TWICE THE SIZE - DIT Update - Dublin Institute of Technology

adopting processes or products that may have been developed by market leaders.
Competitiveness in Ireland is now threatened by the double blows of rising costs and
falling productivity.
2. Critical to the Irish economy, therefore, is cost competitiveness, which has seriously
declined over recent years partly due to domestic price inflation and exchange rate
movements. Vital to restore Ireland’s cost competitiveness is a set of coordinated
actions across a range of policy areas including fiscal policy, infrastructure and land
use planning.
3. The other crucial ingredient to competitiveness is productivity, which is not about
working harder, but about working smarter. Government can influence a country’s
productivity growth rates by ensuring its institutional structures and policy settings
are supportive of investment, entrepreneurship, competition and innovation. It
should also try to maintain a stable macroeconomic environment with well-managed
public finances and price stability, as well as a regulatory environment that
promotes competition on a flexible labour market which minimises red tape. At the
level of the firm, productivity improvements centre on product innovation, use of
technology and management practices.
4. The development of a knowledge intensive workforce is a key long-term source of
competitive advantage. A changing world, moreover, requires a flexible response to
the development of human capital, and Ireland has benefited from the inward flow
of skilled migrant labour. A number of actions, however, would contribute to the
goal of nurturing and expanding the pool of knowledgeable human capital. These
include: more investment in pre-school education; long-term investment in primary
education; increasing the proportion of part-time students; strengthening career
guidance in schools; promoting growth in the number of students studying science,
mathematics and technology at second and third level; and devising a flexible suite
of responses to encourage lifelong learning, training at work, adult literacy and
practical options for adult leavers. Continued reforms and additional funds are also
essential if Ireland’s higher education system is to rank among the best in the world
in teaching, learning, research and development.
5. With regard to fiscal policy and public finances Irelands’ low taxation strategy has
been central to the economy’s performance over the past decade or so, but the
corporate climate has recently become much more competitive. Public finances for
the immediate future must adjust to more moderate growth in tax revenues, and
Ireland’s taxation regime will have to wrestle with tax harmonisation proposals at
EU level so as to remain competitive in the face of tax reform measures across a
range of countries worldwide.
6. Ireland’s declining competitiveness has meant that exporters have lost considerable
market share over recent years. Restoring the traded sectors is paramount. For a
small island economy, the ability to sell goods and services abroad remains crucial
to future prosperity. There is a pressing need, therefore, to develop sales and
marketing expertise in international markets.
7. Lurking around all economies is the portent of inflation. All sectors across the Irish
economy have a responsibility to constrain demands and restrain concessions so that
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