2. POLICY FORUM Rethinking Irish Economic Development WIFI ACCESS
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3. Re-thinking Irish Economic Development
    Policy Forum November 3rd Eoin O’Leary, Competitiveness Institute, Department of Economics, Cork University Business School
Re-thinking Irish
Economic Development

4. My theoretical lens
Economic development is about wealth creation process leading to sustained national prosperity
Ultimately driven by enterprise development
Time frame is decades rather than year to year!!
Not a ‘guru economist’ telling you what to think but rather asking, ‘how do we think?’
Keynes said “The difficulty lies not so much in developing new ideas as in escaping from old ones”

5. Getting Going Forum is contributing to ‘Ireland 2040’ (http://npf.ie/)
In order to plan to 2040, we need to:
be aware of mind-sets and unstated assumptions
understand drivers of Irish economic development since 1970s
Build on strengths and learn from weaknesses
Face up to Brexit and corporation tax competition threats (or opportunities?).
Given recurring policy failures, policymakers cannot revert to business-as-usual.
National Planning Framework does not address:
the enterprise sectors and the places which will drive Irish economic development
the governance arrangements required to fulfil Ireland's potential.

6. Three Inter-related Problems
Weakness in Indigenous Enterprise
Failure to see Places as Drivers
Lack of Institutional Learning

7. Weakness in Indigenous Enterprise
‘Industrialization by invitation’ - not a strategic plan, more a response to various crises.
Since 1950’s indigenous industry has been consistently weak & foreign-assisted enterprises were an alternative source of employment.
After Celtic Tiger it was clear that foreign-assisted enterprises were a permanent feature.
Would anyone have thought that we would be as dependent on the IDA pipeline in 2017 as we were in 1993?
We have 5 internationally competitive sectors:
Pharma, ICT, and Finance……..dominated by foreign-assisted
Food and Tourism ………. largely indigenous

8. Weakness in Indigenous Industry (ctd)
Are sources of superior past performance going to deliver in future?
Pharma, ICT, Financial Services
favourable tax regime;
urbanization economies;
up-grading by Irish-based staff.
Food
Have small number of large enterprises performing well
Too many small low productivity enterprises selling into commodity markets
Lack of entrepreneurial vibrancy
Tourism
Potential is continually undersold.
2 agencies involved in marketing.

9. Failure to see Places as Drivers
In dominant policy mind-set IDA Ireland delivers Irish economic development top-down
Central government has always seen regional/local as being about re-distribution
Result has been:
Endless and meaningless revisions of regions
Haggling over revised city boundaries that are wholly inadequate as city regions
Strict adherence to antiquated county boundaries

10. Lack of Institutional Learning
Recurring policy mistakes and system failures:
Over-emphasis on short-termism …….. pro-cyclical fiscal policy (another agenda)
Tendency of political system to favour rent-seeking with hugely damaging effects on Irish economic development
Occurs where government succumbs to or actively supports lobbying by vested interests that doesn’t add to productivity.
Over-centralisation of government leading to:
Functional specialization in departments ……a disintegrating force
Lack of joined-up thinking on the ground
Resulting in poor quality public services, eg health, transport.

11. Three Inter-related Solutions
Decentralized development process
Design of Fit-for-purpose Places
Elected Authorities & Mayors

12. Decentralized development process
Prioritize the development of critical masses of internationally competitive indigenous enterprises as a bottom-up, organic process that:
Taps into local people as best-placed for harnessing local potential to build concentrations of successful enterprises
Aims to complement existing concentrations of foreign-assisted enterprises in Pharma, ICT, Finance and emerging sectors with linked concentrations of indigenous enterprises
Aims to strengthen existing concentrations in Food, Tourism and build new ones.
Result: a more diversified portfolio of internationally competitive enterprise sectors that may deliver sustained prosperity

13. Design of Fit-for-purpose Places
Ireland’s Urban Hierarchy
Tier 1
Dublin City Region
Tier 2
City regions of:
Cork
Limerick
Galway
Waterford?
Tier 3
Other towns
Rural
Coastal/inland
Urban

14. Elected Authorities & Mayors
Decentralisation of control and responsibility for enterprise development to elected authorities in city regions, towns and rural areas that are:
Adequately resourced to build capability (eg evidence base and know-how) to back winners
Responsible for actions by being required to raise an enterprise development tax
City regions (ie 1st and 2nd tiers) might
compete among themselves to host incoming foreign-assisted enterprises attracted to Ireland by IDA Ireland and/or
Develop concentrations of indigenous enterprises - linked to foreign-assisted and/or in existing/new sectors
Towns might link to 1st/2nd tier city regions or be hub for rural areas
Rural areas (inland/coastal) to focus on developing indigenous industry.

15. Is it workable?
By specializing, places would have deeper and more sustainable competitive advantages.
Currently there is a lack of identity in relation to economic development
places have similar strategies,
little control and are not directly responsible for performance
They all look to central government to supply solutions top-down
Decentralization may
Bring about improved delivery of public services
Lead to less rent-seeking if places build immunity through learning from experience
Not decentralizing economic development to properly designed places has been a missed opportunity for many decades
It is never too late to plot a new course!!

16. Thank You for Listening
Questions Welcome

17. POLICY FORUM Rethinking Irish Economic Development WIFI ACCESS
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