At the end of May the Wall Street Journal Europe held a meeting in Dublin for business leaders, economists and academics to discuss the potential of the Irish economy in the mid-to-long term. The meeting concluded that the global slowdown in the technology sector, which accounts for more than 40 per cent of Irish exports, was good for Ireland. It gives the country time to address fast growing economy issues such as increased infrastructure needs and stretched labour supply.
Present at the meeting were Professor Philip Lane, an economist from Trinity College, Brian Long, ceo, Parthus Technologies, Niall O’Cleirigh, ceo, Macalla Software, Jim Power, director of investment strategy at Friends First, Martin Cullen, Ireland’s minister of state at the Finance Department, Gerry McKenna, c.o.o. of Logica and Bill Riley, a spokesman for Intel in Ireland.
The participants were more concerned about Ireland’s long-term competitiveness than about the immediate fallout from the slowdown. They felt that the country could use it as an opportunity to begin making needed repairs. According to Professor Lane there is a massive infrastructural deficit, adjusting for inflation, public investment only returned to the 1979 level in around 1998.
Some organisations are already seeing benefits from slower growth. The availability of office space is now more evident in the growth of suburban office parks. Supply and demand are finally beginning to balance. The labour market is also loosening up as some of the US multinationals make modest job cutbacks, indigenous firms like O’Cleirigh’s Macalla Software has been able to recruit staff more easily.
The main worry according to Jim Power is that Eastern European countries might copy Ireland’s model of low corporation tax and therefore attract more of the next round of foreign direct investment from the US multinationals. Martin Cullen however feels that Ireland would still be attractive to such investors owing to the country’s political stability, young population and status as the only English-speaking nation in the euro zone. He believes that it would be a mistake to think that you put in a low tax regime and suddenly you get all these direct investment.
Still, the government acknowledges the country’s creaking infrastructure is a turnoff, and last year it launched the National Development Plan to spend E50 billion between 2000 and 2006 on improving utilities, public transport, roads, affordable housing and education. Yet Bill Riley from Intel feels that Ireland has lost its competitiveness with other locations because Ireland’s power, water and waste-management systems, as well as its road network, are now substandard.
Intel, which employs more than 3,000 staff directly in Ireland, is still planning to open a E2.56 billion factory here in the second quarter of 2003, but Riley thinks the infrastructure problems could affect future investment decisions. |
