Assess Irelands indigenous export performance and policy
Introduction The object of this essay is to assess Irelands indigenous export performance and policy. To do this, one must look at the state of Irish exports as a whole, both from the foreign owned and indigenous sector. ... The main body of the essay consists of an analysis of export policy down through the years and how this has affected the export performance of both indigenous and foreign owned enterprises. ... It concludes with possible suggestions as to why indigenous export performance is as it is, and briefly touches on the outlook for the future. Indicators Growth: It is a well-known and undeniable fact that Ireland is an excellent exporter, and that it has one of the best performing export economies in the world. ... Various sectors have had a specific impact on the increase in Ireland’s export performance. The table below indicates which sectors have been the main players in our export growth. ... This undoubtedly is one of the biggest contributing factors, along with electronics and electronic goods in this performance. ... The manufacture of computer equipment, and machine and various equipment is also quite a big contributor to exports, with food and live animals accounting for only 6% of the export total. ... The scale of indigenous firms, unfortunately, cannot boast the same success, with a mere 83, or 2% of indigenous firms employing 200 people or more. (CIP 2000) Market: Ireland’s market diversity has changed greatly since the start of all the increased export activity. Before, Ireland was almost totally dependent on the UK as its export destination, with the state of the British market determining how our economy performed. Seam Lemass and the rest of the policy makers that had set about changing the fundamentals of Irish export performance and policy in the late 1950’s, decided that sticking closely to British economic policy was not going to be beneficial in the long run to the country and so decided to decouple itself from it. ... Although the importance of the UK as en export destination has been drastically reduced over the years, it remains our biggest export destination accounting for 17% of total exports. ... Having the UK as its main export destination, while more accomodating logistically, can be somewhat inconvenient with the fluctuations in value between sterling and euro. ... What does Ireland export? ... The export potential that is being realised in these areas is phenomenal. ... Irelands Main Exports 1999 NACE Code No. ... Gross Output£000 Gross Output Exported £000 15 –16 411 8,981,901 5,759,978 21 – 22 281 5,910,964 5,098,286 24 176 14,352,476 14,051,787 30 – 33 356 18,107,035 16,675,117 Source:CIP 1999 These figures, while portraying a very good image of Irelands export economy (they show it to be a brilliant producer of mainly high tech products), are quite deceptive in that it’s not through innovation and technological advances on the part of the Irish people that we manufacture and export such vast quantities of this type of good. ... How we rate in comparison to other export economies On a world scale, Ireland is the 19th biggest exporter of manufactured goods. ... 3 Source: World Trade Report 2003 We export 1. ... Portugal and Greece, both good countries to compare Ireland with in terms of export capabilities, don’t even feature on this list. ... Irelands share of exports is much larger than that of the majority of small European economies. ... In the following graph, it can be seen that Ireland, in comparison to the other smaller economies in Europe, has an extremely open economy, which enables it to export such vast quantities of goods. ... Irelands index of openess, as measured by dividing exports by the GDP of the country, was an amazing 88% in this year. ... The openess of small European economies Country Export Share of GDP in 1960 Export Share of GDP in 1999 Belgium 39 74 Denmark 33 35 Ireland 30 86 Portugal 16 33 Greece 7 16 As can be seen from the graph, the degree of openess of the Irish economy jumped hugely from just 30% in 1960 to 86% in 1999. ... How has Ireland has reached this level of openess and export performance? ... There was, of course, the shipbuilding, engineering and linen base in Belfast, but this did little for the export activities of the Republic. ... ‘Protection as export promotion’ (Krugman, 1984) appeared to be the order of the day, with high tariff barriers and a strict prohibition on foreign ownership of firms who wanted to operate in Ireland. ... It was under the government headed by Seàn Lemass, that radical changes in Irish export policy began to take place. ... Ireland began looking to conventional outward looking strategies as a means to encourage foreign investment as an aid to indigenous industry. It appears that these Irish policy makers were moving away from inward looking strategies in order to boost the economy. ... (Unstunel) This is exactly what Ireland needed; growth, by foreign investment, if necessary, in order to assist indigenous industrial growth. ... Irish export policy and performance continued to change by means of the dismantling of most trade barriers within a ten-year time frame and the offer of training and investment grants. Tax incentives were introduced to encourage the expansion of industrial exports, and the Industrial Development Agency (IDA) was formed with the task of assisting growth in the indigenous sector, as a priority, while at the same time encouraging foreign firms to set up new industries here. ... The IDA continued its attempts to promote industry by encouraging export-oriented growth sectors such as electronics, engineering and pharmaceuticals to set up in Ireland. ... This need to be prepared for integration in the SEM and the EMU, leads some to believe that Irelands rapid growth and expansion in the 1990’s was more a case of successful regional planning as opposed to resulting from the industrial policies put in place by the Irish government. The goal of EU regional policy and investment is ‘To design and implement policies with the explicit aim of transforming the underlying structure of the (poorer) beneficiary economies in the world in order to prepare them for exposure to the competitive forces unleashed by the SEM and the EMU’. This would seem to back up this argument completely, but whether or not it was just a case of good EU planning or government policy, the fact is that at around this time Ireland became a very attractive destination for investors.