What prompts this rather ponderous headline is a couple of articles in Friday's Irish Times. Marc Coleman warns that the inevitable fall in the value of the US dollar will severely affect the Republic's ability to retain export market share in our largest export market. The Irish Exporters Association recently pointed to the fact that while exports were up 8% for the first quarter of 2006 compared to last year, exports to the US grew by only 1% due to the weakness of the dollar. By contrast, exports to the Euro zone grew by a healthy 15%. US multinationals account for about 90,000 jobs and their presence accounts for an enormous proportion of "irish" manufactured output.
Coleman reports that a survey of US companies located here, the American Chamber of Commerce in Ireland found that 43% indicated that the Republic was no longer "a preferred location" for further investment". 41% said it was not as attractive as when they first set up business here. Coleman concludes that Ireland's location as a source of inward investment from the US is "hanging in the balance". Meanwhile, the EU has now placed further restrictions on state aid to firms setting up or expanding in Ireland. Such policies in the past were influential in attracting the very multi-nationals who no longer look at an Irish location with such favour. While there will still be grants available for small and medium enterprises, especially for research and development, the days of having massive start ups like Intel in Kildare are well and truly over.
The apparent prosperity of the Irish economy currently rests on three elements: employment growth in sectors that add little to the economy in terms of innovation or productivity gains; consumption fuelled by imports; excessive reliance on construction. An economy that is run on the equivalent of taking in each others laundry is not sustainable. But as to how the Irish state should try and encourage the development of a more productive and dynamic indigenous sector in internationally traded goods and services and that has a capacity to be innovative is a subject that is definitely not on the political agenda.
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