UCC hosts forum on Irish economy

31 Oct 2017

For Ireland to reach its economic potential over the next 20 years, Irish policymakers need to undergo a change of mind-set, according to UCC economist Professor Eoin O'Leary.

"Priority should be given," he says "to developing critical masses of internationally competitive indigenous enterprises.  To do this involves seeing economic development as a bottom-up organic process as opposed to the existing over-centralized view. It requires that we design fit-for-purpose city regions, towns and rural places and that control and responsibility for enterprise development be decentralized to elected authorities in these places with tax-raising powers." 

This and other issues will be discussed at a Policy Forum – Rethinking Irish Development organised by Prof O’Leary which will take place in UCC on Friday, November 3.

"Ireland is in the 'sweet spot' for foreign direct investment," says UCC's @seamuscoffey @IFAC_IE Via @examinerbiz https://t.co/EjTvsnJlXU pic.twitter.com/szsSyDZ3N6

— UCC Ireland (@UCC) November 2, 2017

The Forum will focus on how Irish policymakers can re-think their strategies for an increasingly uncertain future.

At the Forum the presenters will deliver a 15-minute non-technical talk that will show an understanding of the context in which policymakers work and a willingness to help re-think policy for future development. The Forum is targeted at policymakers working on Irish economic development at the national, regional and local levels and/or on Ireland’s indigenous and foreign-owned sectors. The focus is on bridging the gap between internationally recognized evidence-based research and policy-making aimed at building a sustainable future for Ireland. 

"We need a new economic plan to build local strengths," says UCC economist, Eoin O'Leary. More via @examinerbiz https://t.co/lBubKZ34LW pic.twitter.com/sz0mWrb1ix

— UCC Ireland (@UCC) November 2, 2017

To register for the conference visit Rethinking Irish Economic Development

"It is never too late to plot a new course," says UCC's Eoin O'Leary. "Small changes at first may set in motion more fundamental reform." pic.twitter.com/BXOZFmy6xY

— UCC Ireland (@UCC) November 2, 2017

See full programme below and short summaries of the various presentations.

Short Summaries of Presentations

Re-thinking Irish Economic Development

Eoin O’Leary, Competitiveness Institute, Department of Economics, Cork University Business School, UCC

This presentation identifies three problems that have and may in future undermine Ireland’s ability to fulfil its economic development potential. These are weakness in developing indigenous enterprise, failure to see places as drivers of economic development and a lack of institutional learning. It proposes that priority be given to developing critical masses of internationally competitive indigenous enterprises by viewing development as a bottom-up organic process. This requires that we design fit-for-purpose city regions, towns and rural places and that control and responsibility for enterprise development be decentralized to elected authorities in these places with tax raising powers. It is never too late to plot a new course.               

How sustainable are favourable tax policies for

future Irish economic development?

Seamus Coffey, Irish Fiscal Advisory Council & Department of Economics, UCC

Ireland is currently in a sweet-spot for attracting investment, employment and, more recently, Corporation Tax revenues from foreign MNCs particularly from the US. US companies are responsible for eight per cent of employment and undertake ten per cent of investment in tangible assets by firms in the business economy in Ireland. In relative terms these are four and three times greater than the median outcome for the remainder of the EU15. More than half of Ireland’s Corporation Tax base arises through US-owned companies with Corporation Tax receipts of €8 billion expected this year. The profits of US companies in Ireland were one-quarter of their reported profits in the EU15 in 2014 and greater than those earned in Germany, France and Italy combined. This presentation assesses the risks, mainly external, that threaten Ireland’s position in this sweet spot.

The Stock of Businesses in Ireland: Pre, During and Post Crisis

What are the Implications for Irish Development Policy?

Bernadette Power, Department of Economics, Cork University Business School, UCC

An exploration of changes in the stock of businesses in Ireland identifies core strengths in terms of continued growth in the knowledge intensive services sector but also highlights imbalances - most of this growth is centralised in Dublin. Manufacturing while more regionally dispersed is not growing and is largely concentrated in medium-low and low technology manufacturing sectors. The vast majority of firms are micro enterprises which are either not scalable, don’t want to scale or are experiencing challenges in scaling their businesses. The implications of the latter for enterprise policy are discussed. Solutions which assist in scaling businesses with 1-4 employees is critical for their long-term survival. Addressing regional imbalances in entrepreneurship through policy is challenging. Local specialisation is important for reducing enterprise deaths but it is greater population density which raises enterprise birth rates. The latter supports spatial strategies to develop urban centres outside the greater Dublin area and a bottom-up approach to enterprise development.

How can we identify sectoral and spatial concentrations of Irish-based businesses? –implications for policymakers.

Chris Van Egeraat, Department of Geography, NUI Maynooth

Regional industrial policy is inspired by a range of territorial production concepts. Most of these are based on the benefits of geographically concentrated groupings of firms in the same industry. The identification of these groupings tends to employ geographical concentration and/or industrial specialisation indices. Neither of these types of indices identify substantial concentrations and methodologies often work with pre-specified administrative boundaries. This paper outlines a new index for substantial industrial concentrations and a new methodology for generating meaningful boundaries of concentrations. In addition, the paper addresses the issue of the relevant spatial scale of clusters and cluster policy in Ireland

The role of agglomeration economies and demonstration effects for Irish foreign-owned manufacturing productivity: lessons for policy

Lisa Noonan & Eoin O’Leary, Competitiveness Institute, Department of Economics, Cork University Business School, UCC

While the National Planning Framework (NPF) places an emphasis on the development of Ireland’s urban structure, we find that factors other than urban location are also important. We discuss how regardless of their location in the country, the productivity of a foreign-owned business in Ireland will be higher the greater the number of foreign-owned businesses of the same nationality in Ireland. This could be dependent on social proximity and sharing the ‘rules of the game’. However, it may also be due to lobbying of the Irish government. In line with the objectives of the NPF, the role of location, specifically urban concentration, and the importance of skilled labour for foreign-owned businesses within Irish regions should also be promoted by policymakers.

Irish Cluster Policy: A Discredited Idea or the Way Forward?

Eleanor Doyle, Competitiveness Institute, Department of Economics, Cork University Business School, UCC

Cluster-based policy is ubiquitous in economic development across Europe, the United States, and wider afield.  Ireland is a relative late-comer to implementing national or regional cluster policies although Irish policy since the 1990s has identified clusters as a channel for supporting and delivering economic development. Currently clusters feature large in national and regional Action Plans for Jobs.  Irish regions stand to benefit from the considerable range of established understandings on how Cluster Initiatives have been organised and what their goals have been elsewhere. This session considers the potential for the current incarnation of Irish cluster policy to be effectively implemented.

Polices for Supporting Innovative Human Capital in Irish Business

Kevin R. Murphy, Kemmy Business School, University of Limerick

For the last 50 years, public policy and organizational efforts to increase levels of Human Capital in the workforce have focussed on education and training. The next generation of human capital development will focus on factors that motivate employees to take risks and innovate, including work attitudes such as job satisfaction and commitment to the goals of the organizations. Public policy programmes aimed at assisting organizations in identifying, implementing and monitoring these critical attitudes and beliefs are presented. These build on existing programmes to support business innovation, and will help build three-way partnerships between organizations, public policy bodies and sources of expertise on human resource management.

The Irish Agri-food sector: policies for future development

Thia Hennessy (1) and Trevor Donnellan (2)

(1)Department of Food Business and Development, Cork University Business School and )2)Department of Agricultural Economics and Farm Surveys, Teagasc

This presentation considers the major challenges facing the Irish agri-food sector and explores future policy options. Three main challenges are considered; the persistent low levels of profitability and productivity in the non-dairy primary agriculture sector, the constraining impact of climate change policy on the profitable dairy sector and the implications of Brexit for Ireland’s agri-food sector in general. The presentation will consider the impending reform of the Common Agricultural Policy, the ongoing Brexit talks and global climate change policies with a view to exploring what policy options may best support the Irish agri-food sector and the wider contribution the sector makes to the rural economy of Ireland. 

A Case Study of Rent-seeking in Ireland; The Irish Bus Industry

Sean Barrett, Trinity College Dublin

Rent-seeking is lobbying by incumbent producers seeking protection by the government from potential competition. Subsidies, tariff protection, and laws to restrict competition and create barriers to entry are examples of successful rent-seeking.  When a regulator is captured the incumbent lobby increases its income without increasing overall economic output. Successful rent-seeking and capture is widespread in the transport sector as a whole, including aviation, trucking, airports and taxis as well as buses.  Rent-seeking behaviour and regulatory capture have dominated the Irish bus sector for 85 years. Where Court decisions have reduced regulatory capture there have been significant increases in output and efficiency but also renewed rent-seeking pressures for regulatory recapture.  Efficient producers face competition from less efficient incumbents engaged in lobbying and society also faces the cost of the lobbyist sector in unproductive entrepreneurship. Society as a whole requires regulatory agencies operating in the interests of the wider society rather than as downtown offices of incumbents. The gains from new entrants to the Irish intercity bus sector have included large increases in output and productivity and should be sought throughout the network nationwide. Regulatory bodies should be proofed against rent-seeking and policy capture by lobbyists.

For more information about courses and research at the Cork University Business School visit CUBS

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