Written answers

Tuesday, 21 March 2006

Department of Enterprise, Trade and Employment

Economic Competitiveness

8:00 pm

Photo of Michael LowryMichael Lowry (Tipperary North, Independent)
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Question 425: To ask the Minister for Enterprise, Trade and Employment the measures he plans to take to assist Irish companies and international companies based here maintain a cost competitiveness and a strong competitive advantage in the marketplace in view of the recent rise in the number of people made redundant; and if he will make a statement on the matter. [10681/06]

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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Maintaining Ireland's attractiveness as a competitive and profitable European location from which to do business is a key priority for the Government, and the Department's enterprise support policies clearly reflect that commitment. Our economy is undergoing fundamental change, and while we are no longer a location of choice for basic, low-value-added manufacturing investment, we have developed different competitive strengths and advantages.

Manufacturing faces particular challenges, but globalisation is creating significant opportunities for us, particularly in services. Our support packages to both foreign and indigenous companies have helped generate significant employment in the sector. Balanced economic policies have led to the creation of 268,000 more jobs between September-November 2000 and the same period in 2005 according to the CSO's quarterly national household survey. Financial and other business services accounted for 15,300 jobs alone in the year to the fourth quarter of 2005. That represents 17.7% of all new jobs created in that time. Meanwhile, research from the National Competitiveness Council shows that our total share of world services trade has increased remarkably, from 0.5% in 1997 to over 2% in 2004. This is far greater than would be expected for an economy of our size.

The Department and its agencies are acutely aware of the imperative to help build firms of both scale and importance in higher-value-added sectors of global trade. Our focus is firmly concentrated on managing that transition with the best possible blend of policies to strengthen both national and firm-level competitiveness. Our response to the challenge is strategic, yet reflects the business needs of companies. The enterprise development agencies are promoting increased levels of investment in research, business-related technological development and innovation across all enterprise sectors. That will assist firms to produce improved, value-added products and services. In the longer term, that will provide more sustainable and higher-quality jobs.

Innovations in the support package available to investors, such as changes to the taxation treatment for head office operations and research and development, are helping secure new forms of investment, as well as helping persuade foreign investors to allocate higher-value-added functions to their Irish operations. Those policy innovations clearly demonstrate the high priority that the Government accords to ensuring that Ireland aligns its business supports and competitive characteristics with the requirements of doing business here. They also show that our enterprise policies are both creative and flexible to capture the opportunities presented by globalisation.

Following the policy prescriptions contained in the enterprise strategy group that I mandated, Enterprise Ireland was mandated to restructure its operations to support the competitive position of indigenous firms better. The outcome is being realised in Enterprise Ireland's new strategic direction to transform Irish industry, which was launched last year. Enterprise Ireland is developing closer relationships between Irish firms and third level colleges to increase levels of applied research. That will ensure that market-led innovation becomes an integral part of the competitive strategy of individual companies and strengthens Ireland's long-term competitiveness. The agency has also made changes to the organisation of its overseas offices so that market intelligence and new opportunities can be fed more effectively back to its client base. Those initiatives will expand the potential for Irish firms to extend their reach into global markets.

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