Enterprise, Trade and Employment | Greatest competition for Ireland over the next five years in respect of the manufacturing and services sector

QUESTION

To ask the Minister for Enterprise; Trade and Employment the countries whence he sees the greatest competition for Ireland over the next five years in respect of the manufacturing and services sectors; and if he will make a statement on the matter.

REPLY

Together, the manufacturing and services sectors comprise the vast majority of economic activity in Ireland. In a modern, interconnected global economy Irish firms are competing with firms worldwide. Technological advances have sharpened this competition over time, particularly for those firms operating in the field of internationally-tradeable services. Current patterns of geopolitical tension and the shortening of global value chains will likely complicate these matters and there is uncertainty as to how these will play out over the medium to long-term.

Enterprise Ireland (EI), the state agency responsible for supporting the development of manufacturing and internationally traded services companies, acknowledges that the global landscape for the manufacturing and services sectors is highly dynamic and subject to evolving market conditions. While it is difficult to predict the greatest competition for Ireland in the next five years, several factors influence competitiveness in these sectors. It is important to note that competition can arise from unexpected sources as global dynamics and economic conditions evolve.

EI works closely with Irish businesses to identify market opportunities, enhance competitiveness, and develop strategic advantages in various sectors. Furthermore, EI provide support through market research, business development initiatives, innovation programs, and international networking opportunities, helping Irish companies navigate global competition effectively.

The Institute for Management Development (IMD) publishes its World Competitiveness Yearbook rankings on a yearly basis. The most recent edition was published in 2023. The IMD Competitiveness Yearbook assesses and ranks 64 economies around the world based on their ability to create and maintain a competitive business environment. The rankings are based on more than 336 indicators grouped across four pillars: Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure.

The most recent report ranks Ireland as the most competitive country in the Euro Area and the 2nd most competitive country in the world. This is an improvement from 11th position in 2022. Ireland’s performance reflects steady progress across specific sub-factors over a number of years, such as ‘Government Efficiency’, alongside strong economic results which have boosted its ranking under ‘Economic Performance’.

In their assessment, the IMD note that the top four countries are small, advanced economies which make good use of their access to markets and trading partners. Ireland places second to Denmark, with Switzerland, Singapore and the Netherlands rounding out the rest of the top five.

In May of 2023, the National Competitiveness and Productivity Council (NCPC) published Ireland’s Competitiveness Scorecard 2023 which benchmarks the competitiveness of Ireland’s economy against international peer countries. The Scorecard gathers a wide range of indicators on Ireland’s relative strengths and weaknesses, that influence our competitiveness position, and flags areas that are negatively impacting on competitiveness and where Ireland’s relative position is not keeping pace with its competitors.

The data in the Scorecard show that, overall, the Irish economy remains internationally competitive. However, there are still several critical areas where Ireland currently falls behind the countries against which we benchmark ourselves, most particularly in relation to energy, infrastructure, spending on R&D and venture capital, and interest costs to businesses.

As outlined in the NCPC’s Ireland’s Competitiveness Challenge 2023 report, there are a number of areas where Ireland could seek to improve its performance and competitiveness position. This report includes 19 recommendations for Government concerning: the costs of doing business; infrastructure delivery; energy generation and consumption; and research, development and innovation – all critical aspects of our current and future competitiveness. My Department has lead responsibility for four of the Council’s recommendations. The Government has issued a formal response to the NCPC’s report, coordinated by the Department of the Taoiseach, which sets out plans to address these recommendations.

My Department continues to pursue pro-enterprise and pro-competitive policies for all Irish enterprise. Published in December 2022, the White Paper on Enterprise 2022-2030 sets out Ireland`s industrial policy for the medium- to long-term, building on Ireland`s economic strengths of an open economy with strong trade and foreign direct investment, a vibrant innovation hub, and a resilient labour market. This review of Enterprise Policy was the first since 2018 and was motivated by an awareness of a changing enterprise landscape posing new challenges, including shifting patterns of globalisation driven by geopolitical change, disruptive technological innovation, and lagging productivity in parts of the indigenous sector of the economy.

It is important that we do not take for granted the underpinnings of our success, and that we are proactive in addressing our weaknesses. As a small, open economy being competitive internationally is critical to the continued success of the Irish economy. The Government looks forward to continued engagement with the NCPC on these issues.