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FDI and the Competitiveness challenge Martin Cronin CEO Forfas

FDI and the Competitiveness challenge Martin Cronin CEO Forfas. Labour Relations Commission Symposium 11 Nov 2004. A tale of two countries………. Country 1: THE BOOMTOWN It was the best of times……. High income Near full employment Strong base of modern industry. Benchmarking the Boomtown.

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FDI and the Competitiveness challenge Martin Cronin CEO Forfas

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  1. FDI and the Competitiveness challengeMartin CroninCEO Forfas Labour Relations Commission Symposium 11 Nov 2004

  2. A tale of two countries……….. Labour Relations Commission Symposium

  3. Country 1: THE BOOMTOWNIt was the best of times…… • High income • Near full employment • Strong base of modern industry Labour Relations Commission Symposium

  4. Benchmarking the Boomtown • Levels of corporation tax 1/16 • FDI net inflows 1/16 • Labour productivity per person employed/hour 2/16 • GDP per capita 2/16 • Unemployment rate 3/16 • Government debt as % GDP 3/16 • Entrepreneurial activity 4/16 Labour Relations Commission Symposium

  5. Country 2: THE BASKET CASEIt was the worst of times…… • Employment in internationally trading sector falling • Rate of pay/price increases (and their absolute level?) unsustainable • Inadequate infrastructure Labour Relations Commission Symposium

  6. Benchmarking the Basket Case • Cluster Development 8/16 • US Patent applications 10/12 • Value Chain presence 11/16 • Business expenditure on R&D 11/16 • Cost of broadband 12/13 • Intensity of local competition 13/16 • Broadband access 13/16 • Overall infrastructure quality 15/16 • Efficiency of distribution infrastructure 15/16 • Growth in nominal compensation per employee 15/16 Labour Relations Commission Symposium

  7. Are there any certainties out there? Labour Relations Commission Symposium

  8. CERTAINTY #1 Economic Development will be increasingly Technology Driven Stone Age Bronze Age Iron Age Information Age ??? Bioengineering Age Labour Relations Commission Symposium

  9. US internet bandwidth demand growth (%pa) Labour Relations Commission Symposium

  10. Economic Development will be increasingly Technology Driven Labour Relations Commission Symposium

  11. CERTAINTY #2Globalisation will continue Singapore U.S China Thailand Labour Relations Commission Symposium

  12. Emulating Ireland/Singapore JORDAN ESTONIA Moving the goal posts INDIA CHINA Labour Relations Commission Symposium

  13. Parts of Asia + Central Europe winning much of “our” high tech & services FDI business. • - National Instruments • - P + G • - G.E., Dell, Ford • - China/semiconductors • - Singapore/pharma Labour Relations Commission Symposium

  14. We are still in the FDI business • Life Sciences : Centocor / Merit Medical / Guident • Web Services : Google / Overture / Amazon • Software : McAfee / Business Objects • Financial Services : Harford Financial Services Labour Relations Commission Symposium

  15. How should we respond to sustain Competitiveness and Growth? Labour Relations Commission Symposium

  16. Future Global Scenarios • Faster, faster • Rough neighbours • Comparative Advantage Labour Relations Commission Symposium

  17. ‘Ahead of the Curve’ - Enterprise Strategy Group Comparative Advantage Competitiveness Labour Relations Commission Symposium

  18. Tax Flexible Regulatory and Business Environment Relevant skills 1 Build Comparative Advantage Labour Relations Commission Symposium

  19. Tax rates Labour Relations Commission Symposium

  20. Tax Rates Labour Relations Commission Symposium

  21. Tax Rates Labour Relations Commission Symposium Source: KPMG Corporate Tax Rate Survey 2004, PwC Corporate Taxes 2003-2004

  22. Labour Market Regulation Labour Relations Commission Symposium

  23. Labour Relations Commission Symposium

  24. Burden of Regulation Labour Relations Commission Symposium

  25. Labour Relations Commission Symposium

  26. ‘Spheres of business’ where Ireland is or could become an internationally significant location A FEW EXAMPLES Established Biotech/pharma Manufacturing Financial Services Communications Management Software Medical Devices Functional foods Emerging/Future possibilities ‘Locally Delivered’ Internationally Traded Services Management of IP E-Learning Labour Relations Commission Symposium

  27. ‘Spheres of business’ where Ireland is or could become an internationally significant location Some Characteristics Customised Products/Services Knowledge Intensive Specialised Skills High Margin Service Intensive High Skills Low Labour Content Niche Markets Labour Relations Commission Symposium

  28. ‘Spheres of business’ where Ireland is or could become an internationally significant location Comparative advantages Relevant Research and Development Strengths Responsive Regulation Indepth Market Knowledge Relevant Skills and Training Specialised Infrastructure Specialised Services Labour Relations Commission Symposium

  29. High Value Manufacturing - Examples of sectors and activities that offer significant opportunities Labour Relations Commission Symposium

  30. Services - Examples of sectors and activities that offer significant opportunities Labour Relations Commission Symposium

  31. 2 Boost productivity • Infrastructure • Research • Innovation • Competition • Education and skills Labour Relations Commission Symposium

  32. The “National System of Innovation” Innovation policy Incubators, Mentoring… Public R&D Firms system Large, small, MNCs, NTBFs, … Intermediaries MARKETS Human capital Training & Education Business support Venture Capital Rules & Regulations Framework conditions Labour Relations Commission Symposium

  33. 3 Maintain an attractive cost environment • Fiscal policy • Public Sector efficiency and responsiveness • Pro competitive regulatory policies Labour Relations Commission Symposium

  34. Labour Relations Commission Symposium

  35. Labour Relations Commission Symposium

  36. Tax and other Comparative Advantages Costs Infrastructure (sites, services) Flexibility, agility, speed “Selling” (Development Agencies) 5 Compete for FDI Labour Relations Commission Symposium

  37. Conclusion • We must apply both economy wide and sector specific strategies to build competitive advantage………. • ……………………in activities for which this country is or can become an internationally significant location Labour Relations Commission Symposium

  38. Forfás Wilton Park House Wilton Place Dublin 2, Ireland Tel: +353 (0) 1 6073000 Fax: +353 (0) 1 6073030 www.forfas.ie Email Alerts For regular updates on Forfás announcements, press releases, publications and events, subscribe to email Alerts by emailing alerts@forfas.ie with ‘subscribe’ in the subject or body of the email. Labour Relations Commission Symposium

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