselves and why?
Countries have been chosen to provide a mix of Eurozone members (Finland, France, Germany, Italy, the
Netherlands and Spain), other non-Eurozone European countries (Denmark, Sweden, Switzerland and
the UK), and two new EU member states (Hungary and Poland). Five non-European countries (Japan,
South Korea, New Zealand, Singapore and the US), who are global leaders or are of a similar size or pace
of development to Ireland, are also included. This allows for a detailed comparison between Ireland and
many of its closest trading partners and competitors. Ireland is also compared to a relevant peer group
average, the OECD-28, EU-15 or EU-27 average where possible.
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l What are the limitations of benchmarking?
Benchmarking Ireland’s performance across more than 140 competitiveness indicators is an important
exercise. It informs the policymaking process and raises awareness of the importance of continuing
national competitiveness to Ireland’s wellbeing. Nonetheless, there are limitations to benchmarking:
While every effort is made to ensure timeliness of the data, there is a natural lag in collating ■■
comparable official statistics across the selected countries. There are also factors that are difficult to
benchmark (e.g. the benefit of being in the GMT time zone or of speaking English fluently).
Secondly, given the different historical contexts and economic, political and social goals of various ■■
countries, and their differing physical geographies and resource endowments, it is not realistic or
even desirable for any country to seek to outperform other countries on all measures. There are no
generic strategies to achieve national competitiveness.
Finally, it is important to note that trade and investment between countries is not a zero-sum game; ■■
economic advances by other countries can, in aggregate terms, lead to improvements in living
standards for the Irish population.
How to read the charts
The remainder of this report is broken up into sections whose order follows the NCC’s Competitiveness
Pyramid. We have endeavoured to ensure that all charts are self-explanatory. However, with reference to
the sample chart in figure 7, the following points may be of value when interpreting the charts:
The best performing country is located at the left of the chart (e.g. in vertical bar charts) or at the top ■■
of the chart (in horizontal charts). In a limited number of charts, it is not possible to designate a best
performer.
In charts that assess output/income or other factors relative to these, Irish figures are provided in ■■
GDP and GNP terms. GDP (national output) is significantly greater than GNP (national income) due
to the repatriation of profits and royalty payments by multinational firms based here. Other countries
are assessed in GDP terms.
The text at the right of the chart explains the charts further or provides additional information. ■■
Figure 7. Sample Chart
5%
4%
6%
3%
2%
1%
0%NEU 12 US OECD
RankingN. Ireland EU 15
TEXT
Ireland(GNP)
Ireland(GNP)
2000 - 20032003 - 2006
Text
Ranking:
Source:
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How to interpret the rankings
Ranking are provided where appropriate, but in a limited number of charts, it is not possible to designate
a best performer.
In interpreting the ranking for each indicator, a low ranking (i.e. close to 1st) implies a healthy ■■
competitiveness position, while a high ranking implies an uncompetitive position.
Changes in rankings refer to the change in Ireland’s position, generally since 2000. Exceptions to ■■
this base year, due to data availability, are highlighted in footnotes. ( ) refers to an improvement
in Ireland’s competitive position, so 4 means an improvement of four places in Ireland’s ranking.
(--) means that there has been no change in Ireland’s ranking, while ( ) refers to a fall in Ireland’s
ranking.
The OECD is the preferred comparator group. However, in some cases depending on data availability, ■■
rankings are provided relative to the group of countries shown or to the EU.
OECD rankings and averages are based on a maximum of 28 countries. Turkey and Mexico are not ■■
included in the analysis, in part due to how their size and income levels affect averages and in part
due to data availability. These 28 countries are as follows: Australia, Austria, Belgium, Canada,
Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy,
Japan, Korea, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic,
Spain, Sweden, Switzerland, UK and the US. Where the sample is less than 28 countries due to data
availability, the countries omitted are detailed in the endnotes.
How to interpret the traffic lights
Using a traffic light system, each chart is accompanied by a traffic light indicator, coloured green, orange
or red, in order to provide a high level indication of Ireland’s performance. Green indicates a strong or
improving performance, orange signals an average performance or some cause for concern while red
means that Ireland has performed poorly on the indicator.
How to interpret the summary charts
This year’s report includes new summary charts at the beginning of each chapter in order to give a brief,
general high level overview of current performance in each area relating to the competitiveness pyramid.
An example summary chart is displayed below.
The scale on the left hand side of the chart puts countries with a good ranking (i.e. close to first) at ■■
the top, while countries with a worse ranking are towards the bottom.
There are two entries for each indicator, Ireland’s ranking in 2000 (or nearest) on the left and ■■
Ireland’s ranking in 2006 (or nearest) on the right.
Most indicators are ranked on an OECD basis. However, this is not possible in all cases, meaning ■■
that an EU-15 or group ranking is given instead. A line under each indicator represents the lowest
possible rank obtainable for an indicator, e.g. 15 for an EU-15 ranking and 28 for an OECD-28
ranking. In the sample chart below, indicators 1 and 3 are ranked by OECD-28, while indicator 2 is
ranked by the EU-15.
Each indicator is colour coded. As before, green indicates a strong or improving performance, ■■
orange signals an average performance or some cause for concern while red means that Ireland has
performed poorly on the indicator.
For example, Ireland’s 2000 ranking for indicator 2 below, 15 out of the EU-15, is coloured red to ■■
represent a poor performance. At the same time, a ranking of 15 out of the OECD-28 (Indicator 3,
2006) is coloured orange to represent an average performance.
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Figure 8. Sample Summary Chart
Source: N/A
Indicator 1 Indicator 2 Indicator 30123456789
10111213141516171819202122232425262728
Str
ong
Ran
king
Wea
k R
anki
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LHS = 2000 RHS = 2006
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Sustainable
Growth
Essential
Conditions
Policy
InputsBusiness
Environment
Physical
Infrastructure
Knowledge
Infrastructure
Sustainable Growth2
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2. Sustainable GrowthCompetitiveness is not an end in itself, but is a means of achieving sustainable improvements in living
standards and quality of life. This section benchmarks Ireland’s performance regarding this desired
outcome, under three headings: national income, quality of life and environmental sustainability.
Summary chart 1 highlights key changes in relevant rankings since 2000 or nearest available year.
Summary Chart 1:
Rankings in Indicators of Sustainable Growth, 2000-2006 (or nearest)
Out
put
leve
ls(G
DP
) (2
.01
)
Inco
me
leve
ls(G
NP
) (2
.01
)
Out
put
grow
th(G
DP
) (2
.03
)
Inco
me
grow
th(G
NP
) (2
.03
)
Con
trib
utio
n of
pro
duci
tivi
tyto
gro
wth
(G
DP
) (2
.06
)
Con
trib
utio
n of
pro
duci
tivi
tyto
gro
wth
(G
NP
) (2
.06
)
Ineq
ualit
y (2
.07
)
Hum
an D
evel
opm
ent
Inde
x R
anki
ng (
2.0
9)
Life
Exp
ecta
ncy
- M
ale
(2.1
0)
Life
Exp
ecta
ncy
- Fe
mal
e (2
.10
)
Life
Hap
pine
ss (
2.1
1)
Ene
rgy
from
rene
wab
les
(2.1
3)
CO
2 e
mis
sion
s (2
.14
)
Wea
k R
anki
ngS
tron
g R
ankn
ig 0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
LHS = 2000 RHS = 2006
IncomeHigh and rising living standards are a key measure of the success of national competitiveness. The
indicators in this section cover the level, growth and distribution of Ireland’s national income.
Ireland has made significant progress in recent years. Irish output per capita (GDP) is now among the
highest in the OECD while income per capita (GNP), a better measure of Irish living standards, is close to
the OECD average (Fig. 2.01). Regionally, the South and East region is among the wealthiest in the EU
and the US (Fig. 2.02). The BMW region’s performance is weaker, but it is still above the EU-15 average.
Overall, income inequality in Ireland is greater than the EU-15 average (Fig. 2.07). Regional disparities
have also increased marginally since 2000 (Fig. 2.08).
Irish economic growth rates have slowed since 2000, particularly for GDP, but they remain above the
OECD average (Fig. 2.03). It is clear that international trade, the engine of Ireland’s growth during the
1990s, is no longer driving Ireland’s current economic growth. The contribution of Ireland’s exporting
sectors to economic growth has faltered since 2003, although this rebounded slightly in 2006 (Fig.
2.04). It is also notable that while the 1990s were marked by strong growth in both productivity and
employment, the contribution of productivity to Irish growth has been among the lowest in the OECD for
the 2003-2006 period (Fig. 2.06).
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Quality of Life
A key objective of competitiveness is to support a high quality of life, which is broader than material
living standards. To measure quality of life, the United Nation’s Human Development Index is used, along
with measures of life expectancy and ‘life-happiness’.
Ireland’s recent performance in the Human Development Index has been very strong. The index covers
indicators of economic, educational and health progress. Ireland ranked fourth in 2004, an improvement
of fourteen places since the 2000 report (Fig. 2.09), driven by strong economic growth. Life expectancy
for both men and women in Ireland has also improved since 1990, but has yet to reach the OECD average
(Fig. 2.10). Finally, in response to survey questions, Irish people are generally happier with their lives
than people in many other countries (Fig. 2.11).
Environmental Sustainability
The essence of environmental sustainability is a stable relationship between human activities and the
natural world, one that does not diminish the prospects for future generations to enjoy a quality of life
at least as good as our own. This section examines Ireland’s broad environmental performance and also
focuses specifically on energy, carbon emissions and waste.
Ireland’s performance in relation to environmental sustainability remains mixed. The composite
environmental performance index places Ireland ninth in the OECD (Fig. 2.12). However, there are
challenges. While, Ireland consumes slightly more energy on a per capita basis than the EU-15 average,
Ireland’s share of energy coming from renewable sources is almost one-third that of the EU-15 average
(Fig. 2.13). Given our high dependence on fossil fuels, and a lack of alternative and nuclear energy
sources, Ireland ranks poorly in terms of per capita carbon dioxide emissions (Fig. 2.14). Lastly, none
of Ireland’s municipal waste is converted into energy, compared to about half of waste in Sweden and
Denmark. Landfill, the least preferred waste solution, dominates in Ireland (Fig. 2.15).
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2.1 National Income
Figure 2.01
Levels of GDP per Capita, Ireland and Selected Economies, 2000-2006 (E000 PPPs)
2000 2001 2002 2003 2004 2005 2006
Euro
€00
0 PP
Ps
Ireland (GDP) Ireland (GNP) N.Ireland OECD
NEU 12 EU 15 US
0
5
10
15
20
25
30
35
40
The level of output (GDP) per head of population in Ireland is above EU-15 and OECD averages. Using income (GNP) per head, Ireland’s performance is still strong and is now above the EU-15 average, but has not converged with the OECD average.
OECD-28 Ranking:
GDP: 4 (h2)
GNP: 15 (h4)
Source: Forfás calculations; Groningen Growth & Development Centre, Total Economy Database, January 2007; UK Office for National Statistics [online]
Figure 2.02
Levels of GDP per Capita, US States and EU Regions, 2004/05 (E000 PPPs)
0
10
20
30
40
50
60
70
Eur
o 0
00
PP
Ps
US States
EU 15 Regions
New EU Member State Regions
Regional Averages
US States EU 15 Regions
New EU Member State Regions Regional Averages
Luxembourg
Washington DC
Ireland South and East
USIreland GDP
Ireland GNP Ireland BMWEU15
Northern Ireland
NEU12
Luxembourg
Washington DC
Ireland South and East
US Ireland GDP
Ireland GNP Ireland BMWEU15
Northern Ireland
NEU12
Ireland (GDP) ranks as one of the wealthiest regions in the EU and US. In terms of GNP, a better measure of income, Ireland ranks above the EU- 15 average. A noticeable gap in output per head exists between Ireland’s two regions, the South & East and the Border, Midlands & West.
EU-15 Regions (of 81):
Ireland S.E: 6
Ireland BMW: 33
Source: Forfás calculations, Eurostat General and Regional Indicators, [online]; US Bureau of Economic Analysis [online]
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Figure 2.03
Average Growth Rates (%) in GDP per Capita, 2003-2006 Compared to 2000-031
0%
1%
2%
3%
4%
5%
6%
EU 15N.IrelandOECDUSIreland (GDP)Ireland (GNP)NEU 12
2003-2006 2000-2003
Irish economic growth rates (in both GNP and GDP terms) remain above OECD and EU-15 averages, although GDP growth is slowing. Average economic growth picked up throughout the OECD in the 2003-2006 period, compared to the 2000-2003 period.
OECD-28 Ranking:
GDP: 13 (i8)
GNP: 11( i4)
Source: Forfás calculations, Groningen Growth & Development Centre, Total Economy Database, January 2007; OECD Annual National Accounts Database; UK Office for National Statistics, 2007 [online]
Figure 2.04
Contribution of Growth in Net Exports to Irish Economic Growth (GDP), 2001-2007f
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2001 2002 2003 2004 2005 2006 2007f
Net ExportsGovernment InvestmentConsumption
This chart examines the sources of recent Irish economic growth. The contribution of trade (i.e. net exports) to economic growth has been small or negative since 2004. This contrasts with the pre-2003 period. Investment, particularly in construction and consumption have driven growth since 2003.
Ranking:
N/A
Source: Forfás calculations, Central Statistics Office, Annual National Accounts [online]
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Figure 2.05
Current Account Balance, Em (2000-2007f)
-10000
-8000
-6000
-4000
-2000
0
2000
�m
2000 2001 2002 2003 2004 2005 2006 2007
The current account balance measures national income less expenditure. Ireland is borrowing heavily internationally to pay for consumption and investment. Future exports and other (factor) income from abroad must be generated to pay for current borrowings; otherwise Irish assets will have to be sold.
Ranking:
N/A
Source: Forfás calculations; Central Statistics Office; Economic & Social Research Institute
Figure 2.06
Contribution of Productivity to Economic Growth, Selected Economies,2000-2006
20%
15%
10%
5%
0%
-5%
Ireland (GDP)
Ireland (GNP)
Northern Ireland
OECD EU 15 US NEU 12
2000-2003
2003-2006
2000-2003
2003-2006
2000-2003
2003-2006
2000-2003
2003-2006
2000-2003
2003-2006
2000-2003
2003-2006
2000-2003
2003-2006
Productivity Employment Average Hours WorkedGrowth in the economy has two main sources: labour productivity and labour use (a combination of employment and hours at work). Since 2003, Irish growth has been predominantly employment-driven, unlike 2000-2003, when it was productivity driven.
OECD-28 Ranking:
GDP: 21 (i17)
GNP: 18 (i11)
Source: Forfás calculations; Groningen Growth and Development Centre, Total Economy Database, January 2007; Eurostat, General and Regional Indicators [online]; UK Office for National Statistics [online]; Northern Ireland Department of Enterprise, Trade & Investment, Northern Ireland Labour Force survey: Spring 2006
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Figure 2.07
Levels of Income Inequality (Gini Coefficient), 2000 and 20052
0
5
10
15
20
25
30
35
40
Sw
eden
Den
mar
k
Cze
ch R
ep
Finl
and
Net
herl
ands
Fran
ce
Ger
man
y
Hun
gary
Irel
and
Spa
in
Ital
y
UK
(2
00
3)
Pol
and
2005 2000
EU
15
Gini coefficients measure the distribution of incomes across households but do not measure absolute poverty. Ireland is marginally more unequal than the EU-15 average. Ireland as with most other EU countries has experienced an increase in relative inequality since 2000 based on this measure.
EU-15 Ranking:
10 (--)
Source: Eurostat, Population and Social Conditions
Figure 2.08
Regional Convergence, Ireland and Northern Ireland,
(Growth versus Wealth), 2000-2004
0% 1% 2% 3% 4% 5% 6% 7% 8%
Average annual growth in GVA per inhabitant, 2000-2004
EU-15 Average GVA per inhabitant (2004) 24.3
EU-15 AverageGrowth in GVA per
inhabitant (2000-2004)2.8%
GVA
per
inha
bita
nt,
20
04
(P
PP
s, 0
00
s)
0
5
10
15
20
25
30
35
40
45
Irl Mid-East
N.Ire NN.Ire Belfast
N.Ire W&S
N.Ire E Ire West Ire Midlands
Ire MidwestIre South East
Ire South WestIre Dublin
N.Ire Belfast I
Ire Border
Convergence between regions would be represented in this diagram by a downward sloping trend line. Irish regions do not appear to be converging, with the richest areas generally those growing the fastest during the 2000-2004 period.
Ranking:
N/A
Source: Forfás calculations; Eurostat, General and regional Indicators [online]
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2.2 Quality of Life
Figure 2.09
Ranking in the United Nation’s Human Development Index, 2000-2004
0
5
10
15
20
25
30
35
40
45
Irel
and
Sw
eden
Japa
n
US
Sw
itze
rlan
d
Net
herl
ands
Finl
and
Den
mar
k
Fran
ce
Ital
y
UK
Spa
in
New
Zea
land
Ger
man
y
Sou
th K
orea
Hun
gary
Pol
and
Bet
ter
Ran
king
Wor
se R
anki
ng 2004 2000The UN’s Human Development Index combines measures of education, health and income. Ireland’s rank has improved strongly since 2000 and is among the highest in the world (4th overall), indicating a high quality of life.
OECD-28 Ranking:
4 (h14)
Source: Forfás calculations, UN Human Development Report, 2006
Figure 2.10
Life Expectancy in Years, by Gender (2005 compared with 1990)
60
65
70
75
80
85
90
Year
s
Japa
n
Sw
itze
rlan
d
Sw
eden
Spa
in
New
Zea
land
Net
herl
ands
Ital
y
Fran
ce UK
OE
CD
Irel
and
Ger
man
y
Finl
and
Den
mar
k
US
Sou
th K
orea
Pol
and
Hun
gary
2005 Male 2005 Female
1990 Male 1990 Female
Life expectancy can be used as a simple indicator of health and well-being. Average life expectancy for Irish males and females was above 75 and 80 respectively in 2005, an increase of three years since 1990 levels. Life expectancy in Ireland remains marginally below the OECD average.
OECD-28 Ranking:
Males: 17(h5)
Females: 20(h3)
Source: Forfás calculations, OECD Factbook, 2007
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Figure 2.11
Average Happiness in Life, Scale (0-10) 2000-2006
0
1
2
3
4
5
6
7
8
9
10
Sca
le o
f 0
(un
happ
iest
) to
10
(ha
ppie
st)
Den
mar
k
US
Net
herl
ands
Sw
eden
Irel
and
Finl
and
UK
OE
CD
Spa
in
Fran
ce
Ger
man
y
Ital
y
Pol
and
Japa
n
Hun
gary
2006 2000This database provides international data on life happiness and satisfaction. Ireland performs relatively well among comparator countries. While these scores are somewhat subjective, the findings mirror those in other international surveys.
Ranking of 15:
5 (--)
Source: World Database of Happiness, Erasmus University Rotterdam
2.3 Environmental Sustainability
Figure 2.12
Environmental Performance Index, 2006, Scale (0-100)3
60
65
70
75
80
85
90
95
100
New
Zea
land
Sw
eden
Finl
and
UK
Den
mar
k
Irel
and
Fran
ce
Japa
n
OE
CD
Ital
y
Ger
man
y
Spa
in
Net
herl
ands US
Pol
and
Sou
th K
orea
This index aggregates sixteen metrics in environmental health, air quality, water resources, productive natural resources, biodiversity and habitat, and sustainable energy. Ireland’s performance is better than the OECD average.
OECD-28 Ranking:
9
Source: Yale Centre for Environmental Law and Policy; Centre for International Earth Science Information Network
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Figure 2.13
Proportion of Energy from Renewable Sources
and per Capita Energy Consumption, 2005
0%
5%
10%
15%
20%
25%
30%
0
1
2
3
4
5
6
Ene
rgy
Con
sum
ptio
n pe
r ca
pita
(o
il to
nne
equi
vale
nt)
Per
cent
age
of e
nerg
y fr
om r
enew
able
res
ourc
es (
20
05
)
Sw
eden
Finl
and
Den
mar
k
Ital
y
EU
15
Fran
ce
Spa
in
Pol
and
Ger
man
y
Hun
gary
Net
herl
ands
Irel
and
UK
Renewables Energy consumptionIreland consumes more energy per capita than the EU-15 average (right axis). Ireland’s share of energy derived from renewable resources (left axis) is almost one third that of the EU-15 average, which reflects our high dependence on fossil fuels.
EU-15 Ranking:
13(i1) (ranked by renewables)
Source: Forfás Calculations; Eurostat, Environment and Energy; OECD Factbook 2007
Figure 2.14
Emissions of Carbon Dioxide (per capita), 2000 and 2004
0
5
10
15
20
25
Tonn
es p
er c
apit
a
Hun
gary
Sw
eden
Fran
ce
Pol
and
Ital
y
Spa
in
New
Zea
land UK
Den
mar
k
Sou
th K
orea
Japa
n
Irel
and
Ger
man
y
Net
herl
ands
OE
CD
Finl
and
US
2004 2000
Although Ireland’s position has improved since 2000, Ireland is still among the highest polluters of carbon dioxide in the OECD on a per capita basis.
OECD-28 Ranking:
19(h2)
Source: Forfás Calculations, OECD Factbook 2007
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Figure 2.15
Municipal Waste Recycling Performance, Various Years4
22
24
31
35
37
45
49
52
54
71
23
2
38
56
50
46
28
43
25
55
73
31
65
7
5
5
20
3
4
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Czech Republic(2002)
Scotland(2005)
Massachusetts(2004)
Ireland(2005)
Denmark(2005)
Sweden(2005)
Singapore(2005)
Austria(2004)
Netherlands(2004)
Flanders(2002)
Recycling Waste to Energy Disposal The rate of municipal waste recycling in Ireland continues to improve slowly but Ireland still ranks 7th out of 10 locations benchmarked. None of Ireland’s municipal waste is converted into energy contrasting to Denmark where over 50 percent is converted to energy.
Ranking of 10:
7(h1)
Source: Forfás, Waste Management in Ireland, March 2007
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Sustainable
Growth
Essential
Conditions
Policy
Inputs
Business
Environment
Physical
Infrastructure
Knowledge
Infrastructure
Essential Conditions3
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3. Essential Conditions
Ireland’s national competitiveness relies on certain key conditions to support the economic environment.
These intermediate indicators connect the government’s policy inputs (indicators in chapter four) with
improvements in sustainable growth (indicators in chapter two). This section benchmarks Ireland’s
performance regarding four essential conditions:
The performance of Ireland’s businesses in terms of investment and trade; ■■
Ireland’s productivity and innovation; ■■
Ireland’s prices and costs structure; and ■■
Labour supply. ■■
Business Performance
The performance of the business sector is critical to income growth and maintaining high employment
levels in Ireland. Its strength is also essential to sustaining strong government finances and spending on
public services. This section assesses business performance in Ireland under the headings of investment
and trade.
Summary Chart 2:
Rankings in Indicators of Business Performance, 2000-2006 (or nearest)
LHS = 2000 RHS = 2006
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
Stro
ng R
anki
ngW
eak
Ran
king
BusinessInvestment
(GDP) (3.01)
BusinessInvestment
(GNP) (3.01)FDI Stock
(GDP) (3.02)FDI Stock
(GNP) (3.02)
GreenfieldProjects(3.03)
Rate ofReturn (UScompanies)
(3.04)ODI Stock
(GDP) (3.05)ODI Stock
(GNP) (3.05)
Exports ofGoods
(GDP) (3.06)
Exports ofGoods
(GNP) (3.06)
Export Growth(goods & services)
(3.07)
Investment
Ireland remains an investment-intensive country. Domestic investment levels are among the highest in
the EU-15 (Fig. 3.01), driven by investment in construction. Despite a continued reduction in the levels
of FDI relative to GDP, Ireland continues to attract high numbers of foreign direct investment projects
(Fig. 3.02, Fig. 3.03), as overseas investors continue to earn a relatively high rate of return in Ireland
(Fig. 3.04). Irish firms are also increasingly investing overseas, with stocks of outward direct investment
already among the highest in the OECD (Fig. 3.05).
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Trade
Ireland continues to be one of the most open economies in the OECD in terms of our trade performance.
However, growth in total exports - goods and services - remained relatively weak between 2000 and
2006, while growth elsewhere in the OECD accelerated (Fig. 3.07). As a result, Ireland’s overall share of
world trade is falling, driven by a steady fall in our share of merchandise trade. Ireland’s share of services
trade continues to increase despite a fall in 2005 (Fig. 3.08). Comparing Ireland’s world market share
in 2001 to 2006, Ireland’s services exports, particularly in other services, which includes business and
finance, have increased, while the share in office/telecommunications equipment and machinery/transport
equipment has fallen. Ireland’s share of the chemicals sector has remained steady (Fig. 3.09). It is also
notable that Irish merchandise exports to non-EU locations are large relative to other EU-15 states (Fig.
3.06).
Productivity and Innovation
In the long run, a country’s standard of living depends on its productivity performance. The indicators in
this section examine Ireland’s overall productivity performance, as well as by broad sector of economic
activity. As innovation is a key driver of productivity, it is also assessed in this section.
Summary Chart 3:
Rankings in Indicators of Productivity and Innovation, 2000-2006 (or nearest)
LHS = 2000 RHS = 2006
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
Str
ong
Ran
king
Wea
k R
anki
ng
New Trademarks per Million
Population (3.22)
Productivity Levels (GDP)
(3.10)
Productivity Levels (GNP)
(3.10)
Productivity Growth (GDP)
(3.11)
Productivity Growth (GNP)
(3.11)
Productivity
Ireland’s productivity levels (GDP) are now on a par with some of the highest in the world. Using
GNP figures indicates that Ireland has converged with the OECD average (Fig. 3.10). Growth rates of
productivity, rather than levels, are vital to ensuring wage increases are sustainable and in this regard,
Ireland performed poorly between 2003 and 2006, with productivity growth below the OECD average
(Fig. 3.11). Latest sectoral productivity growth figures indicate that a range of sectors performed well
between 2000 and 2004, including agri-food, construction, textiles, metals, financial services and the
wholesale and retail trades (Fig. 3.12). Productivity growth has lagged behind in a range of sectors across
modern manufacturing (e.g. publishing/reproduction, office machinery and medical/precision goods) and
traditional manufacturing (e.g. paper, wood, non-metallic minerals and transport equipment), as well as
transport services and utilities (Fig. 3.13-3.17).
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More Irish firms engage in innovation (the creation of new products, services, or processes) than the
EU-15 average, although this masks a significant gap between manufacturing and services (Fig. 3.18).
Modern manufacturing and tradable services sectors are generally at the forefront of innovation, although
the proportion of financial services firms engaged in innovation was the lowest of all sectors (Fig. 3.19). A
relatively modest percentage of turnover in Ireland comes from innovated products, compared to leading
countries (Fig. 3.20).
Prices and Costs
While productivity is the key long-run determinant of competitiveness, the cost environment within the
economy is a very important factor. This section examines the overall level and inflation in Ireland’s prices
and business costs, both pay and non-pay.
Summary Chart 4:
Rankings in Indicators of Prices and Costs, 2000-2006 (or nearest)
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
Str
ong
Ran
king
Wea
k R
anki
ng
Price Level (3.23) Price Growth (3.23) Labour Cost Growth (3.29)Change in Trade WeightedExchange Rate (3.25)
LHS = 2000 RHS = 2006
General Prices
In terms of general consumer price levels, Ireland is among the most expensive locations and still
exhibits inflation rates that are among the highest in the EU-15 (Fig. 3.23). A breakdown of inflation
by sector shows that food, clothing, furniture and communications have shown little or no inflation
since 2003. Other sectors, however, compare very poorly with the Eurozone average throughout the
2003-2007 period. These include housing, utilities, education, health and catering (Fig. 3.24).
Ireland’s trade-weighted exchange rate has worsened considerably since 2000, although the bulk of that
change occurred between 2000 and 2003 (Fig. 3.25). Combining prices and exchange rates, Ireland’s
harmonised competitiveness indicator deteriorated markedly in 2002, and has declined marginally since
then (Fig. 3.26).
Pay Costs
Unit labour costs, the ratio of changes in productivity to earnings, show little change for the
manufacturing sector as a whole over the 2003-2007 period, regardless of the choice of weighting
(Fig. 3.27). Since 2000, economy-wide labour costs continue to rise at a rate over one and a half times
the Eurozone average (Fig. 3.29), particularly in utilities, construction and a range of services sectors
including public services (Fig. 3.30). Given high inflation rates, a risk exists that Ireland could become
trapped into a wage-price spiral that could damage Ireland’s competitiveness, as increasing costs in
domestically trading sectors are passed on to internationally trading firms who source goods and services
in the local economy.
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This report indicates that for basic manufacturing occupations, Ireland remains cheaper than other high-
income locations, but significantly more expensive than locations in the new EU member states and in Asia
(Fig. 3.31). For certain occupations in science and R&D, Ireland remains attractive relative to other high-
income locations (Fig. 3.32, 3.34). The same is true for financial services, with Dublin cheaper than other
leading financial centres (Fig. 3.33). Overall, wages in internationally trading sectors have grown relatively
slowly due to pressures from international competition. This is not mirrored in the wider economy, which is
dominated by domestically trading sectors.
Non-Pay Costs
Non-pay costs in Ireland compare poorly with other countries across a range of cost types. These include
property costs - both purchase and rental, utilities costs from electricity to water and waste, mobile
communications costs, and a range of domestic services, such as accountancy, information technology and
legal services (Fig. 3.35-3.45). Dublin is particularly expensive.
Labour Supply
Growth in labour supply has played a key role in Ireland’s economic development over the past decade. This
section looks at the overall trends in Ireland’s labour supply and identifies areas of spare capacity.
Summary Chart 5:
Rankings in Indicators of Labour Supply, 2000-2006 (or nearest)
Str
ong
Ran
king
Wea
k R
anki
ng
PopulationGrowth (3.53)
Net Migration(3.54)
Foreign LabourStock (3.55)
Total ParticipationRates (3.56)
Male ParticipationRate (3.56)
FemaleParticipationRate (3.56)
Unemploymentrate (3.57)
DependencyRatio (3.60)
LHS = 2000 RHS = 2006
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
Ireland’s labour force continues to grow strongly, driven by both natural increases in the Irish-born
population and growing levels of inward migration (Fig. 3.47, 3.48, 3.53, and 3.54). Foreign-born workers
now comprise almost 11% of the Irish labour force; more than two and a half times the level in 2000 (Fig.
3.55). Despite rapid increases, participation rates, particularly for women, remain below leading OECD
countries. While, Ireland’s overall demographic position is among the healthiest in the OECD, Ireland will
also face an ageing population into the medium term (Fig. 3.60).
Employment growth in Ireland has been exceptionally strong. The bulk of new jobs between 2000 and
2006 were created in the public service (37 percent - predominantly in education, health and the civil
service) and construction (29 percent) while manufacturing, both traditional and modern, and agriculture
lost jobs over the same period (Fig. 3.49, 3.50). Certain manufacturing sectors, including medical/precision
devices and chemicals, increased their employment levels between 2000 and 2007, although most,
including the largest indigenous sector, food - were static or falling (Fig. 3.51). Unemployment remains
among the lowest in the OECD, and regional variance in the unemployment rate remains relatively small
(Fig. 3.57, 3.58).
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3.1.1 Investment
Figure 3.01
Gross Fixed Capital Formation by the Private Sector (% of GDP), 2006
0%
5%
10%
15%
20%
25%
30%
Irel
and
(GN
P)
Spa
in
Irel
and
(GD
P)
Den
mar
k
Hun
gary
Ital
y
EU
15
Fran
ce
Finl
and
Net
herl
ands
Ger
man
y
UK
Pol
and
Sw
eden
2006 2000Investment rates in Ireland are among the highest in the EU-15. While investment is dominated by construction related activities (74%), investment in machinery and equipment is also growing rapidly.
EU-15 Ranking:
GDP: 3 (h2) GNP: 1 (--)
Source: Eurostat, Structural Indicators
Figure 3.02
Stock of Inward Direct Investment (FDI, % of GDP), 2005
0%
20%
40%
60%
80%
100%
120%
140%
160%2005 2000
Irel
and
(GN
P)
Irel
and
(GD
P)
Net
herl
ands
Hun
gary
New
Zea
land
Sw
eden
Sw
itze
rlan
d
Den
mar
k
UK
Spa
in
Pol
and
Fran
ce
Finl
and
OE
CD
Ger
man
y
US
Ital
y
Sou
th K
orea
While the stock of inward investment in Ireland as a percentage of both GDP and GNP has declined since 2000, it remains among the highest in the OECD and well above the OECD average. Hungary has made strong progress since opening its economy to FDI.
OECD-28 Ranking:
GDP: 4 (i2) GNP: 3 (i2)
Source: UNCTAD World Investment Report 2006
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Figure 3.03
Number of Greenfield Projects by Destination (per million of population), 2004/05
5
10
15
20
25
30
35
402004/05 2002/03
Sin
gapo
re
Irel
and
Hun
gary
Den
mar
k
Sw
eden UK
Sw
itze
rlan
d
Pol
and
Net
herl
ands
Finl
and
Fran
ce
New
Zea
land
Spa
in
OE
CD
Ger
man
y
Sou
th K
orea
Ital
y
US
Japa
n
Ireland continues to attract a large number of international greenfield investment projects, relative to its size. Only Singapore has attracted a similar number of projects per capita. The number of new greenfield projects increased between 2002/03 and 2004/05.
OECD-28 Ranking:
1 (h1)
Source: UNCTAD World Investment Report 2006
Figure 3.04
Rate of Return to US-Owned Companies on their Investments in
Foreign Countries (%), 20055
0%
5%
10%
15%
20%
25%
30%
Spa
in
Ital
y
Net
herl
ands
EU
15
Bel
gium
Ger
man
y
Fran
ce UK
Sw
eden
Pol
and
Hun
gary
Japa
n
Den
mar
k
Irel
and
Sin
gapo
re
Finl
and
2005 2000 This indicator measures income earned by US companies as a proportion of the amount invested in a particular country. The rate of return in Ireland is well above the EU-15 average and among the highest of the countries benchmarked.
EU-15 Ranking:
3(h1)
Source: Forfás calculations; US Bureau of Economic Analysis figures, 2007 [online]
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Stock of Outward Direct Investment (ODI, % of GDP), 2005
0%
20%
40%
60%
80%
100%
120%S
wit
zerl
and
Net
herl
ands
Irel
and
GN
P
Irel
and
GD
P
Sw
eden UK
Den
mar
k
Fran
ce
Finl
and
Ger
man
y
Spa
in
OE
CD
Ital
y
US
New
Zea
land
Hun
gary
Sou
th K
orea
Pol
and
2005 2000Ireland’s levels of outward direct investment increased significantly between 2000 and 2005, meaning that Ireland’s stock of investments abroad relative to the size of our economy has grown rapidly.
OECD-28 Ranking:
GDP: 8 (h4) GNP: 6 (h2)
Source: UNCTAD World Investment Report 2006
3.1.2 Trade
Figure 3.06
Exports of Goods, intra-EU and extra-EU (% of GDP), 2005
Irela
nd G
NP
Hun
gary
Irela
nd G
DP
Net
herl
ands
Den
mar
k
Pol
and
Sw
eden
Finl
and
Ger
man
y
EU
15
Por
tuga
l
Fran
ce
Spa
in
Ital
y
UK
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Exports to Non-EUExports to EU
Ireland continues to be one of the most open countries to trade in the EU-15. Most of Ireland’s goods exports in 2005 were to other parts of the EU, although Ireland also trades substantially with the rest of the world, compared to other EU member states.
EU-15 Ranking:
(Ranked by total exports) GDP: 3 (i1) GNP: 2 (i1)
Source: External and Intra EU trade-Statistical Yearbook (1985-2005)
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Figure 3.07
Annual Average Growth in Exports of Goods and Services (%), 2000-20065
-4%
-2%
2%
0%
4%
6%
8%
10%
12%
16%
14%
2003-2006 2000-2003
Sou
th K
orea
Pol
and
Hun
gary
Japa
n
Ger
man
y
Finl
and
Sw
eden UK
Den
mar
k
Sw
itze
rlan
d
US
OE
CD
Net
herl
ands
Irel
and
Por
tuga
l
Fran
ce
Spa
in
Ital
y
New
Zea
land
Total growth in Irish exports between 2000 and 2003 was substantially above the OECD average. However, between 2003 and 2006, while Ireland’s export growth increased, growth in trade elsewhere has been at a quicker pace.
OECD-28 Ranking:
17(i11)
Source: OECD, Economic Outlook No. 81, 2007
Figure 3.08
Ireland’s Share of World Trade: Overall, Merchandise and Services (%),
2000-2006
20
00
20
01
20
02
20
03
20
04
20
05
20
06
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%Services Total Merchandise
Ireland’s share of merchandise trade has fallen gradually, while our share of services trade (a smaller but growing component of world trade) continues to grow. While trade from China and India is growing, the EU was the world’s largest source of new trade in 2005.
Ranking:
N/A
Source: World Trade Organisation [online]
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Nat
ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.09
Ireland’s Share of World Trade by Sector (%), 2006
Oth
er s
ervi
ces
Che
mic
als
Off
ice
and
tele
com
equi
pmen
t
Agr
icul
tura
l pro
duct
s
Mac
hine
ry/t
rans
port
equi
pmen
t
Trav
el s
ervi
ces
Tran
spor
t se
rvic
es
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%2006 2000 The period between
2000 and 2006 has seen a change in the structure of Ireland’s trade. Strong gains in the ‘other services’ finance, computers, and business, have offset losses in office and telecommunications equipment, and machinery and transport equipment.
Ranking:
N/A
Source: World Trade Organisation [online]
3.2 Productivity and Innovation
3.2.1 Productivity
Figure 3.10
Per Hour Output, Ireland and Selected Economies, 2000-2006 (E value added)
10
15
20
25
30
35
40
45
50
55
60
2000 2001 2002 2003 2004 2005 2006
NEU 12Ireland (GDP)
EU 15
OECD
N.Ireland
Ireland (GNP)
US
Figures for GDP per hour worked indicate that Irish productivity has been among the highest in the world since the late 1990s. Using GNP figures, which reduces the effects of MNCs, suggests that Irish productivity levels have converged with the OECD average.
OECD-28 Ranking:
GDP: 3 (h4) GNP: 14 (h2)
Source: Forfás Calculations; Groningen Growth & Development Centre, Total Economy Database, January 2007; United Kingdom, Office for National Statistics, 2007 [online]; Northern Ireland Department of Enterprise, Trade & Investment, Northern Ireland Labour Force Survey: Historical Supplement Spring 1984 – Spring 2006, March 2006
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Figure 3.11
Annual Average Growth in Output per Hour Worked,
Selected Economies, 2000-20066
-1%
0%
1%
2%
3%
4%
5%
NEU 10 N.Ireland US OECD Ireland (GNP) EU-15 Ireland (GDP)
2003-2006 2000-2003
While productivity levels in Ireland remain strong, growth rates have declined to their lowest levels since the 1980s. Average productivity growth in Ireland is now below the OECD average and in line with the EU-15.
OECD-28 Ranking:
GDP: 22(i18) GNP: 18(i10)
Source: Forfás Calculations; Groningen Growth & Development Centre, Total Economy Database, January 2007; United Kingdom, Office for National Statistics, 2007 [online]; Northern Ireland Department of Enterprise, Trade & Investment, Northern Ireland Labour Force Survey: Historical Supplement Spring 1984 – Spring 2006, March 2006
Figure 3.12
Productivity Growth by Sector, Ireland, EU 15 and US, 2000-2004
Pub
lic S
ervi
ces
Who
lesa
le/R
etai
l
Con
stru
ctio
n
Agr
icul
ture
Bus
ines
s S
ervi
ces
Hot
els/
Res
taur
ants
Tran
spor
t S
ervi
ces
Fina
ncia
l S
ervi
ces
Ele
ctri
cal E
quip
men
t
Food
/Bev
erag
es
Tele
com
mun
icat
ions
Che
mic
als
Pap
er/p
ublis
hing
Met
als
Oth
er M
achi
nery
Oth
er M
anuf
actu
ring
Oth
er M
iner
als
Uti
litie
s
Tran
spor
t G
oods
Text
iles/
Leat
her
Woo
d/C
ork
Min
ing
Ave
rage
Gro
wth
in
Valu
e A
dded
per
hou
r w
orke
d. 2
00
0-2
00
4
-10%
-5%
0%
5%
10%
15%USEU 15Ireland
This chart shows productivity growth by sector between 2000 and 2004. The sectors are ranked from left to right by employment share. Few of Ireland’s larger, mostly services, sectors have shown productivity growth in line with the national average of 3.5% between 2000 and 2004, which was driven instead by smaller sectors.
Ranking:
N/A
Source: Forfás calculations, EU KLEMS Database March 2007
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Nat
ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.13
Annual Average Productivity Growth in Primary Sectors, 2000-2004
12%
10%
8%
6%
4%
2%
0%
-2%
-4%Food Products Agriculture Construction Utilities Mining
Aver
age
grow
th in
� v
alue
add
ed p
er h
our
wor
ked,
20
00
- 2
00
4 Ireland USEU 15
Relative to the US and EU-15, productivity growth in Ireland’s agriculture and food sectors has been strong since 2000. Productivity growth rates in utilities continue to lag behind EU and US averages. Productivity growth in construction is strong compared to other countries.
Ranking:
N/A
Source: Forfás calculations, EU KLEMS Database March 2007
Figure 3.14
Annual Average Productivity Growth in Modern Manufacturing, 2000-2004
12%
10%
8%
16%
14%
6%
4%
2%
0%
-2%
-4%Electrical
EngineeringChemicals/
PharmaRubber/Plastics
Publishing/Reproduction
Medical/Precision
OfficeMachinery
USEU 15Ireland
Aver
age
grow
th in
� v
alue
add
ed p
er h
our
wor
ked,
20
00
- 2
00
4
The measurement of productivity in modern manufacturing in Ireland is difficult due to the concentration of foreign-owned multinationals. The US has achieved the highest productivity growth rates in modern manufacturing over the period 2000-2004.
Ranking:
N/A
Source: Forfás calculations, EU KLEMS Database March 2007
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Figure 3.15
Annual Average Productivity Growth in Traditional Manufacturing, 2000-2004
15%
10%
5%
0%
-5%
-10%Textiles/Leather
OtherMachinery
Metals Paper/Pulp Wood/Cork TransportEquipment
Non-metalicMinerals
USEU 15Ireland
Aver
age
grow
th in
� v
alue
add
ed p
er h
our
wor
ked,
20
00
- 2
00
4
Between 2000 and 2004, productivity growth rates in paper, wood, non-metallic minerals, and transport equipment lagged their EU and US equivalents. The Irish textiles, metals and ‘other machinery’ sectors performed better.
Ranking:
N/A
Source: Forfás calculations, EU KLEMS Database March 2007
Figure 3.16
Annual Average Productivity Growth in Tradable Services, 2000-2004
8%
6%
10%
4%
2%
0%
-2%Telecommunications Finance Business Services Hotels/Restaurants
USEU 15Ireland
Aver
age
grow
th in
� v
alue
add
ed p
er h
our
wor
ked,
20
00
- 2
00
4
The productivity growth performance of the hotels/ restaurants sector has been stagnant in all three regions. Irish productivity growth in telecommunications is on a par with the EU and US, while productivity growth in financial
services is strong.
Ranking:
N/A
Source: Forfás calculations, EU KLEMS Database March 2007
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ual C
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Nat
ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.17
Annual Average Productivity Growth in Non-Tradable Services, 2000-2004
Wholesale/retail Education Health PublicAdministration
TransportServices
USEU 15Ireland
Aver
age
grow
th in
� va
lue
adde
d pe
r ho
ur w
orke
d, 2
00
0 -
20
04
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
Non-tradable services are critical to Ireland’s overall productivity performance as they account for almost half of total hours worked. Productivity is particularly difficult to measure in non-tradable services. The figures suggest that Irish productivity growth is relatively strong in the wholesale and retail trade, but has been negative in transport services.
Ranking:
N/A
Source: Forfás calculations, EU KLEMS Database March 2007
3.2.2 Innovation
Figure 3.18
Percentage of Firms Engaged in Innovative Activity, 2004
80%
70%
60%
50%
40%
30%
20%
10%
0%
Ger
man
y
Irel
and
Den
mar
k
Sw
eden
EU
15
Finl
and
UK
Ital
y
Spa
in
Net
herl
ands
Fran
ce
Pol
and
Hun
gary
Industry ServicesTotalThis chart shows the total number of firms which engage in innovative activity, either by changing their products or their processes. Overall, Ireland performs above the EU-15 average, although the innovation gap between Irish industry and services sectors at almost 20% is among the widest in the EU.
EU-15 Ranking:
4
Source: Eurostat, Fourth Community Innovation Survey, 2004
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Figure 3.19
Percentage of Firms Engaged in Innovation Activity, by Sector, 2004
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Financial services
Wholesale trade
Transport
Eng. & tech. services
Communications
Computer related services
Mining & quarrying
Electricity, gas etc.
Furniture & other
Textiles, clothing & leather
Metal & non-metal minerals
Fabr. metals & other mach.
Publish. & recorded media
Wood & paper products
Computers, elect. & comms.
Motors & transport
Food, beverages & tobacco
Rubber & plastics
Medical & precision
Chemicals
This chart presents the innovation activity rate by sector in Ireland. Overall, manufacturing sectors exhibited higher innovation activity rates, although certain services sectors, particularly computer-related services also show high innovation activity rates.
Ranking:
N/A
Source: Forfás, Fourth Community Innovation Survey, 2004
Figure 3.20
Percentage Turnover from Innovative Activity, 2004
0%
2%
4%
6%
8%
10%
12%
14%
Pola
nd
Finl
and
Swed
en
Ital
y
Fran
ce UK
Ger
man
y
EU15
Hun
gary
Irel
and
Den
mar
k
Net
herla
nds
Spai
n
Ultimately, innovation is about turning ideas into revenue. This chart shows the percentage contribution to turnover from the introduction of new/improved products to the market among innovative firms. Ireland’s performance is in line with the EU average but lags leading countries.
EU-15 Ranking:
9
Source: Eurostat, Fourth Community Innovation Survey, 2004
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Nat
ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.21
Percentage of Innovation Firms Engaged in Co-operation, 2004
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%Fi
naln
d
Sw
eden
Den
mar
k
Pol
and
Fran
ce
Net
herl
ands
Hun
gary
Irel
and
UK
EU
15
Spa
in
Ger
man
y
Ital
y
Innovation co-operation is defined as active participation with other enterprises or non-commercial institutions on innovation activities. This chart displays all categories of cooperation (customers, businesses, public institutions, etc.).
EU-15 Ranking:
7
Source: Eurostat, Fourth Community Innovation Survey, 2004
Figure 3.22
New Community Trademarks per Million Population, 2006
50
0
100
150
200
250
Sw
itze
rlan
d
Den
mar
k
Irel
and
Net
herl
ands
Spa
in
Ger
man
y
Sw
eden UK
EU
15
Finl
and
Ital
y
Fran
ce US
Pol
and
Japa
n
Trademarks identify a product to a specific owner and are important business assets that can play a key role in the marketing of innovative products and services. Irish firms have a relatively high number of community trademarks per million population.
EU-15 Ranking:
4(i1)
Source: European Commission, European Innovation Scoreboard, 2006
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3.3 Prices and Costs
3.3.1 Prices
Figure 3.23
Price Level 2006, and Inflation 2003-2007, EU Member States
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
50 60 70 80 90 100 110 120 130 140
Infl
atio
n (C
hang
e in
Pri
ce L
evel
)
Price Level, Eurozone = 100Less expensive More Expensive
Eurozone Inflation (2.0%)
Low Cost, Rising Quickly High Cost, Rising Quickly
Low Cost, Rising Slowly
Czech RepublicPoland
PolandGreece
FranceGermany
Spain Luxembourg
Ireland
Denmark
Finland
Sweden
Netherlands
UK
High Cost, Rising Slowly
Prices, and the rate of change in prices, are key indicators of competitiveness. Price levels in Ireland are the second highest in the EU and are continuing to rise at rates above both the Eurozone average and the ECB target rate of 2 percent.
EU-15 Ranking:
Price Level 14 (i3) Inflation 12 (h3)
Source: Eurostat, Economy and Finance Indicators, 2007 [online]
Figure 3.24
Inflation by Commodity Group, Ireland and the Eurozone, 2000-2007
-4%
-2%
0%
2%
4%
6%
8%
10%2003-2007 Ireland
2000-2003 Ireland 2000-2003 Eurozone
2003-2007 Eurozone
-4%
-2%
0%
2%
4%
6%
8%
10%2003-2007 Ireland
2000-2003 Ireland 2000-2003 Eurozone
2003-2007 Eurozone
Hou
sing
/uti
litie
s
Edu
cati
on
Hea
lth
Tran
spor
t
Cat
erin
g
Ove
rall
Mis
cella
neou
s
Alc
ohol
/tob
acco
Rec
reat
ion
Com
mun
icat
ions
Food
Furn
itur
e, e
tc
Clo
thin
g
Hou
sing
/uti
litie
s
Edu
cati
on
Hea
lth
Cat
erin
g
Tran
spor
t
Alc
ohol
, et
c
Ove
rall
Mis
c.
Rec
reat
ion
Com
mun
icat
ions
Food
Furn
itur
e, e
tc
Clo
thin
g
This chart shows inflation in particular sectors of the Irish and EU economy. While Irish inflation rates have fallen since the first period (2000-03), they remain higher than the Eurozone average across most sectors, particularly for housing, utilities and domestic services such as education and health.
Ranking:
N/A
Source: Eurostat, Economy and Finance Indicators, 2007 [online]
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Nat
ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.25
Percentage Change in the Trade-Weighted Exchange Rate, 2000-20067
-9.0%
-1%
-0.2%
1.2%
4.0%
6.8%
7%
8.5%
8.4%
8.9%
9.3%
10.3%
11.3%
12.6%
14%
15%
25%
-15% -10% -5% 0% 5% 10% 15% 20% 25% 30%
US
Sweden
UK
OECD
Hungary
Poland
Spain
France
Denmark
Switzerland
Italy
Germany
Finland
Netherlands
South Korea
Ireland
New Zealand
Competitiveness Gain Competitiveness Loss
Exchange rates show the price of an economy’s currency. This chart shows the change in a country’s exchange rate weighted by the importance of trade with other countries. Ireland’s trade-weighted exchange rate has appreciated by 15% since 2000, meaning that Irish goods/services are now more expensive in international markets.
OECD-28 Ranking:
24(i5)
Source: Forfás Calculations; OECD, Economic Outlook no. 81, 2007
Figure 3.26
Harmonised Competitiveness Indicator, 2001-2007 (2004=100)
80
85
90
95
100
105
Impr
ovem
ent
Det
erio
rati
on
Aug-
01
Aug-
02
Aug-
03
Aug-
04
Aug-
05
Aug-
06
Aug-
07
This chart combines changes in price levels and exchange rates to give a single measure of changes in international price competitiveness. The bulk of Ireland’s loss of price competitiveness occurred between 2002 and early 2004, when the euro strengthened considerably against the
dollar.
Ranking:
N/A
Source: Central Bank of Ireland, 2007
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3.3.2 Pay Costs
Figure 3.27
Changes in Unit Labour Costs in Manufacturing, 2003-2007 (Q1, 2000 = 100)
ULC (employment) ULC (output)
75
80
85
90
95
100
105
110
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
20
05
Q1
20
05
Q2
20
05
Q3
20
05
Q4
20
06
Q1
20
06
Q2
20
06
Q3
20
06
Q4
Cos
ts, 2
00
0-Q
1=1
00
Cos
ts W
orse
ning
Cos
ts I
mpr
ovin
g
20
07
Q1
Unit labour costs reflect relative changes in productivity and earnings. A downward trend indicates that productivity rose faster than wages, which is good for competitiveness. ULCs weighted by output and employment both suggest that manufacturing unit labour costs have not changed significantly since the start of 2003.
Ranking:
N/A
Source: Central Bank of Ireland; Central Statistics Office, Industrial Production, IndustrialEarnings, Employment (by 2 digit NACE codes)
Figure 3.28
Average Annual Change in Unit Labour Costs by Manufacturing Sector, 2000-2007
-15%
-10%
-5%
0%
5%
10%
15%
Ris
ing
Cos
tsFa
lling
cos
ts
Pri
ntin
g
Ele
ctri
cs
Rad
io/T
V G
oods
Ele
ctro
nics
Che
mic
als
Med
ical
Dev
ices
Food
Oth
er M
achi
nery
Met
als
Tran
spor
t G
oods
Uti
litie
s
Woo
d
Text
iles
Pla
stic
Min
eral
s
Pap
er
Fabr
ic.
Met
als
Unit labour costs (ULC) measure the change in labour costs relative to output. While some Irish manufacturing sectors (e.g. electrics and printing) have seen their ULCs fall since 2000, costs have risen faster than output in a number of sectors.
Ranking:
N/A
Source: Forfás Calculations; Central Statistics Office, Industrial Production, Industrial Earnings, Employment (by 2 digit NACE codes)
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ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.29
Average Growth in Labour Costs, 2000-20078
0%
2%
4%
6%
8%
10%
14%
12%
UK
Hun
gary
Pol
and
Irel
and
Spa
in
Fran
ce
Finl
and
Den
mar
k
Sw
eden
Eur
ozon
e
EU
15
Net
herl
ands
Ger
man
y
2003-2007 2000-2003Labour cost growth rates show the change in the cost of employing workers over time. Ireland’s growth rates across all sectors of the economy have exceeded the EU-15 average over both periods. The average rate of wage inflation in Ireland between 2003 and early 2007, was over one and a half times the Eurozone average.
EU-15 Ranking:
13(i5)
Source: Eurostat, General and Regional Indicators, 2007 [online]
Figure 3.30
Inflation in Overall Labour Costs, by Sector, Ireland & the Eurozone, 2000-20079
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Ove
rall
Man
ufac
turi
ng
Uti
litie
s
Con
stru
ctio
n
Ret
ail/e
tc
Cat
erin
g
Com
m'n
s/et
c
Fina
nce
Oth
er s
ervi
ces
Pub
lic S
ecto
r
UK
10% 2003-2006 Ireland
2003-2006 Eurozone2000-2003 Ireland
2000-2003 Eurozone
Since 2000, labour costs in all sectors of the Irish economy have increased by more than the Eurozone average.
While Irish wage inflation fell in the 2003-2007 period, it is still growing by more than double the Eurozone average in utilities and a number of services sectors.
Ranking:
N/A
Source: Eurostat, General and Regional Indicators, 2007 [online]; Central Statistics Office, Labour Market Statistics; Office of National Statistics, Labour Market Statistics
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Figure 3.31
Wage Costs for Highly Skilled and Unskilled Production Operatives, 2007
Ban
galo
re
Sin
gapo
re
Bud
apes
t
Der
ry
Bel
fast
Gal
way
Lim
eric
k
Cor
k
Man
ches
ter
Lond
on
Dub
lin
Bos
ton
Maa
stri
cht
Cop
enha
gen
�0
� 5,000
� 10,000
� 15,000
� 20,000
� 25,000
� 30,000
� 35,000
40,000
45,000Highly Skilled Unskilled
Wage costs for highly skilled and unskilled production operatives follow a relatively similar pattern among the benchmarked countries. While Ireland is cheaper than some European cities, it is considerably more expensive than Budapest, Singapore and Bangalore.
Ranking of 14:
Highly skilled: Galway 6, Limerick 7, Cork 8, Dublin 11
Source: NCC, Costs of Doing Business in Ireland, 2007
Figure 3.32
Wage Costs for Laboratory Technicians, 2007
Ban
galo
re
Bud
apes
t
Sing
apor
e
Bel
fast
Der
ry
Man
ches
ter
Cork
Lim
eric
k
Gal
way
Dub
lin
Lond
on
Bos
ton
Maa
stric
ht
Cope
nhag
en
� 0
� 5,000
� 10,000
� 15,000
� 20,000
� 25,000
� 30,000
� 35,000
� 40,000
45,000 Laboratory technicians undertake research and development. Although wage costs are over four times higher in Ireland than the cheapest location, Bangalore, Ireland’s highest cost location, Dublin, is still 35 percent lower than Copenhagen.
Ranking of 14:
Cork 7, Limerick 8, Galway 9, Dublin 10
Source: NCC, Costs of Doing Business in Ireland, 2007
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ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.33
Wage Costs for Financial Analysts, 2007
Ban
galo
re
Bud
apes
t
Sin
gapo
re
Man
ches
ter
Bel
fast
Der
ry
Maa
stri
cht
Cor
k
Lim
eric
k
Gal
way
Dub
lin
Bos
ton
Lond
on
Cop
enha
gen
� 0
� 10,000
� 20,000
� 30,000
� 40,000
� 50,000
� 60,000
� 70,000 Financial analysts assess economic trends and risk. They account for a large part of the labour cost base of a fund administration company. Irish locations rank among the highest countries benchmarked. Nonetheless, Dublin is cheaper than other financial centres such as Boston and London.
Ranking of 14:
Cork 8, Limerick 9, Galway 10, Dublin 11
Source: NCC, Costs of Doing Business in Ireland, 2007
Figure 3.34
Wage Costs for Directors of Research & Development, 2007
� 0
� 20,000
� 40,000
60,000
� 80,000
� 100,000
� 120,000
140,000
� 160,000
� 180,000
Ban
galo
re
Bud
apes
t
Sin
gapo
re
Cor
k
Lim
eric
k
Gal
way
Der
ry
Bel
fast
Dub
lin
Man
ches
ter
Maa
stri
cht
Bos
ton
Cop
enha
gen
Lond
on
A director of R&D, with at least 15 years of experience, has control of the R&D function of a company exporting to international markets. There is a gap between Dublin and the other Irish cities. However, all Irish cities compare favourably to other high-income cities.
Ranking of 14:
Cork 4, Limerick 5, Galway 6, Dublin 9
Source: NCC, Costs of Doing Business in Ireland, 2007
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3.3.3 Non-Pay Costs
Figure 3.35
Cost (per m2) to Purchase or Rent a Prime Industrial Site, 2007
€0
€100
€200
€300
€400
€500
€600
€700
€800
Cop
enha
gen
Bud
apes
t
Maa
stri
cht
Bos
ton
Man
ches
ter
Lim
eric
k
Cor
k
Gal
way
Dub
lin
Der
ry
Sin
gapo
re
Ban
galo
re
Bel
fast
Lond
on
Purchase Rent
All firms face property costs, either to rent or to purchase. This chart shows purchase and rental costs for industrial sites. Irish cities are among the most expensive of the cities surveyed to rent a prime industrial site but are cheaper than other locations particularly London for purchase costs.
Ranking of 14:
Purchase cost: Limerick 6, Cork 7, Galway 8, Dublin 9 Rent cost: Limerick 5, Cork 10, Galway 12, Dublin 13
Source: NCC, Costs of Doing Business in Ireland, 2007
Figure 3.36
Cost (per m2) to Purchase and Rent an Office Space, 2007
Ban
galo
re
Bud
apes
t
Bel
fast
Der
ry
Sin
gapo
re
Bos
ton
Maa
stri
cht
Man
ches
ter
Gal
way
Lim
eric
k
Cor
k
Dub
lin
Cop
enha
gen
Lond
on
€0
€500
€1,000
€1,500
€2,000
€2,500
Purchase Rent
The cost to purchase an office site in Ireland is among the highest of the cities benchmarked. While office rents in most Irish cities are on a par with those in other high-income cities, rents in Dublin are expensive and only exceeded by London.
Ranking of 14:
Purchase Cost: Galway 9,
Limerick 10, Cork 11,
Dublin 12
Rent Cost: Limerick 5,
Galway 7, Cork 9, Dublin 13
Source: NCC, Costs of Doing Business in Ireland, 2007
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ual C
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ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.37
Electricity Costs (per 100 kwh) for Industrial Users, 2007
€0
€2
€4
€6
€8
€10
€12
€14
Per
10
0 k
wh
Sin
gapo
re
Bos
ton
Bud
apes
t
Ban
galo
re
Man
ches
ter
Lond
on
Bel
fast
Der
ry
Maa
stri
cht
Lim
eric
k
Gal
way
Dub
lin
Cor
k
Cop
enha
gen
This indicator measures electricity costs (including VAT) for a typical medium sized enterprise. It shows that Ireland ranks as the second most expensive location.
Ranking of 11:
Irish cities 10
Source: NCC, Costs of Doing Business in Ireland, 2007
Figure 3.38
National Mobile Telephone Costs (per min), 2007
Ban
galo
re
Sin
gapo
re
Bud
apes
t
Cop
enha
gen
Lond
on
Man
ches
ter
Bel
fast
Der
ry
Bos
ton
Maa
stri
cht
Cor
k
Dub
lin
Gal
way
Lim
eric
k
€0.00
€0.05
€0.10
€0.15
€0.20
€0.25
€0.30
€0.35
€0.40
€0.45
€0.50
Cos
t pe
r M
inut
e
Mobile telephony has become an integral part of enterprise. National mobile telephone costs per minute are significantly more expensive in Irish cities than all other cities surveyed.
Ranking of 11:
Irish cities 11
Source: NCC, Costs of Doing Business in Ireland, 2007
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Figure 3.39
Internet Costs (per month) 2MB, 2007
Maa
stri
cht
Bos
ton
Bel
fast
Lond
on
Man
ches
ter
Der
ry
Cor
k
Dub
lin
Gal
way
Lim
eric
k
Cop
enha
gen
Sin
gapo
re
Bud
apes
t
Ban
galo
re
Cos
t pe
r M
onth
€0
€20
€40
€60
€80
€100
€120
€140
€160 Broadband internet is now a necessity for modern business, particularly information-intensive services. Ireland’s internet costs (per month) are in line with many of the other cities surveyed. Costs are falling across most of the cities surveyed.
Ranking of 11:
Irish cities 7
Source: NCC, Costs of Doing Business in Ireland, 2007
Figure 3.40
Waste Disposal Costs (per tonne), 2007
€0
€50
€100
€150
€200
€250
Cos
t pe
r To
nne
Ban
galo
re
Sin
gapo
re
Bos
ton
Man
ches
ter
Lond
on
Bel
fast
Cop
enha
gen
Lim
eric
k
Bud
apes
t
Gal
way
Maa
stri
cht
Der
ry
Dub
lin
Cor
kWaste costs measure the cost of disposing of a tonne of non-hazardous waste into landfill. While costs in Irish cities have fallen in the last year, Dublin and Cork remain the most expensive cities surveyed.
Ranking of 14:
Limerick 8, Galway 10, Dublin 13, Cork 14
Source: NCC, Costs of Doing Business in Ireland, 2007
50
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ual C
ompe
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ss R
epor
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00
7 V
olum
e 1
Nat
ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.41
Water Costs (per cubed metre), 2007
€0.0
€0.5
€1.0
€1.5
€ 2.0
€2.5
Cos
t pe
r M
3
Bud
apes
t
Bos
ton
Sin
gapo
re
Ban
galo
re
Gal
way
Man
ches
ter
Lond
on
Maa
stri
cht
Lim
eric
k
Bel
fast
Der
ry
Cop
enha
gen
Dub
lin
Cor
k
Water costs measure the cost for industrial users per metre cubed. Cork and Dublin rank as the most expensive cities. Furthermore, costs have increased in the last twelve months.
Ranking of 14:
Galway 5, Limerick 9, Dublin 13, Cork 14
Source: NCC, Costs of Doing Business in Ireland, 2007
Figure 3.42
Accountancy Fees per Hour 2007
€0
€20
€40
€60
€ 80
€100
€120
€140
Ban
galo
re
Bel
fast
Der
ry
Sin
gapo
re
Cop
enha
gen
Man
ches
ter
Bos
ton
Cor
k
Dub
lin
Gal
way
Lim
eric
k
Bud
apes
t
Maa
stri
cht
Lond
on
Fee
per
Hou
r
This chart measures junior accountancy fees per hour. Irish cities are among the most expensive for accountancy fees, significantly more expensive than Belfast, Derry or Copenhagen.
Ranking of 14:
Irish cities 8
Source: NCC, Costs of Doing Business in Ireland, 2007
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Figure 3.43
IT Fees per Hour 2007
€0
€20
€40
€60
€80
€100
€120
€140
€160
€180
€200
Fee
per
Hou
r
Ban
galo
re
Sin
gapo
re
Cop
enha
gen
Maa
stri
cht
Bud
apes
t
Man
ches
ter
Bel
fast
Der
ry
Lim
eric
k
Bos
ton
Gal
way
Cor
k
Dub
lin
Lond
on
This chart measures the cost of ad-hoc on-site services per hour. Irish cities, particularly Dublin, are among the most expensive cities surveyed. IT services fees vary considerably across the cities surveyed.
Ranking of 14:
Limerick 9, Galway 11, Cork 12, Dublin 13
Source: NCC, Costs of Doing Business in Ireland, 2007
Figure 3.44
Legal Fees per Hour 2007
Fee
per
Hou
r
Ban
galo
re
Sin
gapo
re
Lim
eric
k
Bud
apes
t
Cor
k
Bel
fast
Der
ry
Gal
way
Man
ches
ter
Cop
enha
gen
Lond
on
Maa
stri
cht
Bos
ton
Dub
lin
� 0
� 50
� 100
� 150
� 200
� 250
300 This chart measures the cost charged by a major legal company for a junior legal assistant excluding VAT. There is considerable variation between Irish cities. While Galway, Cork and in particular Limerick are cost competitive relative to other cities surveyed, Dublin remains the most expensive city.
Ranking of 14:
Limerick 3, Cork 5, Galway 8, Dublin 14
Source: NCC, Costs of Doing Business in Ireland, 2007
52
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ual C
ompe
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ional
Com
pet
itiv
enes
s C
ounci
l Figure 3.45
Health Insurance Costs, 2007
�0
�200
�400
�600
�800
�1,000
�1,200B
anga
lore
Sing
apor
e
Cope
nhag
en
Bud
apes
t
Lond
on
Man
ches
ter
Cork
Dub
lin
Gal
way
Lim
eric
k
Bel
fast
Der
ry
Bos
ton
Maa
stric
ht
Health insurance costs for firms are broadly similar across high-income countries. However, Maastricht is particularly expensive and Copenhagen is cheap.
Ranking of 11:
Irish cities 7
Source: NCC, Costs of Doing Business in Ireland, 2007
Figure 3.46
Interest Rates, Ireland and the Eurozone, by loan type, 2007-q2
Overdraft Small - short Small - medium Small - long Large - short Large - medium Large - long
2007 q2 Ireland 2007 q2 Eurozone
2004 q2 Ireland 2004 q2 Eurozone
0%
1%
2%
3%
4%
5%
6%
7%
8%
9% This chart shows average interest rates in Ireland and the Eurozone, by loan type, in the second quarter of 2004 and 2007. All loans types in Ireland are now more expensive than the Eurozone average. While interest rates have increase in Ireland and the Eurozone since 2004, the gap between Ireland and the Eurozone has widened for almost all loan types.
Ranking:
N/A
Source: European Central Bank; Central Bank of Ireland
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3.4 Labour Supply
3.4.1 Overview
Figure 3.47
Labour Force (Employment & Unemployment), Ireland 000s, 2000-2007
Long Term Unemployment Short Term Unemployment Employment
(000
’s)
1500
1600
1700
1800
1900
2000
2100
2200
2000
Q1
2001
Q1
2002
Q1
2003
Q1
2004
Q1
2005
Q1
2006
Q1
2007
Q1
Ireland’s ongoing economic growth has been facilitated by a remarkable increase in labour supply. Labour force growth continued in 2006 and early 2007, with most unemployment taking the form of short term unemployment.
Ranking:
NA
Source: Forfás Calculations; Central Statistics Office, Quarterly National Household Survey Data, 2000-2007
Figure 3.48
Decomposition of Change in Total Hours Worked in Ireland, 2000-2006
200
150
100
Cha
nge
in h
ours
wor
ked
(mill
ions
)
50
0
-50
-100
Natural Increase/Demographics Migration Participation Unemployment Average Hours Worked
2000 2001 2002 2003 2004 2005 2006
Changes in total hours worked in the Irish economy depend on a wide variety of factors. Natural population growth and migration induced increases in population are driving employment growth. Average hours worked are falling.
Ranking:
NA
Source: Forfás Calculations; EU KLEMS Database, March 2007; Central Statistics Office, Quarterly National Household Survey Data, 2000-2006
54
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ual C
ompe
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ional
Com
pet
itiv
enes
s C
ounci
l 3.4.2 Employment
Figure 3.49
Percentage Change in Employment, 2000-2006, by Broad Sector,
Ireland, EU-15 and US
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
IRL
EU
US
A
IRL
EU
US
A
IRL
EU
US
A
IRL
EU
US
A
IRL
EU
US
A
IRL
EU
US
A
IRL
EU
US
A
IRL
EU
US
A
IRL
EU
US
A
IRL
EU
US
A
Construction OtherServices
Government BusinessServices
Finance Retail Communications Catering Manufacturing Agriculture
USEU 15Ireland
Overall, employment in Ireland increased faster than either the EU or US averages between 2000 and 2006. At a sectoral level, employment growth in construction, ‘other services’, and public services has outstripped the EU / US performance.
Ranking:
N/A
Source: Central Statistics Office, Eurostat, US Bureau of Labour Statistics
Figure 3.50
Source of Jobs Growth in Ireland, (000’s) 2000-2007
Edu
cati
on/H
ealt
h
Con
stru
ctio
n
Fina
nce/
Bus
ines
sS
ervi
ces
Ret
ail/C
ater
ing
Oth
er S
ervi
ces
Civ
il S
ervi
ce
Tran
spor
t/C
omm
’ns
Trad
itio
nal
Man
ufac
turi
ng
Agr
icul
ture
Mod
ern
Man
ufac
turi
ng
-40
-20
0
20
40
60
80
100
120
140
2000 -20032003 - 2007
This chart shows the number of jobs created by sector in Ireland between 2000 and the second quarter of 2007. Modern and traditional manufacturing and agriculture have contracted, while education/health, construction, and finance/business services have expanded strongly, particularly since 2003.
Ranking:
N/A
Source: Central Statistics Office (by 2 digit NACE codes)
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Figure 3.51
Change in Employment in Irish Manufacturing by Sector (000’s), 2000-2007
2003-2007 2000-2003
Cha
nge
in n
umbe
rs e
mpl
oyed
(0
00
s)
-12
-10
-8
-6
-4
-2
0
2
4
6
8
Che
mic
als
Med
ical
, P
reci
sion
Rad
io, TV
Met
als
&M
achi
nery
Woo
d, P
aper
Com
pute
rs
Oth
er M
iner
als
Food
Text
ile, Le
athe
r
Ele
ctri
cal
Mac
hine
ry
Pub
lishi
ng
Oth
er
The rate of job losses in manufacturing slowed over the 2000–2007 period. The chemicals and medical/precision devices sector have expanded throughout.
Ranking:
N/A
Source: Central Statistics Office (by 2 digit NACE codes)
Figure 3.52
Change in Employment in Manufacturing by Region (000’s), 2000-2006
-12
-10
-8
-6
-4
-2
0
2
Midlands West Mid West Border Mid East South West South East Dublin
Cha
nge
in n
umbe
rs e
mpl
oyed
(0
00
s)
2003-2006 2000-2003
Dublin, Ireland’s most populous region has experienced the bulk of manufacturing job losses over the past six years, particularly in the 2000-2003 period. The Midlands, West, Mid West and Border regions have regained manufacturing jobs since 2003.
Ranking:
N/A
Source: Forfás Annual Employment Survey, 2006
56
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ual C
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ional
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itiv
enes
s C
ounci
l 3.4.3 Labour Supply Characteristics
Figure 3.53
Average Population Growth per Annum, 2000-2006
2.0%
2.5%
1.5%
1.0%
0.5%
0.0%
-0.5%
2000-20032003-2006
Aver
age
popu
lati
on g
row
th p
er a
nnum
(%
)
Ireland Northern Ireland OECD EU 15 US NEU 12
1.6%
0.4%0.5%
0.3%
0.9%
-0.2%
2.1%
0.5%0.4%
0.2%
0.9%
-0.2%
Ireland’s population continues to grow at a fast rate. Overall, the EU-15 population is growing at a very slow pace, while the population in the new 12 EU member states is falling.
OECD-28 Ranking:
1(--)
Source: Forfás Calculations; Groningen Growth & Development Centre, Total Economy Database, January 2007; United Kingdom, Office for National Statistics, 2007 [online]
Figure 3.54
Net Migration per 1,000 of Population, 1999-200510
8%
10%
12%
6%
4%
2%
0%
-2%
Ireland EU 15 OECD US NEU 10 Northern Ireland
Mig
rant
s pe
r 1
,00
0 o
f po
pula
tion
2002-2005 2000-200211.1
4.74.0 3.9
0.6
-0.1
9.0
3.73.6
4.3
-0.3-0.8
Ireland’s increases in population are not just domestically driven. Net migration has been increasing dramatically.
OECD-28 Ranking:
2(--)
Source: Forfás Calculations; Groningen Growth & Development Centre, Total Economy Database, January 2007; United Kingdom, Office for National Statistics, 2007 [online]; Northern Ireland Department of Enterprise, Trade & Investment, Northern Ireland Labour Force Survey: Historical Supplement Spring 1984 – Spring 2006, March 2006
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Figure 3.55
Stock of Foreign Labour as a Percentage of the Total Labour Force, 200512
2005 2000
0%
5%
10%
15%
20%
25%
30%
Sw
itze
rlan
d
Aus
tral
ia
New
Zea
land US
Irel
and
20
07
Q2
OE
CD
Ger
man
y
Spa
in
Ital
y
UK
Fran
ce
Sw
eden
Den
mar
k
Net
herl
ands
Cze
ch R
ep
Finl
and
Sou
th K
orea
Japa
n
Foreign workers comprise 10.9% of the Irish labour force, more than two and a half times the level in 2000. A more detailed breakdown of Irish statistics reveals that almost half of these foreign workers are from the twelve new EU member states.
OECD-28 Ranking:
7 (h2)
Source: Forfás Calculations; Central Statistics Office Labour Market Statistics; OECD, International Migration Outlook, 2007
Figure 3.56
Participation Rates of 15-64 Population in the Workforce, by Gender, 2006
Total Female
0
10
20
30
40
50
60
70
80
90
Sw
itze
rlan
d
Sw
eden
Den
mar
k
New
Zea
land UK
Net
herl
ands
(2
00
4)
Ger
man
y
Finl
and
OE
CD
Japa
n
Spa
in
Irel
and
Fran
ce
Sou
th K
orea
Pol
and
Ital
y
Hun
gary
This chart displays total and female participation rates in 2006. Participation rates in Ireland have increased steadily in recent years. They are converging on the OECD average, but the gap between female participation in Ireland and leading countries such as Switzerland and Sweden remains considerable.
OECD-28 Ranking:
Overall: 18(h2) Males: 15(h1) Females: 17(h5)
Source: Forfás Calculations; OECD, Employment Outlook 2007
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ional
Com
pet
itiv
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s C
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l Figure 3.57
Unemployment, Standardised Rates, 2000 and 200613
20002006
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%S
outh
Kor
ea
Sw
itze
rlan
d
New
Zea
land
Den
mar
k
Net
herl
ands
Japa
n
US
Irel
and
UK
OE
CD
Ital
y
Sw
eden
Hun
gary
Finl
and
Ger
man
y
Spa
in
Fran
ce
Pol
and
Unemployment remains low in Ireland, below the OECD average and many of the larger economies in the EU. A number of OECD countries have recorded higher unemployment rates since 2000, causing Ireland’s ranking to improve marginally.
OECD-28 Ranking:
8(h1)
Source: Forfás Calculations; OECD, Employment Outlook 2007
Figure 3.58
Regional Unemployment, 2004 and 2007, Ireland and Northern Ireland Lo
wer
Une
mpl
oym
ent
Hig
her
Une
mpl
oym
ent
2007Q2
2004Q2
-1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5%
Mid West
Border
South East
West
Midlands
Dublin
Mid East
South West
Northern Ireland
Difference in Unemployment Rate, compared to National Average (2004: 4.4%, 2007: 4.5%)
In the second quarter of 2007, unemployment was lowest in the South West, Mid East, Dublin and Midlands regions. Unemployment levels in the West region are now above the national average and the Mid West region now has the highest unemployment rate in the country. Northern Ireland has made strong progress.
Ranking:
N/A
Source: Forfás Calculations; Central Statistics Office, Quarterly National Household Survey Data, 2000-2007; Northern Ireland Department of Enterprise, Trade & Investment, Monthly Labour Market Report, September 2007
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Figure 3.59
Average Hours Worked per Person Employed per Year
1,500
1,600
1,700
1,800
1,900
2,000
20
00
20
01
20
02
20
03
20
04
20
05
20
06
USIreland OECDNEU-12 EU-15
Average hours worked per person in Ireland have declined gradually since 2000 and remain below the OECD average for the entire 2000-2006.
OECD-28 Ranking:
12(h2)
Source: Forfás Calculations; Groningen Growth & Development Centre, Total Economy Database, January 2007
Figure 3.60
Number of Persons of Working-Age per Dependent, 200614
2005 2015
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Spa
in
Sou
th K
orea
Irel
and
Pol
and
Hun
gary
New
Zea
land
Finl
and
OE
CD
Ital
y
Nor
way
Net
herl
ands
Ger
man
y
Fran
ce
Japa
n
Den
mar
k
US
Sw
eden UK
Economies with higher ratios of workers to dependents (children and retirees) are able to fund their social services more easily. Ireland’s population is favourably structured, due to a peak in births in 1980. Projections for 2015 suggest there may be a slight decline in the ratio.
OECD-28 Ranking:
8(i3)
Source: Forfás Calculations; OECD, Labour Force Statistics 2007 (online); UN, Human Development Report 2006
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61
Sustainable
Growth
Essential
Conditions
PolicyInputs
Business
Environment
Physical
Infrastructure
Knowledge
Infrastructure
Policy Inputs4
Ann
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4. Policy Inputs
4.1 Business Environment
The business environment can have a significant impact on a country’s economic performance and
competitiveness. In this section, indicators that illustrate Ireland’s relative performance on taxation,
regulation and competition, labour market regulations, finance and social capital are assessed.
Chart 6 provides an overview of Ireland’s recent performance in terms of key business environment
indicators.
Summary Chart 6:
Rankings in Indicators of Business Environment, 2000-2006 (or nearest)
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
Str
ong
Ran
king
Wea
k R
anki
ng
Corp
orat
ion
Tax/
GNP
(4.0
5)
Tax
Wed
ge o
n La
bour
(4.
06)
Leve
l of R
egul
atio
n (4
.11)
Cost
of S
tart
ing
a Bu
sine
ss (
4.12
)
No.
of P
roce
dure
s to
Sta
rt
a Bu
sine
ss (
4.12
)
Mar
ket S
hare
of L
arge
st
Elec
tric
ity G
ener
ator
(4.
13)
Mar
ket S
hare
of I
ncum
bent
in
Inte
rnat
iona
l Tel
epho
ne C
alls
(4.
14)
Com
petit
ion
Legi
slat
ion
(4.1
5)
Prod
uct M
arke
t Leg
isla
tion
(4.1
6)
Labo
ur R
egul
atio
n (4
.17)
Rigi
dity
of E
mpl
oym
ent I
ndex
(4.
18)
Capi
tal A
cces
s In
dex
(4.2
0)
Priv
ate
Equi
ty In
vest
men
t/GN
P (4
.21)
Mem
ber
of a
t Lea
st O
ne C
ivil
Soci
ety
Orga
nisa
tion
(4.2
2)
Publ
ic T
rust
in P
oliti
cal
Inst
itutio
ns (
4.23
)
Publ
ic T
rust
in S
ocia
l In
stitu
tions
(4.
24)
Impa
ct o
f Leg
al C
ontr
ibut
ions
to P
oliti
cal
Part
ies
on P
ublic
Pol
icy
(4.2
5)
LHS = 2000 RHS = 2006
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Taxation
Overall, tax revenues in Ireland as a proportion of income are above the OECD average (Fig. 4.01).
Ireland’s tax structure is much less dependent on social security contributions than elsewhere in Europe,
raising Government revenues instead from direct and indirect taxation (Fig. 4.02, 4.07). Nonetheless,
taxes on both capital (profits) and labour (wages) are low relative to other countries, while the tax take
from corporations is above the OECD average (Fig. 4.03-4.06). Indirect taxation rates are amongst the
highest in the OECD (Fig. 4.08), which influences consumer prices and tourism. Tax revenues from
property are in line with the OECD average, although they come from taxes on transactions rather than
taxes on assets (Fig. 4.09). Lastly, Ireland does not tax pollution directly, unlike some other countries
(Fig. 4.10).
Regulation and Competition
Both overall regulatory levels and regulatory impediments to product market competition in Ireland are
perceived to be lower than the OECD average, although perceived regulatory levels have increased in
recent years (Fig. 4.11, 4.16). Nonetheless, the financial and administrative costs of starting a business
in Ireland are small compared to other countries (Fig. 4.12). In relation to domestic competition, while
the legislation is perceived to be efficient, incumbents still dominate the market in certain utilities - in
particular, the electricity and communications markets (Fig. 4.13-4.15).
Labour Market
Labour market regulations are perceived to be increasing in Ireland, with the employment framework here
considerably less flexible than economies such as the UK and Denmark (Fig. 4.17, 4.18). The minimum
wage in Ireland is the fourth highest in the OECD (Fig. 4.19).
Finance
Overall, access to capital in Ireland is not perceived to be a significant barrier to enterprise (Fig. 4.20). In
the Milken Institute’s Capital Access Index, Ireland ranked 9th place globally in 2006, an improvement of
8 places since 2000. However, private equity investment is not well developed in Ireland (Fig. 4.21).
Social Capital
Membership of civil society organisations increased in Ireland between 1990 and 2000 (Fig. 4.22).
The public’s trust in social and political institutions, while falling, still compares favourably with other
countries (Fig. 4.23, 4.24). Finally, when surveyed, more Irish executives believe that legal contributions
to political parties have a direct influence on specific public policy outcomes than in all but two other
countries in the EU-15 (Fig. 4.25).
Ann
ual C
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ional
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Business Environment
4.1.1 Taxation
Figure 4.01
Total Tax Revenue (% GDP), 2005
Sout
h K
orea
Japa
n
US
Switz
erla
nd
Irel
and
GD
P
OEC
D
Pola
nd (
2004
)
Ger
man
y
Spai
n
Irel
and
GN
P
New
Zea
land
Hun
gary UK
Net
herla
nds
(200
4)
Ital
y
Fran
ce
Finl
and
Den
mar
k
Swed
en
0%
10%
20%
30%
40%
50%
60%2005 2000
Ireland’s tax take, as a proportion of its income (GNP) is above the OECD average. Total tax revenue taken as a percentage of GDP has remained relatively stable across the OECD since 2000.
OECD-28 Ranking:
GDP: 6 (h1)
GNP: 14 (h1)
Source: OECD, Revenue Statistics 1965-2005
Figure 4.02
Breakdown of Tax Revenue, 2005
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Direct Indirect Social Security Tax
42.4%
40.5%
38.7%
38.7%
34.6%
32.9%
30.7%
30.4%
25.9%
25.8%
23.6%
20.2%
34.2%
32.0%
42.1%
33.3%
34.5%
35.6%
34.0%
33.5%
34.4%
30.0%
40.9%
40.2%
23.4%
27.5%
19.2%
28.1%
30.9%
31.4%
35.3%
36.1%
39.7%
44.2%
35.5%
39.6%
UK
Finland
Ireland
Sweden
EU15
Italy
Spain
Netherlands
France
Germany
Hungary
Poland
Ireland’s tax structure is less dependent on social security contributions than other economies. There is a relatively even split between direct and indirect taxes, reflecting a policy to reduce taxes on factors of production – i.e. workers and firms.
Ranking:
N/A
Source: Eurostat, Statistics in Focus 31/2007
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Figure 4.03
Top Standard Tax Rate on Corporate Income (%), 2000-200615
2000
2001
2002
2003
2004
2005
2006
2007
Ireland EU 15EU 27 NEU 12
0%
5%
10%
15%
20%
25%
30%
35%
40%
The average top rate of corporation tax in the EU has continued its declining trend as economies seek to create attractive investment environments. At 12.5 percent, Ireland has the third lowest rate in the EU-27.
EU-15 Ranking:
1 (--)
Source: Eurostat, Taxation Trends in the European Union
Figure 4.04
Effective Average Tax Rate on Companies (%), 2005
36.1%
36.0%
34.8%
32.0%
32.0%
28.9%
28.5%
25.2%
24.8%
24.6%
17.9%
14.7%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Ireland
Hungary
Finland
Sweden
Denmark
Netherlands
UK
Italy
EU 15
France
Germany
Spain
These estimates measure the burden on a hypothetical investment project, taking into account the existing tax rules in each country. It includes corporate tax rates on income, taxes on capital and local taxes (where applicable). This rate fell in six of the EU-15 countries in 2005 reflecting a downward trend.
EU-15 Ranking:
1
Source: CESifo, The Effective Tax Burden of Companies in Europe, DICE Report 4/2005, Michael Overesch
Ann
ual C
ompe
titi
vene
ss R
epor
t 2
00
7 V
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ional
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s C
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Figure 4.05
Corporation Tax Receipts as a Percentage of GDP, 2004
0%
1%
2%
3%
4%
5%
6%
7%N
ew Z
eala
nd
Irel
and
GN
P
Japa
n
Finl
and
Irel
and
GD
P
Sou
th K
orea
Spa
in
Sw
eden
Den
mar
k
Net
herl
ands UK
OE
CD
Ital
y
US
Hun
gary
Pol
and
Ger
man
y
2004 2000While Ireland’s corporation tax rates are low, Ireland earns more in corporation tax payments as a percentage of GNP or GDP than most other OECD countries.
OECD-28 Ranking:
GDP: 8 (h4)
GNP: 6 (--)
Source: OECD, Revenue Statistics 1965-2005
Figure 4.06
Total Tax Wedge on Labour (% of Average Earnings), 2006
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Irel
and
Sou
th K
orea
New
Zea
land US
Sw
itze
rlan
d
Japa
n
UK
OE
CD
Den
mar
k
Spa
in
Finl
and
Net
herl
ands
Ital
y
Hun
gary
Pol
and
Sw
eden
Fran
ce
Ger
man
y
2006 2000
Ireland’s tax wedge on labour, i.e. the gap between what the employer pays and what the employee receives has fallen since 2000. Ireland’s tax wedge is now the smallest in the OECD and is less than half the OECD average.
OECD-28 Ranking:
1 (h5)
Source: OECD Taxing Wages 2005/2006
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Figure 4.07
Social Contributions Received by Government (% GDP) 2006
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Fran
ce
Ger
man
y
Net
herl
ands
Sw
eden
EU
15
Pol
and
Spa
in
Ital
y
Hun
gary
Finl
and
UK
Irel
and
GN
P
US
(2
00
4)
Irel
and
GD
P
Den
mar
k
2006 2000Social contributions are paid by workers to social security funds – typically run by governments – in return for entitlement to social benefits. Contributions by Irish workers are about half EU-15 levels.
EU-15 Ranking:
GDP: 15 (i1)
GNP: 14 (i1)
Source: European Commission, AMECO, General Government Data, February 2007
Figure 4.08
Value Added Tax, Standard Rate, 200616
0%
5%
10%
15%
20%
25%
30%
Japa
n
Sw
itze
rlan
d
Sou
th K
orea
New
Zea
land
OE
CD
Ger
man
y
Spa
in UK
Net
herl
ands
Fran
ce
Hun
gary
Ital
y
Pol
and
Irel
and
Finl
and
Den
mar
k
Sw
eden
2006 2000The main source of indirect tax revenues for all countries is a sales or value added tax on consumption. While they are less likely to affect incentives to work or invest, they can be regressive. They can also discourage tourism. Irish VAT rates are amongst the highest in the benchmarked countries.
OECD-28 Ranking:
19(i1)
Source: OECD, Revenue Statistics 1965-2005
Ann
ual C
ompe
titi
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ss R
epor
t 2
00
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Figure 4.09
Property Tax Receipts as a Percentage of GDP, 2005
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%G
erm
any
Hun
gary
Finl
and
Pol
and
(20
04
)
Sw
eden
Den
mar
k
New
Zea
land
Ital
y
Net
herl
ands
Irel
and
GD
P
Sw
itze
rlan
d
OE
CD
Irel
and
GN
P
US
Spa
in
Sou
th K
orea
Fran
ce UK
20002005 Ireland’s tax take from property is close to the OCED average. The major component of property tax revenue in Ireland is stamp duty, which is dependent on property transactions. Other components include capital gains tax and capital acquisitions tax.
OECD-28 Ranking:
GDP: 17 (i5) GNP: 22 (i6)
Source: OECD Revenue Statistics 1965 - 2005
Figure 4.10
Use of Environmental Taxes by Type (as % of Total Tax Revenue), 200417
0%
2%
4%
6%
8%
10%
12%
Net
herl
ands
Den
mar
k
Slo
veni
a
Irel
and
EU
15
Finl
and
UK
Pol
and
Ital
y
Ger
man
y
Spa
in
Sw
eden
Fran
ce
Energy Transport Pollution
Overall, Ireland collects a relatively large proportion of its tax revenue from environmental sources, but Ireland does not tax pollution, as some other countries do. Ireland’s share of revenues from energy is also below the EU average.
EU-15 Ranking:
4 (i1)
Source: Forfás Calculations; Eurostat, Economy and Finance Indicators, 2006 [online]
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4.1.2 Regulation and Competition
Figure 4.11
Level of Regulation, 2007 (Scale 1-7)18
1
2
3
4
5
6
7
Sin
gapo
re
Finl
and
Sw
itze
rlan
d
Sou
th K
orea
Japa
n
Den
mar
k
Irel
and
US
OE
CD
New
Zea
land UK
Sw
eden
Net
herl
ands
Ger
man
y
Spa
in
Pol
and
Hun
gary
Fran
ce
Ital
y
Low
Lev
elof
Reg
ulat
ion
Hig
h Le
vel o
f R
egul
atio
n
2007 2001The overall level of regulation in Ireland is among the lowest in the OECD. Regulation levels are increasing in most countries, including Ireland. Denmark, Japan and South Korea have reduced perceived regulatory levels since 2001.
OECD-28 Ranking:
9(i4)
Source: WEF Global Competitiveness Report 2007/08
Figure 4.12
Cost of Starting a Business and the Number of Procedures Involved, 200619
0
5
10
15
20
25
0 2 4 6 8 10 12 14
Number of Procedures
Hungary
Spain
Poland
ItalySouth Korea
JapanNetherlands
Germany
FranceUKUSIreland
Sweden
Cos
t (%
Gro
ss N
atio
nal I
ncom
e pe
r ca
pita
)
This chart shows both the financial costs of establishing a business and the number of procedures required. Ireland ranks well on both measures, particularly on financial costs.
OECD-28 Ranking:
Cost: 3 (h11)
Procedures: 7 (--)
Source: World Bank, Doing Business, 2006 [online]
Ann
ual C
ompe
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ss R
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00
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ional
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itiv
enes
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Figure 4.13
Market Share of Largest Generator in the Electricity Market, 200520
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fran
ce
Irel
and
Sw
eden
EU
15
Hun
gary
Ital
y
Spa
in
Den
mar
k
Ger
man
y (2
00
3)
Finl
and
UK
Pol
and
2005 2000
The Irish electricity market is undergoing reform, but despite progress it remains highly concentrated, with the incumbent having a larger share than its average EU counterpart. This may be partially explained by our limited market size and limited international connectivity.
EU-15 Ranking:
9(h4)
Source: Eurostat, General and Regional Indicators, 2007 [online]
Figure 4.14
Market Share of Incumbent in International Telephone Calls, 200421
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hun
gary
Ger
man
y
Pol
and
Irel
and
Spa
in
Fran
ce
Ital
y
EU
15
UK
Net
herl
ands
Finl
and
Sw
eden
(2
00
3)
2004 2002
This chart shows the market share of the incumbent in the market for international phone calls. While, the Irish telecommunications market is open to competition, the largest player in the market still dominates, with almost 70 percent of the market.
EU-15 Ranking:
9(h2)
Source: Eurostat, General and Regional Indicators, 2007 [online]
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Figure 4.15
Efficiency of Competition Legislation, 2007 (Scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Eff
icie
nt L
egis
lati
on
Den
mar
k
Net
herl
ands
Sin
gapo
re
New
Zea
land
Finl
and
Sw
itze
rlan
d
Ger
man
y
Fran
ce
Sw
eden UK
Japa
n
US
OE
CD
Irel
and
Hun
gary
Spa
in
Ital
y
Sou
th K
orea
Pol
and
Inef
fici
ent
Legi
slat
ion
2007 2000Competition can boost productivity and reduce prices for consumers and other businesses. According to executives, Ireland’s competition legislation is perceived as slightly less efficient than the average OECD economy.
OECD-28 Ranking:
19 (i10)
Source: IMD World Competitiveness Yearbook, 2007 [online]
Figure 4.16
Product Market Regulation, 2003 (Scale 0-6)22
0
1
2
3
4
5
6
Mos
t R
estr
icti
veLe
ast
Res
tric
tive
UK
US
Irel
and
Den
mar
k
New
Zea
land
Sw
eden
Japa
n
Fina
lnd
Net
herl
ands
OE
CD
Ger
man
y
Sou
th K
orea
Spa
in
swit
zerl
and
Fran
ce
Ital
y
Hun
gary
Pol
and
2003 1998
This measure captures the degree to which policies promote or inhibit competition in product markets. Regulatory impediments to product market competition declined throughout the OECD between 1998 and 2003. Ireland, along with the UK and US, has one of the most liberalised environments.
OECD-28 Ranking:
5 (h2)
Source: OECD, Going for Growth, 2006
Ann
ual C
ompe
titi
vene
ss R
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t 2
00
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ional
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itiv
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4.1.3 Labour Regulation
Figure 4.17
Labour Market Regulations, 2007 (Scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Faci
litat
e B
usin
ess
Hin
der
Bus
ines
s
Sin
gapo
re
Den
mar
k
Sw
itze
rlan
d
Hun
gary US
Irel
and
UK
Japa
n
OE
CD
Finl
and
Net
herl
ands
New
Zea
land
Sw
eden
Spa
in
Ital
y
Ger
man
y
Sou
th K
orea
Pol
and
Fran
ce
2007 2000According to executive opinion, labour market regulations in Ireland are not believed to have a significant impact upon business activities but the trend for most countries, including Ireland, is one that is increasingly impacting on business activities.
OECD-28 Ranking:
9 (--)
Source: IMD World Competitiveness Yearbook, 2007 [online]
Figure 4.18
Rigidity of Employment Index, 2006 (Scale 0-100)23
0
10
20
30
40
50
60
70
Mor
e R
igid
Less
Rig
id
US
New
Zea
land UK
Den
mar
k
Switz
erla
nd
OEC
D
Japa
n
Pola
nd
Irel
and
Sout
h K
orea
Hun
gary
Net
herla
nds
Swed
en
Ger
man
y
Finl
and
Ital
y
Fran
ce
Spai
n
2006 2005
This index measures the flexibility of employment regulation. Higher values indicate more rigid regulation. Ireland’s employment framework is more rigid than the OECD average and significantly more rigid than economies such as the UK, Denmark and Switzerland.
OECD-28 Ranking:
12 (i1)
Source: World Bank, Doing Business, 2006 [online]
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Figure 4.19
Hourly Minimum Wages US$, 200624
$0
$2
$4
$6
$8
$10
$12
Net
herl
ands
Fran
ce UK
Irel
and
New
Zea
land
OE
CD
19
(ave
rage
)
Japa
n
US
Spa
in
Sou
th K
orea
Por
tuga
l
Hun
gary
Pol
and
$
2006 2000Ireland’s minimum wage is relatively high compared to nineteen other OECD countries. However, by 2004 only 3.1 percent of full time employees were on the minimum wage in Ireland.
Ranking of 19:
4(i1)
Source: OECD, National Accounts Database, 2007
4.1.4 Finance
Figure 4.20
Capital Access Index, 2006 (Scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Bet
ter
Wor
se
Sin
gapo
re UK
US
Sw
itze
rlan
d
Net
herl
ands
Irel
and
Sw
eden
OE
CD
Finl
and
Den
mar
k
Ger
man
y
New
Zea
land
Japa
n
Sou
th K
orea
Fran
ce
Spa
in
Hun
gary
Ital
y
Pol
and
2006 2000
This index measures the breadth, depth and vitality of capital markets. Efficient financial markets by making capital accessible to entrepreneurs are key to long-term growth. Ireland ranks in 7th place in the OECD, an improvement of 4 places since 2000.
OECD-28 Ranking:
7(h4)
Source: Milken Institute’s Capital Access Index, 2006
Ann
ual C
ompe
titi
vene
ss R
epor
t 2
00
7 V
olum
e 1
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ional
Com
pet
itiv
enes
s C
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Figure 4.21
Private Equity Investment, including High-Tech Investment (% of GDP), 2004/0525
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%U
K
Sw
eden
Den
mar
k
Net
herl
ands
EU
15
Fran
ce
Spa
in
Ital
y
Finl
and
Ger
man
y
Irel
and
%G
NP
Irel
and
%G
DP
Pol
and
Hun
gary
High-Tech Investment 2004 Private Equity Investment 2005Private equity investment is formal investment outside public capital markets and represents total start up, expansion, turnaround and buyout investments. Private equity investment is not well developed in Ireland.
EU-15 Ranking:
GDP: 12(i2)
GNP: 11(i3)
Source: Forfás Calculations; European Venture Capital Association (EVCA)/Thompson;PricewaterhouseCoopers, European Technology Investment Report, 2005
Figure 4.22
Percentage of the Population that is a Member of at Least One Civil
Society Organisation 1990-200026
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hig
h Le
vel
Low
Le
vel
Icel
and
Net
herl
ands
Den
mar
k
US
(1
99
0)
Bel
gium
Can
ada
(19
90
)
Gro
up A
vera
ge
Irel
and
Ger
man
y
N.I
rela
nd
Ital
y
Fran
ce
2000 1990
Social capital refers to trust between actors in society. One summary measure of this is the proportion of the population that is a member of at least one civil society organisation (e.g. youth work, human rights). The proportion increased slightly in Ireland between 1990 and 2000, but lies well below countries such as Iceland and the Netherlands.
Group Ranking of 11
7(h3)
Source: World Values Survey,1980- 2000
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4.1.5 Social Capital
Figure 4.23
Public Trust in Political Institutions 1990-200027
0%
10%
20%
30%
40%
50%
60%
70%
Icel
and
Den
mar
k
Irel
and
Net
herla
nds
Ger
man
y
N.I
rela
nd
Hun
gary
UK
Gro
up A
vera
ge
Bel
gium Ital
y
US
Cana
da
Fran
ce
Sou
th K
orea
Japa
n
Low
Lev
elH
igh
Leve
l 19902000
Trust in political institutions (parliament, civil service and the judiciary) fell in most countries between 1990 and 2000. This was also true of Ireland; however the fall was not as marked as most.
Group Ranking of 15
3(h4)
Source: World Values Survey, 1980-2000
Figure 4.24
Public Trust in Social institutions 1990-200028
Sou
th K
orea
Icel
and
Net
herl
ands US
Den
mar
k
Gro
up A
vera
ge
Can
ada
Irel
and
Ital
y
Japa
n
Fran
ce
Ger
man
y
N.I
rela
nd
Bel
gium
Hun
gary
UK
0%
10%
20%
30%
40%
50%
60%
70%
Low
Lev
elH
igh
Leve
l 19902000Social institutions, including the media, religious organisations and trade unions, are important parts of civil society. Irish people’s trust in these institutions fell by almost 10% to 44% although it still remains above the group average.
Group Ranking of 15
6(i3)
Source: World Values Survey, 1980-2000
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ual C
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Figure 4.25
Impact of Legal Contributions to Political Parties on Public Policy 2006,
Scale (1-7)29
1
2
3
4
5
6
7
Sing
apor
e
Net
herla
nds
Den
mar
k
Finl
and
Swed
en
Ger
man
y
Fran
ce UK
Japa
n
OEC
D
Sout
h K
orea
Irel
and
Pola
nd
Hun
gary
Ital
y
US
Wea
k Im
pact
Stro
ng I
mpa
ct
20012006
When surveyed, more executives based in Ireland believed that legal contributions to political parties have a direct influence on specific public policy outcomes than in all but two other countries in the EU-15.
OECD-28 Ranking:
20(h6)
Source: WEF Global Competitiveness Report, 2006/07
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4.2 Physical Infrastructure
The level of infrastructure in a country affects competitiveness in a number of ways. Well developed
infrastructure can reduce traffic congestion, increase productivity and reduce costs. This not only affects
existing firms, but also affects a country’s attractiveness as an investment location and general quality of life.
In this section, indicators that illustrate Ireland’s relative performance are grouped under four headings;
Investment in Physical Infrastructure, ■■
Transport and Energy Infrastructure, ■■
Information and Communications Technology Infrastructure, and ■■
Housing.■■
Chart 7 provides an overview of Ireland’s recent performance in terms of key infrastructure indicators.
Summary Chart 7:
Rankings in Indicators of Physical Infrastructure, 2000-2006 (or nearest)
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
Str
ong
Ran
king
Wea
k R
anki
ng
Hou
sing
C
ompl
etio
ns (
4.4
1)
Gov
ernm
ent
Inve
stm
ent/
GD
P (
4.2
8)
Gov
ernm
ent
Inve
stm
ent/
GN
P (
4.2
8)
Ove
rall
Infr
astr
uctu
re Q
ualit
y (4
.29
)
Dis
trib
utio
n In
fras
truc
ture
(4
.30
)
Qua
lity
of A
ir
Tran
spor
tati
on (
4.3
2)
Por
t In
fras
truc
ture
Q
ualit
y (4
.33
)
Ene
rgy
Infr
astr
uctu
re (
4.3
4)
ICT
Exp
endi
ture
/ G
DP
(4
.37
)
ICT
Exp
endi
ture
/ G
NP
(4
.37
)
Per
cent
age
of
Hou
seho
lds
wit
h B
road
band
(4
.38
)
Per
cent
age
of
Ent
erpr
ises
wit
h B
road
band
(4
.39
)
E-G
over
nmen
t Av
aila
bilit
y (4
.40
)
Hou
sing
Sto
ck
(4.4
1)
Hou
seho
ld
Bor
row
ing
(4.4
3)
LHS = 2000 RHS = 2006
Investment in Physical Infrastructure
Public capital stock as a proportion of output in Ireland has fallen steadily since the late 1980s as the
economy has grown (Fig. 4.26). Overall, perceptions of infrastructure quality remain very low (Fig. 4.29), and
despite real improvements to date, Ireland’s rankings have fallen across a number of categories since 2001.
Through successive National Development Plans, Ireland’s investment rates - the rate at which new public
capital stock is formed - are among the highest in the EU-15 (Fig. 4.28).
Transport and Energy Infrastructure
Ireland’s distribution networks rank poorly internationally, with peak speeds in Dublin well below most other
cities surveyed (Fig. 4.30, 4.31). Air and seaport infrastructure also scores poorly, highlighting the need
for ongoing investment to improve Ireland’s performance (Fig. 4.32, 4.33). In energy, the perceptions of
enterprise about the efficiency of energy infrastructure have weakened across many countries since 2002.
Ireland’s energy infrastructure again scores poorly (Fig: 4.34). Ireland is particularly dependent on imported
and non-renewable forms of energy (Fig. 4.35).
Ann
ual C
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Information and Communication Technology Infrastructure
Ireland’s investments in both information and communications technologies are below the EU-15 average, and lags
leading countries by some distance (Fig. 4.37). Related to this, the penetration rate of broadband in both households
and firms in Ireland is well below the EU-15 average (Fig. 4.38, 4.39). At government level, the proportion of public
services available online is below that of the EU-15 average (Fig. 4.40).
Housing
There are two aspects to housing that are relevant to competitiveness: infrastructure/activity and costs/debt. In
relation to relative levels of housing, Ireland has fewer houses per capita than the EU-15 average (Fig. 4.41). This
gap is narrowing quickly as household completions per capita are by far the highest in the EU. Housing activity is
slowing, however, with the number of planning permissions peaking in 2004 (Fig. 4.42).
In relation to costs and debt, house prices have increased dramatically since the mid-1990s (Fig. 4.44). As a result
household borrowing, almost four-fifths of which is for house purchase, more than doubled between 2003 and 2007.
The average Irish person is almost e35,000 in debt by 2007 (Fig. 4.43). The value of Irish housing stock (over
E500 billion) significantly outweighs mortgage debt (E118.5 billion). However, a disproportionately large part of the
debt is borne by recent entrants to the housing market.
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Physical Infrastructure
4.2.1 Investment in Physical Infrastructure
Figure 4.26
Ireland’s Public Capital Stock as a % of GDP and per Person (2003 prices) 2004
Per
cent
age
GD
P/G
NP
Thou
sand
Eur
os p
er p
erso
n
20
30
40
50
60
70
80
90
100
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
8
9
10
11
12Per person Thousand � Ratio to GNP % Ratio to GDP % This indicator
measures the level of public capital stock (e.g. roads, railways, airports, schools, etc.) relative to national income and per person. Since 2000, the level of public capital stock per person has grown due to high rates of investment in infrastructure.
Ranking:
N/A
Source: OECD (2005), Economic Outlook 78 database and Kemps, C. (2004), “New Estimates of Government Net Capital Stocks for 22 OECD Countries: 1960-2001”, IMF Working Paper
Figure 4.27
Public Capital Stock per Person in Thousand E, 2004
8.0
8.1
10.3
10.5
10.5
11.3
11.4
12.0
12.3
12.8
13.3
14.0
14.4
14.4
15.6
17.2
17.6
17.9
19.1
19.6
19.9
38.5
0 5 10 15 20 25 30 35 40 45
Portugal
Greece
Spain
UK
Ireland
Belgium
Australia
Sweden
Canada
Italy
Finland
Norway
Denmark
Germany
France
Netherlands
New Zealand
Austria
OECD
Switzerland
US
JapanLevels of public capital stock per person in Ireland compare poorly with other countries, with the estimated amount just over half the OECD average. Ireland’s poor ranking is a result of underinvestment in the past and strong population growth in recent years.
OECD-28 Ranking:
17
Source: OECD (2005), Economic Outlook 78 database and Kemps, C. (2004), “New Estimates of Government Net Capital Stocks for 22 OECD Countries: 1960-2001”, IMF Working Paper
Ann
ual C
ompe
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ss R
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t 2
00
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ional
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Figure 4.28
General Government Gross Fixed Capital Formation (% GDP), 2005
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
20002005Ir
elan
d G
NP
Spa
in
Irel
and
GD
P
Hun
gary
Fran
ce
Pol
and
Sw
eden
Net
herl
ands
Finl
and
EU
15
Ital
y
UK
Den
mar
k
Ger
man
y
The 2000-2006 National Development Plan resulted in higher levels of investment in gross fixed capital formation (% of GNP) in Ireland than in other countries. The new National Development Plan (2007-2013) commits to sustained investment.
EU-15 Ranking:
GDP: 5 (--)
GNP: 2 (i1)
Source: Eurostat, Structural Indicators
Figure 4.29
Overall Infrastructure Quality, 2007 (Scale 1-7)30
1
2
3
4
5
6
7
Switz
erla
nd
Ger
man
y
Sing
apor
e
Fran
ce
Den
mar
k
Finl
and
US
Swed
en
Japa
n
Net
herla
nds
OEC
D
Sout
h K
orea UK
Spai
n
New
Zea
land
Hun
gary
Irel
and
Ital
y
Pola
nd
Hig
hly
Deve
lope
dPo
or Q
ualit
y
20012007
Measuring the quality of infrastructure across countries is difficult.This chart shows executive perceptions regarding overall quality of infrastructure in an economy. Ireland’s score is improving slowly relative to the OECD average.
OECD-28 Ranking:
25 (--)
Source: WEF Global Competitiveness Report 2007/08
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4.2.2 Transport and Energy Infrastructure
Figure 4.30
Efficiency of Distribution Infrastructure, 2007 (Scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Effic
ient
Non
-Eff
icie
nt
Sin
gapo
re
Den
mar
k
Sw
itze
rlan
d
Ger
man
y
US
Sw
eden
Finl
and
Fran
ce
Net
herl
ands
OE
CD
Japa
n
Sou
th K
orea
Hun
gary
New
Zea
land
Spa
in UK
Pol
and
Irel
and
Ital
y
2006 2000
This chart shows executives’ perceptions of Ireland’s distribution infrastructure, including road, rail, air and sea transport. While Ireland continues to rank poorly – among the weakest in the OECD - there has been an improvement since 2000.
OECD-28 Ranking:
27 (i1)
Source: IMD World Competitiveness Yearbook, 2007 [online]
Figure 4.31
Average Peak Hour Speeds in Major Cities (KM/ Per Hour), 2002/3
14.5
15
16.5
18
19
20
22
22.3
22.8
24
26
27
28
32.6
36
40
0 5 10 15 20 25 30 35 40 45
(KM/PH)
UK-Bristol (2000)
UK-London
Ireland- County Dublin
UK-Oxford
Scotland-Glasgow
Poland-Warsaw
Austria-Vienna
Hungary-Budapest
Spain-Madrid
Belgium-Brussels (2001)
Netherlands-Rotterdam
Nothern Ireland-Belfast
Denmark-Copenhagen
Romania-Bucharest (2000)
Finland-Helsinki
Germany-CologneA possible measure of transport congestion in our main cities and regions is the average peak-hour speeds of cars and motorcycles in these cities. Dublin is ranked 28th out of 30 cities and regions on this measure. The Irish car speed data is taken from the Dublin Transport Office. It should be noted that Dublin refers to car speeds only.
Ranking of 16:
14
Source: Urban Transport Benchmarking Initiative [online] / Dublin Transportation Office
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ual C
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Figure 4.32
Quality of Air Transportation, 2007 (Scale 0-10)31
1
2
3
4
5
6
7
8
9
10
Enc
oura
ges
Bus
ines
sD
eter
s B
usin
ess
Sin
gapo
re
Ger
man
y
Sw
itze
rlan
d
Den
mar
k
Net
herl
ands US
Sw
eden
Sou
th K
orea
Finl
and
New
Zea
land
Fran
ce
OE
CD
Hun
gary
Japa
n
UK
Spa
in
Irel
and
Pol
and
Ital
y
2007 2002
This chart measures executives’ perceptions of the quality of Ireland’s air transportation infrastructure. Ireland scores poorly, although the score is improving. A second terminal at Dublin airport, due to open in 2009, should improve Ireland’s score.
OECD-28 Ranking:
25 (--)
Source: IMD World Competitiveness Yearbook, 2007 [online]
Figure 4.33
Port Infrastructure Quality, 2007 (Scale 1-7)32
Dev
elop
edU
nder
deve
lope
d
1
2
3
4
5
6
7
Sing
apor
e
Net
herla
nds
Ger
man
y
Den
mar
k
Finl
and
Fran
ce
Swed
en US
OEC
D
Japa
n
Switz
erla
nd
Sout
h K
orea
New
Zea
land UK
Spai
n
Irel
and
Hun
gary
Pola
nd
Ital
y
2007 2001
Ireland’s seaport infrastructure also lags our economic peer group. Based on a survey of enterprise perceptions, Ireland ranks among the lowest in the OECD. Ireland’s score has not changed significantly since 2001.
OECD-28 Ranking:
25(i3)
Source: WEF Global Competitiveness Report 2007/08
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Figure 4.34
Efficiency of Energy Infrastructure, 2007 (Scale 0-10)33 E
ffic
ient
Inad
equa
te
0
1
2
3
4
5
6
7
8
9
10
Sin
gapo
re
Sw
itze
rlan
d
Den
mar
k
Fran
ce
Ger
man
y
Net
herl
ands
Japa
n
Sou
th K
orea
Finl
and
Hun
gary
OE
CD
US
Sw
eden UK
Spa
in
Pol
and
New
Zea
land
Irel
and
Ital
y
2007 2002
The perceptions of enterprise about the efficiency of energy infrastructure have weakened across many countries since 2002. This includes Ireland, which ranks among the weakest in the OECD.
OECD-28 Ranking:
27 (i3)
Source: IMD World Competitiveness Yearbook, 2007 [online]
Figure 4.35
Fuel Mix for Electricity Generation, 200434
Coal Gas OilRenewables Nuclear Other
New
Zea
land
(2
00
2)
Finl
and
Por
tuga
l
Den
mar
k
Spa
in
Ital
y
Fran
ce
Ger
man
y
US
Net
herl
ands
Irel
and
UK
Sin
gapo
re
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Ireland’s energy comes predominantly from imported non-renewable resources, in particular coal and gas. Of the countries surveyed, only the UK and Singapore generated less energy from renewable resources.
Ranking of 13: (ranked by renewables)
11
Source: Forfás Calculations; International Energy Agency
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ual C
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ional
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Figure 4.36
Level of Spare Electricity Generation Capacity over Peak Demand
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%S
inga
pore
New
Zea
land
Spa
in
Ger
man
y
Net
herl
ands UK
Por
tuga
l
Fran
ce
Ital
y
Irel
and
Capa
city
mar
gin
as p
ropo
rtio
n of
pea
k de
man
d
2005 2004
This indicator shows the difference between available electricity capacity and peak demand. In Ireland, peak demand is highest in winter. Ireland has a low level of spare electricity capacity over peak demand among the benchmarked countries.
Ranking of 10:
10
Source: Forfás Electricity Benchmarking Report, 2006
4.2.3 Information and Communication Technology (ICT)
Figure 4.37
ICT Expenditure as a % of GDP, 200535
3.7%
3.2%
3.4%
3.8%
2.6%
3.1%
3.8%
3.3%
3.1%
2.7%
3.3%
5.0%
3.7%
3.4%
3.8%
5.7%
4.2%
1.2%
2.0%
1.9%
1.7%
3.4%
3.1%
2.4%
3.1%
3.4%
4.0%
3.7%
2.2%
3.9%
4.3%
4.2%
2.4%
4.4%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Greece
Italy
Spain
France
Germany
Ireland GNP
Ireland GDP
EU 15
Denmark
US
Finland
Poland
Netherlands
Switzerland
UK
Hungary
Sweden
Communications
IT
Information and communication technology (ICT) are essential to modern enterprise. Ireland’s investment in both forms of technology, particularly IT, ranks among the lowest in the EU-15.
EU-15 Ranking:
GDP: 14 (i2)
GNP: 10 (i3)
Source: Eurostat, Structural Indicators
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Figure 4.38
Percentage of Households with Broadband 200635
Net
herl
ands
Den
mar
k
Finl
and
Sw
eden UK
Ger
man
y
EU
15
Fran
ce
Spa
in
Hun
gary
Pol
and
Ital
y
Irel
and
0%
10%
20%
30%
40%
50%
60%
70%
2006 2003Broadband affects not just how enterprises work internally or with each other, but also how they interact with consumers.This chart shows the percentage of total households that use a broadband connection. Despite strong growth since 2003, Ireland continues to perform poorly.
EU-15 Ranking:
14(--)
Source: Eurostat, Information Society Indicators
Figure 4.39
Percentage of Enterprises with Broadband, 200637
Finl
and
Sw
eden
Spa
in
Den
mar
k
Net
herl
ands
EU
15
UK
Luxe
mbo
urg
Ger
man
y
Ital
y
Por
tuga
l
Hun
gary
Irel
and
Pol
and
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%2006 2002
Broadband penetration in Irish firms is among the lowest in the EU. Despite broadband growth in Ireland, Ireland’s ranking has not improved since 2003.
EU-15 Ranking:
14(--)
Source: Eurostat, Information Society Indicators
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ual C
ompe
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ss R
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t 2
00
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ional
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itiv
enes
s C
ounci
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Figure 4.40
E-Government Availability, 200638
0%
10%
20%
30%
40%
50%
60%
70%
80%
Hun
gary
Pol
and
Sw
itze
rlan
d
Sw
eden
UK
Fran
ce
Den
mar
k
Finl
and
Ital
y
EU
15
Spa
in
Net
herl
ands
Irel
and
Ger
man
y
2006 2002This indicator shows online availability of 20 basic public services i.e., for which it is possible to carry out full electronic case handling. There has been a significant decline in Ireland’s relative performance as other countries have progressed faster.
EU-15 Ranking:
11 (i8)
Source: Eurostat, Information Society Indicators
4.2.4 Housing
Figure 4.41
Total Housing Stock and Completions (Dwellings per 000 of Population), 200539
300
400
500
600
Hou
sing
Sto
ck P
er 1
00
0 o
f po
pula
tion
0
5
10
15
20
25H
ousi
ng C
ompl
etio
ns
Spa
in
Por
tuga
l
Finl
and
Sw
eden
Den
mar
k
EU
15
Ger
man
y
UK
Hun
gary
Net
herl
ands
Irel
and
Pol
and
Compared to the EU-15, Ireland is under-housed, relative to its population size. Ireland is adding to its housing stock at a rate far above any other European country. In 2006 there were approximately 90,000 house completions in Ireland.
EU-15 Ranking:
Stock 14 (h1)
Completions 1 (--)
Source: European Mortgage Federation, Hypostat, 2005
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Figure 4.42
Year-on-year Change in Planning Permissions Granted, 2003-Q1 to 2006-Q4
-40%
-20%
0%
20%
40%
60%
80%2
00
3 Q
1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
20
05
Q1
20
05
Q2
20
05
Q3
20
05
Q4
20
06
Q1
20
06
Q2
20
06
Q3
20
07
Q1
20
06
Q4
No. of permissions Area of permissions (sq-m)
While the number of housing completions remains at a very high level relative to the population, forward-looking indicators based on the number of planning permissions have pointed towards a slowdown in construction activity since 2004.
Ranking:
N/A
Source: Forfás Calculations; Central Statistics Office, Housing and Households Statistics
Figure 4.43
Household Borrowing per Capita, 2007
�0
�5,000
�10,000
�15,000
�20,000
�25,000
�30,000
�35,000
2007 2004
Ital
y
Gre
ece
Por
tuga
l
Bel
gium
Fra
nce
Aust
ria
Euro
are
a
Fin
land
Ger
man
y
Spai
n
Net
her
lands
Irel
and
Ireland’s debt per capita has increased very rapidly in recent years and Ireland is now one of the most indebted Eurozone members. Average household debt per person is almost z35,000 in 2007. 80% of this is mortgage debt, followed by consumer credit (13%). Assets values have increased also - the value of the Irish housing stock is over four times greater than mortgage debt.
Eurozone-13 ranking:
12 (i2)
Source: European Central Bank, Aggregated Balance Sheet of Euro Area Monetary Financial Institutions
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ual C
ompe
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ss R
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00
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ional
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itiv
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s C
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Figure 4.44
National House Price Index Change (%), 1997-2006
231%
176%
165%
115%
109%
95%
93%
92%
86%
81%
16%
-1%
-31%
-50% 0% 50% 100% 150% 200% 250%
Ireland
UK
Spain
France
Sweden
US
New Zealand
Denmark
Netherlands
Italy
Switzerland
Germany
Japan Excessive house price growth places upward pressure on wage demands and business costs. It also exposes the economy to greater volatility. Between 1997 and 2006, Irish house prices increased by 231 percent. There is evidence that house prices are falling in 2007.
OECD-28 Ranking:
28
Source: Economist Intelligence Unit (EIU)
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4.3 Knowledge Infrastructure
Education, training and research and development form key parts of a nation’s infrastructure for generating
knowledge. This section assesses Ireland’s performance in this area. Chart 8 provides an overview of Ireland’s
recent performance in terms of key knowledge infrastructure indicators.
Summary Chart 8:
Rankings in Indicators of Knowledge Infrastructure, 2000-2006 (or nearest)
1
0
23456789
10111213141516171819202122232425262728
Str
ong
Ran
king
Wea
k R
anki
ng
Edu
cati
onal
Att
ainm
ent
25
-64
yrs
(4
.45
)
Exp
endi
ture
Pre
-Pri
mar
y (4
.46
)
Exp
endi
ture
Pri
mar
y (4
.46
)
Exp
endi
ture
Sec
onda
ry (
4.4
6)
Exp
endi
ture
Ter
tiar
y (4
.46
)
Par
tici
pati
on o
f Th
ree
Year
Old
s in
Edu
cati
on (
4.4
8)
At
Leas
t U
pper
Sec
onda
ry E
duca
tion
20
-24
yrs
(4
.50
)
At
Leas
t U
pper
Seo
ndar
y E
duca
tion
25
-64
yrs
(4
.51
)
Sci
enti
fic
Lite
racy
of
15
Yea
r O
lds
(4.5
2)
Mat
hem
atic
al L
iter
acy
of 1
5 Y
ear
Old
s (4
.52
)
Rea
ding
Lit
erac
y of
15
Yea
r O
lds
(4.5
2)
Stu
dent
s to
Tea
chin
g S
taff
in S
econ
d Le
vel (
4.5
4)
At
Leas
t Th
ird
Leve
l Edu
cati
on 2
5-6
4 y
rs (
4.5
5)
Kno
wle
dge
Tran
sfer
(4
.57
)
Life
Lon
g Le
arni
ng (
4.5
8)
GE
RD
/GD
P (
4.5
9)
GE
RD
/GN
P (
4.5
9)
Tota
l Res
earc
hers
(4
.60
)
BE
RD
/GD
P (
4.6
1)
BE
RD
/GN
P (
4.6
1)
Bus
ines
s R
esea
rche
rs (
4.6
2)
Tria
dic
Pat
ents
(4
.64
)
HE
RD
/GD
P (
4.6
5)
HE
RD
/GN
P (
4.6
5)
Hig
her
Edu
cati
on R
esea
rche
rs (
4.6
6)
PhD
Gra
duat
es (
4.6
7)
LHS = 2000 RHS = 2006
Education: Overview
Average educational attainment in Ireland has increased steadily in the last two decades, with younger cohorts of
the population as well qualified as their OECD counterparts. Older cohorts of Ireland’s labour force remain less
qualified than the OECD average, though, and a relatively large share of the working age population has no more
than lower secondary education (Fig. 4.45). Expenditure per student is below the OECD average at all levels
(except pre-primary), while the pre-primary education system is predominantly privately funded, unlike in other
countries (Fig. 4.46, 4.47).
Pre-Primary and Primary
Without a comprehensive state-funded pre-primary system, participation of three year-olds in education in
Ireland is minimal and well below the EU-15 average (Fig. 4.48). At primary level, while the average number
of hours tuition given to 9-11 year-olds is among the highest in the OECD, the amount of time spent on the key
skills of mathematics, science and technology is among the lowest of the countries surveyed (Fig. 4.49).
Ann
ual C
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ional
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pet
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s C
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Secondary
Ireland has made significant progress over time and relative to other countries in terms of increasing secondary
school participation rates. The proportion of the 20-24 year-old population with upper secondary in Ireland is above
the EU-15 average and now exceeds the Lisbon target of 85 percent (Fig. 4.50). In the latest OECD PISA study
(2003), Irish 15 year-olds ranked well among OECD countries in terms of reading literacy (6th) but less well in terms
of scientific literacy (13th) and mathematical literacy (16th) (Fig. 4.52). Ireland’s scientific literacy ranking has
fallen four places since 2000. The number of computers per student is relatively low in Ireland (Fig. 4.53).
Tertiary and Life-Long Learning
Ireland’s younger population is considerably better qualified than older cohorts, with 41 percent of the 25-34 age
group possessing a third-level qualification. This compares very favourably with the OECD average of 35 percent (Fig.
4.55). It is difficult to measure the quality of third level institutions due to a range of issues. Based on available
data, the performance of Irish third level institutions ranks far behind the leading institutions overseas. Ireland’s
leading third level institution ranks 78th in the world (Fig. 4.56).
Life long learning is defined as all learning activity undertaken throughout life, with the aim of improving knowledge,
skills and competencies. Adult participation in life long learning remains relatively low in Ireland - below both the EU
average and Ireland’s Lisbon target (Fig. 4.58).
Research and Development
The transition to a knowledge economy requires higher levels of expenditure in research and development, both in
terms of capital infrastructure and development programmes. This section examines various measures of expenditure
in research and development, and the outputs achieved.
Despite a large increase in actual expenditure on R&D, Ireland is making limited progress towards the Irish (2.5
percent of GNP by 2013) and the Lisbon (3 percent of GDP by 2010) targets as strong economic growth is making
these targets more difficult to achieve. Total R&D spending in Ireland increased from 1.32 percent of GNP in 2000
to 1.59 percent of GNP in 2006 (Fig. 4.59). This compares with an OECD average of 2.26 percent (2006). The
number of researchers in Ireland is also growing. The number of researchers per 1000 total employment has grown
from 5 per 1000 in 2000 to 6 per 1000 in 2006 (Fig. 4.60). The R&D Action Plan for promoting investment in
R&D has set a target of 9.3 researchers per 1000 of total employment by 2010. Despite strong growth rates in
expenditure, business R&D as a percentage of economic activity has remained relatively static over the past decade
(Fig. 4.61). Most business expenditure on R&D in Ireland is undertaken by foreign-owned companies (Fig. 4.63).
Finally, higher education expenditure has increased strongly since 2000 (Fig. 4.65).
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Knowledge Infrastructure
4.3.1 Education: Overview
Figure 4.45
Educational Attainment of Population Aged 25-64 by Highest Level of
Education (%), 200540
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pre-Primary/Primary/Lower secondary Upper Secondary/Non-tertiary Tertiary
Japa
n
US
Finl
and
Den
mar
k
OE
CD
Sou
th K
orea
Net
herl
ands
Sw
eden UK
Irel
and
Spa
in
Fran
ce
Ger
man
y
Pol
and
Hun
gary
Ital
y
1221 17 20
28
16 14
35
51
34
17 1524
49
60
49
44 47 5044
42
56
35
20
41
5968
59
38
40 39 35 33 32 32 30 30 30 29 28 25 2517
12
24
54
17
Average educational attainment in Ireland has increased steadily in the last two decades. Older cohorts of Ireland’s labour force remain less qualified than the OECD average, though, and a relatively large share of the working age population (35%) has no more than lower secondary education.
OECD-28 Ranking:
(Ranked by third level)
14(i1)
Source: OECD, Education at a Glance, 2007
Figure 4.46
Annual Expenditure on Educational Institutions – per Student (E’000s PPP), 2004
4.24.6
6.1
8.7
6.77.5
8.5
19.2
4.7 4.9
6.5
9.2
4.05.0
6.2
9.510
15
0
5
20
25
Pre-Primary Primary Secondary Tertiary
OECDIrelandEU 15US
At all levels of education, Ireland invests less per student than the EU-15 and OECD averages (with the exception of pre-primary). The gap between the EU-15 and the US at all levels is considerable, particularly at third level.
OECD-28 Ranking:
Pre-Primary 10 (h7)
Primary 16 (h3)
Secondary 26 (i4)
Tertiary 15 (i6)
Source: OECD, Education at a Glance, 2007
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ual C
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Figure 4.47
Relative Public and Private Expenditure on Educational Institutions (%), 200441
0
10
20
30
40
50
60
70
80
90
100Public Expenditure Private Expenditure Ireland’s pre-primary system
is almost entirely privately funded, unlike the typical OECD system. Public funding is relatively more important in Ireland at all other levels of the education system.
Ranking:
N/A
Source: OECD, Education at a Glance, 2007: Pre-Primary data for Ireland provided by the Department of Education and Science, Ireland
4.3.2 Pre-Primary and Primary Education
Figure 4.48
Participation of Three Year Olds in Education (as a % of population age cohort), 200442
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fran
ce
Spa
in
Sw
eden
Den
mar
k
EU
15
Hun
gary
Ger
man
y
Japa
n
UK
US
Finl
and
Pol
and
Sw
itze
rlan
d
Irel
and
Net
herl
ands
2004 2000Pre-primary education includes programmes designed for children at least three years old and not older than 6 years. Ireland lags the EU-15 average by a considerable amount on this indicator. Pre-primary education, rather than childcare, is found to have significant individual and social returns.
EU-15 Ranking:
13 (--)
Source: Eurostat, Population and Social Conditions [online]
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Figure 4.49
Average Annual Hours of Tuition to 9-11 year-olds, by Subject, 2005
0 100 200 300 400 500 600 700 800 900 1000
Hungary
Finland
Poland (2004)
South Korea
Denmark
Japan
Germany
Spain
OECD
Portugal
France
UK
Ireland
Maths, science& technology
Other tuition
Overall, 9 -11 year old students at primary level in Ireland receive more hours of tuition per year than in most other OECD countries. However, of 22 countries surveyed, only two spent less time teaching mathematics, science, and technology.
OECD-28 Ranking:
Overall 4
Source: OECD, Education at a Glance, 2007
4.3.3 Secondary Education
Figure 4.50
Percentage of the Population Aged 20 to 24 having Completed at Least
Upper Secondary Education 2006
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lisbon Target 85%
Pol
and
Sw
eden
Irel
and
Finl
and
Hun
gary
Fran
ce UK
Den
mar
k
Ital
y
EU
15
Net
herl
ands
Ger
man
y
Spa
in
2006 2000
This indicator forms a key metric in the Lisbon Agenda. It is defined as the percentage of young people aged 20-24 years having achieved at least an upper secondary education attainment level. Data for 2006 suggests that Ireland (85.4 percent) exceeds the EU Lisbon target of 85 percent.
EU-15 Ranking:
3 (h1)
Source: Eurostat, Structural Indicators
Ann
ual C
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00
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Figure 4.51
Percentage of the Population Aged 25-64 with at least Upper
Secondary Level Education, 2005
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%2005 2000
US
Japa
n
Sw
eden
Ger
man
y
Sw
itze
rlan
d
Den
mar
k
Finl
and
New
Zea
land
OE
CD
Hun
gary
Sou
th K
orea
Net
herl
ands UK
Fran
ce
Irel
and
Pol
and
Ital
y
Spa
in
Current secondary level completion rates take a long time to raise the overall level of qualifications. 65 percent of the 25-64 age group in Ireland have attained at least upper secondary education, which is below the OECD average and significantly below leading countries (e.g. US).
OECD-28 Ranking:
21(--)
Source: OECD, Education at a Glance, 2007
Figure 4.52
Scientific, Mathematical and Reading Literacy of 15 Year Olds, 200343
Inde
x of
Lit
erac
y (3
35
-62
5)
rank
ed b
y ov
eral
l av
erag
e
Finl
and
Sou
th K
orea
Japa
n
Net
herl
ands
New
Zea
land
OE
CD
Sw
itze
rlan
d
Sw
eden
Irela
nd
Fran
ce
Ger
man
y
Pol
and
Den
mar
k
Hun
gary
Spa
in
Ital
y
US
400
420
440
460
480
500
520
540
560
Reading Literacy Scientific Literacy Mathematical Literacy
In the 2003 PISA study, Irish 15 year olds ranked comparatively well in terms of reading literacy but ranked less well for scientific and mathematical literacy. Small differences between countries should be interpreted with caution.
OECD-30 Ranking:
Reading 6 (i1)
Science 13 (i4)
Maths 16 (i1)
Source: OECD, PISA Database, 2003
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Figure 4.53
Computers and Number of Internet Connected Computers per 100 Pupils, 200644
0%
5%
10%
15%
20%
25%
3 0%
Den
mar
k
Net
herl
ands UK
Sw
eden
Finl
and
Aus
tria
Fran
ce
EU
15
Hun
gary
Spa
in
Ger
man
y
Ital
y
Por
tuga
l
Pol
and
Computers per 100 pupils Internet connected computers per 100 pupils
Irel
and
ICT has profound implications for education, as it can facilitate new forms of learning and is now a necessary preparation for adult life. Among the benchmarked countries, Ireland has fewer computers per student than the EU-15 average.
EU-15 Ranking: 9(--)
Source: Benchmarking Access and Use of ICT in European Schools, 2006
Figure 4.54
Ratio of Students to Teaching Staff in Secondary Education Institutions, 200545
0
5
10
15
20
25
2005
Spa
in
Ital
y
Hun
gary
Fran
ce
Pol
and
Sw
eden
OE
CD
Japa
n
Finl
and
UK
New
Zea
land
Ger
man
y
Irel
and
US
Net
herl
ands
Sou
th K
orea
2000Ireland continues to be above the OECD average of 13.7 for the ratio of students to teaching staff in secondary schools in 2005. As in most countries, this ratio has fallen since 2000.
OECD-28 Ranking:
22(i2)
Source: OECD, Education at a Glance, 2007
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ual C
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4.3.4 Tertiary Education and Life Long Learning
Figure 4.55
Population by Age Cohort that has at Least Third Level Education, 200546
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
EU 15
Ireland
UK
OECD
US
35-44 45-54 55-6425-34A breakdown of third-level graduates by age reveals that Ireland’s educational attainment varies much more by age than in other countries. While cohorts over 45 – in particular the 55-64 age group – have lower attainment rates than the OECD average, Ireland’s 25-34 year-olds are more qualified than most of their counterparts elsewhere in the OECD, in particular the EU-15.
OECD-28 Ranking:
(ranked by total 25-64 year olds) 14 (--)
Source: OECD, Education at a Glance, 2007
Figure 4.56
Performance of the Third Level Sector (Scale 0-100), 2005
0
10
20
30
40
50
60
70
80
90
100
Trin
ity
Col
lege
US
UK
Chi
na
Aus
tral
ia
Fran
ce
Sin
gapo
re
Japa
n
Can
ada
Sw
itze
rlan
d
Hon
g K
ong
New
Zea
land
Den
mar
k
Indi
a
Ger
man
y
Sou
th K
orea
Net
herl
ands
Bel
gium
Irel
and
Aus
tria
Sw
eden
Ranking third-level institutions is an exercise fraught with difficulties. The rankings shown in the chart are based on peer review and recruiter review assessments, number of citations, ratio of faculty to student numbers and success in attracting foreign students. Ireland’s leading institution, Trinity College, comes 78th out of 200.
Ranking of Institution:
78 (out of 200)
Source: The Times Higher Education Supplement, 2006
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Figure 4.57
Knowledge Transfer Between Companies and Universities, 2007 (Scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Litt
le T
rans
fer
Hig
hly
Dev
elop
ed
Sw
itze
rlan
d
Sin
gapo
re
Den
mar
k
US
Sw
eden
Ger
man
y
Net
herl
ands
Irel
and
OE
CD
New
Zea
land
Sou
th K
orea
Japa
n
UK
Hun
gary
Fran
ce
Finl
and
Spa
in
Ital
y
Pol
and
2007 2000Executive opinions regarding the state of development of knowledge transfer between academia and enterprise in Ireland are in line with the OECD average. Barriers to more effective knowledge transfer include lack of knowledge of third level research projects and difficulties with intellectual property contracts.
OECD-28 Ranking:
14 (i8)
Source: IMD World Competitiveness Yearbook, 2007 [online]
Figure 4.58
Life Long Learning in EU Member States (% 25-64 year olds), 200647
0%
5%
10%
15%
20%
25%
30%
35%
Lisbon Target 12.5%
Sw
eden UK
Den
mar
k
Finl
and
Net
herl
ands
EU
15
Spa
in
Ger
man
y (2
00
4)
Irel
and
Fran
ce
Pol
and
Ital
y
Hun
gary
2006 2000
Sw
eden
(200
5)
Den
mar
k
UK
Finl
and
Net
herla
nds
EU
15
Spa
in
Ger
man
y
Irela
nd
Fran
ce
Italy
Pol
and
Hun
gary
Life long learning is defined as all learning activity undertaken throughout life, with the aim of improving knowledge skills and competencies. This indicator measures the percentage of persons aged 25 to 64 in receipt of education in the four weeks prior to the survey and includes both formal and non formal education. Ireland’s score is below both the EU-15 average and the Lisbon target.
EU-15 Ranking:
9 (i1)
Source: Eurostat, Structural Indicators
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ual C
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4.3.5 Research and Development
Figure 4.59
Gross Domestic Expenditure on R&D (GERD), % GDP, 200548
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Irish Target 2.5%
EU Lisbon Target 3%
Sw
eden
Finl
and
(20
06
)
Japa
n
US
20
06
Ger
man
y
Den
mar
k
OE
CD
Fran
ce
Net
herl
ands
(2
00
4)
UK
Irel
and
GN
P (
20
06
)
Irel
and
GD
P (
20
06
)
Spa
in
Ital
y (2
00
4)
Hun
gary
Pol
and
2005 2000
As part of the Lisbon Strategy, the European Council set a target that 3 percent of EU GDP would be spent on R&D by 2010. The Irish Strategy for Science, Technology and Innovation 2006-2013 foresees Ireland reaching 2.5 percent of GNP by 2013.
OECD-28 Ranking:
GDP: 21(--)
GNP: 17(h2)
Source: Forfás, Research and Development Statistics in Ireland at a Glance 2006; OECD, Main Science and Technology Indicators, 2007/ Issue 1
Figure 4.60
Total Researchers per 1000 Total Employment, 200549
0
2
4
6
8
10
12
14
16
18
Irish Target 9.3
Finl
and
Spa
in
Den
mar
k (2
00
4)
US
Fran
ce (
20
04
)
Sou
th K
orea
OE
CD
Ger
man
y
Sw
itze
rlan
d (2
00
4)
Irel
and
(20
06
)
Pol
and
Net
herl
ands
(20
03
)
Hun
gary
Ital
y (2
00
4)
2005 2000
The R&D Action Plan for promoting investment in R&D has set a target of 9.3 researchers per 1000 of total employment by 2010. The number of researchers has grown from 5 per 1,000 total employment in 2000 to 6 per 1,000 in 2006.
OECD-28 Ranking:
17(h1)
Source: OECD, Main Science and Technology Indicators, 2007/ Issue 1
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Figure 4.61
Business Expenditure on R&D (BERD) % GDP, 200550
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
EU Lisbon GDP Target 2%
Irish GNP Target 1.7%
2005 2000Ja
pan
Finl
and
(20
06
)
Sou
th K
orea
Sw
itze
rlan
d (2
00
4)
US
(2
00
6)
Ger
man
y
Den
mar
k
OE
CD
Fran
ce
UK
Irel
and
GN
P (
20
06
)
Net
herl
ands
Irel
and
GD
P (
20
06
)
Spa
in
Ital
y (2
00
6)
New
Zea
land
(2
00
3)
Hun
gary
Pol
and
The Irish Strategy for Science, Technology and Innovation has set a target of E3 billion for business expenditure on R&D by 2013. In 2005, business expenditure on R&D in Ireland stood at E1,329 million.
OECD-28 Ranking:
GDP: 19(--)
GNP: 15(h2)
Source: Forfás, Research and Development Performance in the Business Sector Ireland, 2005/06; OECD, Main Science and Technology Indicators, 2007/ Issue 1
Figure 4.62
Business Researchers per 1000 Total Employment 200551
0
1
2
3
4
5
6
7
8
9
102005 2000
Finl
and
Sw
eden US
Japa
n
Den
mar
k
Sou
th K
orea
OE
CD
Fran
ce (
20
04
)
Ger
man
y
Irel
and
UK
Hun
gary
Ital
y
Pol
and
Research staff can play an important part in helping a company increase its scientific and technological capabilities. Ireland had a lower number of business researchers per 1000 employment than the OECD average in 2005.
OECD-28 Ranking:
15(--)
Source: Forfás Calculations; OECD, Main Science and Technology Indicators, 2007/ Issue 1
Ann
ual C
ompe
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vene
ss R
epor
t 2
00
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olum
e 1
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ional
Com
pet
itiv
enes
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Figure 4.63
Business Sector R&D Expenditure by Firm Type 2001-2005
19
95
19
97
19
99
20
01
20
03
20
05
0
200
400
600
800
1000
1400
1200
All (�mn) Foreign-owned (�mn) Irish-owned (�mn)
mill
ions
�
Foreign-owned companies undertake most business expenditure on R&D in Ireland. The Irish Strategy for Science, Technology and Innovation 2006-2013 has set a target for business expenditure on R&D in indigenous firms to grow to E825 million by 2013. This is more than double the amount being spent by Irish firms in 2005.
Ranking:
N/A
Source: Forfás, Research and Development Performance in the Business Sector Ireland, 2005/06
Figure 4.64
Triadic Patent Granted per Million Population, 2005
0
10
20
30
40
50
60
70
802005 2000
Ger
man
y
Sw
eden
Net
herl
ands US
OE
CD
Finl
and
Fran
ce
Den
mar
k
UK
Irel
and
Ital
y
Spa
in
Hun
gary
Pol
and
Patents can be taken as the reflection of a country’s inventive activity. Triadic patent are patents granted at the European, Japanese and US Patent offices. On this measure, Ireland continues to perform well below the OECD average.
OECD-28 Ranking:
19(i1)
Source: OECD, Main Science and Technology Indicators, 2007/ Issue 1
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Figure 4.65
Higher Education Expenditure on R&D (HERD) as a % of GDP, 200552
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
0.9%2005 2000
Swed
en
Fina
nd (
2006
)
Den
mar
k
Net
herla
nds
UK
Japa
n
OEC
D
Ger
man
y
Fran
ce
Irel
and
GN
P(2
006)
US
(200
6)
Ital
y (2
004)
Irel
and
GD
P(2
006)
Spai
n
Sout
h K
orea
Hun
gary
Pola
nd
Higher education expenditure has more than doubled over the last seven years rising from E238 million in 2000 to E565 million in 2005. As a percentage of GNP, Ireland has converged with the OECD average, but remains far behind the leading countries.
OECD-28 Ranking:
GDP: 19 (h5)
GNP: 16 (h7)
Source: OECD, Main Science and Technology Indicators, 2007/ Issue 1
Figure 4.66
Higher Education Total Researchers per 1000 Employment 200553
0
1
2
3
4
5
62005 2000
Finl
and
Sw
eden
Den
mar
k
Pol
and
Japa
n
Fran
ce (
20
04
)
OE
CD
Irel
and
Ger
man
y
Hun
gary
Sou
th K
orea
Ital
y (2
00
4)
The number of researchers in the higher education sector in Ireland is growing rapidly. This is evident by Ireland’s convergence towards the OECD average.
OECD-28 Ranking:
17 (h5)
Source: Forfás Calculations; OECD, Main Science and Technology Indicators, 2007/ Issue 1
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Figure 4.67
PhD Graduates per 1000 of Population aged 25-34, 200554
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.52005 2000
Fin
land
Sw
eden UK
EU
15
US
Net
her
lands
Den
mar
k
Irel
and
Fra
nce
Pol
and
Spai
n
Ital
y
Hunga
ry
PhD graduates are central to the delivery of Ireland’s Strategy for Science, Technology and Innovation. In 2005, PhD graduates per 1000 of population in Ireland lagged the EU15 by more than 25%. While more 25-34 year-old males in Ireland have PhDs than females, the gap is not as large as in other EU-15 countries.
EU-15 Ranking:
9 (h1)
Source: Eurostat, Population and Social Conditions; National science Foundation, Thompson ISI, Science and Engineering Indicators, 2006
Figure 4.68
Scientific Citations and Publications Index 2003
1 1.2
0.4
0.5
0.6
0.6
0.7
0.7
0.8
0.8
0.8
0.8
0.9
0.9
0.9
1.0
1.0
0 0.2 0.4 0.6 0.8
Poland
Hungary
Japan
Spain
Italy
EU15
France
Ireland
Germany
Finland
Sweden
UK
Denmark
Netherlands
US This index represents an economy’s share of scientific citations and references relative to its share of published literature. Ireland performs relatively well in this measure, scoring just above the EU-15 average.
EU-15 Ranking:
9
Source: Science and Engineering Indicators, 2006 (National Science Foundation), Thomson ISI
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End Notes1 Base year for ranking change is 2000-2003 period compared to 2003-2006 period
2 UK refers to 2003 data
3 OECD average minus Luxembourg
4 Base year for ranking change is 2004 compared to 2005
5 EU-15 2000 average – Austria, Italy, Luxembourg, Portugal and Spain refer to 2001
6 Base year for ranking change is 2000-2003 compared to 2003-2006
7 Base year for ranking change is 2000-2003 period compared to 2003-2007 period
8 Base year for ranking change is 2001 compared to 2006
9 Base year for ranking change is 2000-2003 period compared to 2003-2006 period
10 Ireland public sector wage inflation (minus health) refers to third quarter 2006;
Public sector comparison is made to UK public sector wage inflation due to data availability
11 Base year for ranking change is 2000-2002 period compared to 2002-2005 period
12 OECD average minus Iceland, Canada and Poland. Australia and US refer to 2004
13 OECD average minus Iceland
14 Base year for ranking change is 2005 compared to 2015 projections
15 In Ireland, companies in the manufacturing industry had a rate of 10% until the rate changed to 12.5% in 2003. In making international
comparisons of corporate tax rates, it is important to take account of the impact of exemptions in the tax base.
16 OECD average minus US
17 Base year for ranking change is 1995 compared to 2004
18 Base year for ranking change is 2002 compared to 2003
19 Base year for ranking change is 2005 compared to 2006
20 EU-15 average minus Austria and the Netherlands
21 EU-15 average minus Luxembourg and Denmark
22 Base year for ranking change is 1998 compared to 2003
23 Base year for ranking change is 2005 compared to 2006. OECD average minus Luxembourg
24 OECD average composes of 19 countries
25 EU-15 average minus Luxembourg
26 Base year for ranking change is 1990 compared to 2000
27 Base year for ranking change is 1990 compared to 2000
28 Base year for ranking change is 1990 compared to 2000
29 Base year for ranking change is 2001 compared to 2006
30 Base year for ranking change is 2001 compared to 2006
31 Base year for ranking change is 2002 compared to 2006
32 Base year for ranking change is 2001 compared to 2006
33 Base year for ranking change is 2002 compared to 2006
34 Data for Singapore ‘other’ category is 2002
35 EU-15 minus Luxembourg
36 Base year for ranking change is 2003 compared to 2006
37 Base year for ranking change is 2002 compared to 2006
38 Base year for ranking change is 2002 compared to 2006
39 EU average minus Italy, Greece and France
40 Base year for ranking change is 2003 compared to 2004
41 EU-15 average minus Greece
42 OECD-28 minus UK in 2003 and minus Slovakia and the Netherlands in 2000
43 EU-15 average minus Greece
44 OECD average minus Canada, Norway and Denmark
45 Base year for ranking change is 2001 compared to 2004
46 Ireland refers to change since 2002 and Poland since 2001
47 Rankings incorporate the latest available data for countries that are unavailable for 2005
48 OECD average minus UK & Ireland. Rankings incorporate the latest available data for countries that are unavailable for the current year
49 Rankings incorporate the latest available data for countries that are unavailable for the current year
50 Rankings incorporate the latest available data for countries that are unavailable for the current year
51 Rankings incorporate the latest available data for countries that are unavailable for the current year
52 OECD average minus UK & US. Rankings incorporate the latest available data for countries that are unavailable for the current year
53 EU-15 minus Luxembourg; Finland and France refer to 2003
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Appendices5
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5. Appendices
Appendix 1- ACR Data Sources
Organisation for Economic Cooperation and Development (OECD)
The OECD is an organisation of 30 member countries characterised by democratic government and
adherence to the market economy. These countries are located primarily in Western Europe, but also
in North America and in the Asia-Pacific region. Its work covers economic and social issues including
macroeconomics, trade, education, development and science and innovation. The OECD provides
statistical data for member countries on a wide range of economic and social indicators.
http://www.oecd.org/statistics
Eurostat
Eurostat is part of the European Statistics System (ESS). The ESS comprises Eurostat and the statistical
offices, ministries, agencies and central banks that collect official statistics in EU Member States,
Iceland, Norway and Liechtenstein. Member States collect data and compile statistics for national and
EU purposes. The ESS functions as a network, in which Eurostat’s role is to facilitate the harmonization
of statistics in cooperation with the national statistical authorities. The ESS also coordinates its work with
international organisations such as OECD, the UN, the International Monetary Fund and the World Bank.
http://www.europa.eu.int/comm/eurostat/
Central Statistics Office (CSO) Ireland
The Central Statistics Office serves as Ireland’s national statistical agency. The Office exists primarily to
meet the needs of Government for quality statistical information that is a vital input to the formation,
implementation and monitoring of policy and programmes at national, regional and local levels in a
rapidly changing economic and social environment. It also serves the needs of the wider national and
international community (i.e. business, EU, international organisations, media, researchers, and the
public generally) for impartial and relevant information on social and economic conditions.
http://www.cso.ie
Groningen Growth and Development Centre
The Groningen Growth and Development Centre is a research group of economists and economic
historians at the Economics Department of the University of Groningen. It was created in June 1992
within the Economics Department of the University. The group carries out research on comparative
analysis of levels of economic performance and differences in growth rates in the world economy. Up-to-
date GGDC data include: the Total Economy database (GDP, Population and Employment data), and the
EU Klems Database (Value added data and Employee data), which allow analysis of macroeconomic and
productivity performance over time.
http://www.ggdc.net/
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IMD World Competitiveness Yearbook (IMD WCY), (2007)
The stated aim of the World Competitiveness Yearbook is to analyse and rank the ability of nations to create and
maintain a competitive enterprise environment. It features 55 industrialised and emerging countries and provides
323 different competitiveness criteria grouped into four ‘Competitiveness Factors’ (Economic Performance,
Government Efficiency, Business Efficiency, and Infrastructure). Indicators are derived from both hard data taken
from international, national and regional organisations and private institutes, and survey data drawn from the annual
Executive Opinion Survey (over 4,000 respondents). This report is published every summer, and the figures in the
2007 report generally relate to 2006 and 2007 data.
World Economic Forum Global Competitiveness Report (WEF GCR), (2006-2007 and 2007-2008)
The Global Competitiveness Report measures the competitiveness of nations through two main indices developed by
the WEF team, the Global Competitiveness Index (GCI) and the Business Competitiveness Index (BCI). Both indices
are derived from a combination of publicly available hard data, and information provided in the Forum’s Executive
Opinion Survey, which conveys information about the competitiveness of 131 countries. Through the survey, over
11,000 business executives in these countries assess the importance of a broad range of factors central to the
business environment. The response rate to the survey averages over 80 respondents per country. The ACR mainly
uses WEF survey data to supplement statistical information about the innovation, enterprise and general business
climates. This report is published every year and the figures in the 2006-2007 and 2007-2008 reports generally
relate to 2006 and 2007.
UNCTAD World Investment Report (2006)
Established in 1964, UNCTAD promotes the development-friendly integration of developing countries into the world
economy. In performing its functions, the secretariat works together with member Governments and interacts with
organizations of the United Nations system and regional commissions. Its World Investment Report focuses on global
trends in foreign direct investment. This report is published annually.
http://www.unctad.org
The UK Office for National Statistics (ONS)
The ONS is the government department that provides UK statistical and registration services. It is responsible for
producing a wide range of economic and social statistics that are used by government to monitor performance. It
also registers life events and holds the decennial census of the population.
http://www.statistics.gov.uk/
United Nations Human Development Report (UN HDR), (2006)
This report presents two types of statistical information: statistics in the human development indicator tables, which
provide a global assessment of country achievements in different areas of human development, and statistical
evidence on the thematic analysis in the chapters. The Human Development Report Office is primarily a user, not a
producer, of statistics. It therefore relies on international data agencies with the resources and expertise to collect
and compile international data on specific statistical indicators. This report is published annually and the figures in
the 2006 report generally relate to 2003-2004.
http://hdr.undp.org/
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International Energy Agency
The International Energy Agency is the energy forum for 26 industrialised countries. IEA Member
governments have agreed to share energy information, to co-ordinate their energy policies and to co-
operate in the development of rational energy programmes. These provisions are embodied in the
Agreement on an International Energy Program, which established the Agency in 1974.
http://www.iea.org/Textbase/subjectqueries/index.asp
US Bureau of Economic Analysis (BEA)
BEA is an agency of the Department of Commerce in the US. BEA produces economic accounts statistics.
These consist of national accounts which provide a quantitative view of US domestic production and
investment, of exports and imports, national and domestic income and saving, and regional accounts
which provide detailed data on economic activity by region, state and county.
http://www.bea.gov/
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Appendix 2: Glossary of Terms
BERD Business Expenditure on Research and Development
CPI Consumer Price Index
Index which measures the price that consumers pay for a representative basket of
goods.
Enterprise Ireland State agency with primary responsibility for the development of Irish-owned business
in manufacturing and internationally-traded services.
EPO European Patent Office
ESRI Economic and Social Research Institute
Ireland’s national independent think-tank undertaking economic and social research,
with the aim of informing policy formation and societal understanding.
FDI Foreign Direct Investment
Investment by a multinational company in establishing production, distribution or
marketing facilities abroad.
Forfás State agency responsible for providing policy advice on enterprise, trade, science,
technology and innovation and for advising and co-ordinating the functions of IDA
Ireland, Enterprise Ireland and Science Foundation Ireland.
GDP Gross Domestic Product
The total money value of all final goods and services produced in an economy over a
defined period.
General Government Gross
Fixed capital Formation
This consists of resident producer’s acquisitions, less disposals of fixed assets during
a given period plus certain additions to the value of non-produced assets realized by
the productive activity of government producer or units.
GERD Gross Expenditure on Research and Development
Total public and private expenditure on R&D
Gini Coefficient The Gini Coefficient is a measure of income distribution whereby a score of zero
indicates perfect equality, and 100 indicates that all national income in enjoyed by
one person.
GNP Gross National Product
The value of all final goods and services produced within a nation in a given year,
plus income earned by its citizens abroad, minus income earned by foreigners from
domestic production.
Greenfield
Projects
The setting up of a new activity as opposed to the acquisition of one that already
exists.
Gross Fixed capital Formation
by the Private Sector
This consists of resident producer’s acquisitions, less disposals of fixed assets plus
certain additions to the value of non-produced assets realised by productive activity.
The private sector consists of non-financial and financial corporations, households
and non-profit organisations serving households.
HEA Higher Education Authority
The statutory body responsible for the funding of universities and designated third-
level education institutions. Its functions include the development of third level
education to meet the needs of the community and to advise in relation to all higher-
level education.
HERD Higher Education Expenditure on Research and Development
HDI Human Development Index
Composite index which combines measures of life expectancy, school enrolment,
literacy and income.
ICT Information and Communications Technology
IDA Ireland State agency responsible for attracting inward investment in manufacturing and
internationally-traded services sectors.
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IP Intellectual Property
The asset which arises where innovation or creative activities lead to an invention,
design or process sufficiently unique or original to be considered confidential or
valuable or both.
Labour Costs Labour costs cover all market economic activities except agriculture, fisheries,
fostery, education, health, entertainment, information and personal services
activities. Labour costs include gross wages and salaries, employer’s social
contributions and taxes net of subsidies connected to employment.
Labour Force The total number of people, aged 15 years and over, employed and unemployed and
seeking employment.
NDP National Development Plan
The NDP 2007-2013 is a 184 billion seven year spending plan across five priority
areas; economic infrastructure, enterprise, science and innovation, human capital,
social instrastructure and social inclusion.
PPP Purchasing Power Parity
PPP is a method of measuring the relative purchasing power of different countries’
currencies over the same types of goods and services. Goods and services may
cost more in one country than in another one, hence PPP allows us to make more
accurate comparisons of standards of living across countries.
Productivity The relationship between the output of an economic unit and the factor inputs that
have gone into producing that output. Productivity is usually measured in terms of
output per hour worked, also known as value added per hour worked.
R&D Research and Development
Creative work undertaken on a systematic basis in order to increase the stock of
knowledge, including knowledge of man, culture and society, and the use of this
stock of knowledge to devise new applications. (OECD)
SFI Science Foundation Ireland
Established by the Government in July 2003 to invest €648 million between 2000
and 2006 in academic researchers and research teams to generate knowledge,
leading-edge technologies and competitive enterprises in the fields underpinning
biotechnology and information and communications technology.
Sustainable Development Development that meets the needs of the present population without compromising
the ability of future generations to meet their own needs (UN definition).
ULC Unit Labour Cost
Measures the cost of labour required to produce one unit of a good. Changes in
unit labour costs occur due to changes in productivity (output per hour worked) or
changes in earnings/wages.
VAT Value Added Tax
An indirect tax levied on the sale of goods and services.
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Appendix 3: NCC Publications
Publication Date
Annual Competitiveness Report, 1998 March 1998
The Competitiveness Challenge Summary Statement March 1998
Statement on Telecommunications: A Key Factor in Electronic Commerce and
Competitiveness
November 1998
Statement on Skills December 1998
Annual Competitiveness Report, 1999 May 1999
Report on Costs June 1999
Statement on Social Partnership September 1999
Proposals on Transport Infrastructure, the Planning Process and Public Transport March 2000
The Competitiveness Challenge May 2000
Annual Competitiveness Report, 2000 May 2000
Statement on Telecommunications, e-Business and the Information Society July 2000
Statement on Regulatory Reform July 2000
Statement on Labour Supply and Skills September 2000
The Competitiveness Challenge, 2001 December 2001
Annual Competitiveness Report, 2001 December 2001
The Competitiveness Challenge, 2002 November 2002
Annual Competitiveness Report, 2002 November 2002
Statement on Inflation May 2003
The Competitiveness Challenge, 2003 November 2003
Annual Competitiveness Report, 2003 November 2003
Statement on Prices and Costs September 2004
The Competitiveness Challenge, 2004 October 2004
Annual Competitiveness Report, 2004 October 2004
Annual Competitiveness Report, 2005 September 2005
The Competitiveness Challenge, 2005 November 2005
Annual Competitiveness Report 2006, Volume 1: Benchmarking Ireland’s Performance October 2006
Overview of Ireland’s Productivity Performance, 1980-2005 October 2006
Statement on the Costs of Doing Business in Ireland, 2006 October 2006
Annual Competitiveness Report 2006, Volume 2: Ireland’s Competitiveness Challenge February 2007
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