Fostering Investment The Irish Approach

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Fostering Investment- The Irish Approach

• Conor OMahony
• Department of Enterprise Trade and Employment,
  Ireland
• October 2003
• www.entemp.ie

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Presentation in 2 parts

• Background to recent performance of Irish Economy
• Overview of State supports for Enterprise

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GDP Growth
4
Employment Growth 2000 2001
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World Competitiveness Scoreboard

• 2001 00 99 98 97 96
• USA 1 1 1 1 1 1
• Singapore 2 2 2 2 2 2
• Finland 3 4 3 5 4 15
• Netherlands 5 3 5 4 6 7
• Switzerland 10 7 6 7 7 9
• Luxembourg 4 6 4 9 12 8
• IRELAND 7 5 11 11 15 22
• Germany 12 11 9 14 14 10
• Sweden 8 14 14 17 16 14

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Sources of Growth in Ireland

• EU membership
• Targeting
• Education and training
• Population effects
• Exports and Globalisation

• Social Partnership
• Economic and Monetary Union
• Demonstration and Agglomeration effects
• Intangibles (English speaking, diaspora, access
  to decision makers, etc)

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EU membership

• Ireland has been a member since 1973
• Access to the Single Market from 1992
• Common Agricultural Policy
• Structural and Cohesion Funds
• Competition policy development - Reforms
• Science and Technology (Framework programmes)
• Enterprise Development (SMEs, linkages)

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• Sectoral Targeting
• Small country has to pick winners
• Computers/Minicomputers/PCs
• Software
• Financial Services
• Healthcare
• Multimedia/e-business
• Historic investment in Science Research

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Education and training

• Long educational tradition
• Free education in 1960s
• Third-level expansion
• Flexibility in curriculum

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Population effects

• Declining emigration
• High population growth
• Increase in working-age population
• Womens participation
• Immigration

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Exports and Globalisation

• 17 of Trade with Us
• 23 of Trade with Rest of World
• ? 58 with UK and EU

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Social Partnership

• Initial agreement a response to crisis
• Originally three partners Government,workers,
  employers
• Membership has broadened (Fourth Pillar)
• Agenda has broadened also
• 6th Agreement concluded this year

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Economic and Monetary Union

• Preparatory period forced monetary and fiscal
  discipline (Maastricht criteria)
• Ireland was one of the founders on 1 January 1999
• Now twelve members of the eurozone
• Macroeconomic stability (low inflation, low
  interest rates)

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Demonstration / Agglomeration

• Existing foreign firms reported favourable
  investment experiences
• Clustering of ICT firms in particular to take
  advantage of skills
• Specialised services developed (logistics,
  packaging, localisation)

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Enterprise Policy Strategic Challenge

• Maintaining growth and raising living standards
  with slower labour force growth
• Raising productivity across all sectors
• Overcoming infrastructure gaps
• Achieving regional balance
• Maintaining quality of life
• Maintaining / improving competitiveness Ireland
  as a location for internationally mobile
  investment
• Strengthening indigenous enterprise base

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Enterprise Support

• Role of Department of Enterprise Trade and
  Employment
• Development Agencies
• Structure
• Offer

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Role of Department of Enterprise, Trade
Employment

• Frequent review of Enterprise Policy
• Champion for pro-business environment
• Driving administrative efficiency and
  flexibility, cutting red tape
• Ensuring a light regulatory environment
• Competitive Proofing proposals
• SME Round Table Consultations
• Partnership
• Support Website and Publications, e.g -

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WWW.BASIS.IEGovernment Internet Portal
providing detailed information On

• Employing staff
• Taxation and finance
• Returns and other obligations
• Innovation
• Expanding your business
• Selling to government
• Closing or selling a business

• Starting a business, including business
  registration
• Funding including the range of funds available
  and how to access them
• Legal and Regulatory matters
• Business Operations and Trade
• Premises and environment including matters
  relating to planning permission

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Industrial PromotionOrganisational Structure

• Department
• 35 County Enterprise
  Boards
• (Indigenous) (FDI) (Micro-enterprise)

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Forfás

• Adviser on Industrial Policy
• Coordinator of Industrial Development agencies
• National Competitiveness Council

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Industrial Development Authority Ireland

• Responsible for attraction of FDI
• Markets Ireland as base for Investment
• Provides some financial assistance (subject to EU
  State Aids regime)

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ENTERPRISE IRELAND

• Offers services support measures mainly for
  indigenous enterprises
• Services For Enterprises
• Focus on fast growth, export oriented start-ups
• Provide professional advice on all aspects of
  company development
• Introduce potential business partners
• Provide Access to Finance
• Venture Capital equity
• Employment grants
• Management Development
• Support for RD, Innovation and Incubators

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ENTERPRISE IRELAND

• Example of Support Provided
• Seed and Venture Capital Funds
• Objectives are to
• fill the gap left by existing venture capital
  funds
• assist start-up operations and early stage
  development companies
• stimulate the investment by the Private Sector of
  funds into Venture Capital

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ENTERPRISE IRELAND

• Seed and Venture Capital Funds (contd)
• Partnership with Venture Capital Funds/ promoters
  with management resources and expertise
• Commercial remit.
• Mix of private and public funding (incl EIF in a
  number of funds)
• Current programme State funding of c. 100m
  leveraged total funds of 400m

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County Enterprise Boards

• Provide support to micro-enterprise (lt 10
  employees)
• Network of 35 boards at municipal level
• Funded mainly by Exchequer
• Mixture of direct financial support and soft
  supports
• Promote Entrepreneurship locally
• High client satisfaction
• Positive impact on local economic activity

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COUNTY ENTERPRISE BOARDS SERVICES

• Finance feasibility study (max 5k), employment
  (max 6.3k per job), capital and equity (max
  63k)
• Management Development
• Start your own business programme
• Business Advice and Information
• Information Seminars
• Business Mentoring
• Women in Business network
• Networking Opportunities
• E-commerce development

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Conclusions

• Extraordinary performance in past decade, driven
  by
• Good policies
• Good timing
• Good Luck
• More challenging environment going forward
• Have to be aggressive in driving competitiveness,
  incl implementation of Better Regulation
  agenda.
• Need to continuously minimise bureaucracy
• Need to maintain and develop support for business
  particularly SME sector
• Industrial promotion framework appears to be
  working but cannot be complacent
• Need to constantly review and respond to change.

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Some Useful Websites

• www.entemp.ie
• www.forfas.ie
• www.enterprise-ireland.ie
• www.basis.ie
• www.bettergov.ie
• www.betterregulation.ie
• www.fingalceb.ie