Survey sounds alarm bells for tech sector

16 May 2005

Ireland has slipped down the league of competitive economies in Swiss business school IMD’s World Competitiveness Yearbook rankings. In 2005, Ireland fell from 10th to 12th place, due mainly to its poor performance in infrastructure (which slipped to 31st place in 2005 from 25th place in 2004) and health infrastructure.

The report is the latest to underline Ireland’s eroding competitiveness. A report published by IBEC earlier this year found that energy costs for ICT companies had risen by over 22pc since 2002.

“This situation is unsustainable for a sector that depends on reliable, secure and competitively priced energy supply to ensure its competitiveness in a global market,” said Kathryn Raleigh, director of ICT Ireland, IBEC’s lobby group for the technology sector.

“Ireland cannot afford to slip further in terms of its competitiveness. Ireland is no longer a low-cost economy and it is vital that the Government and industry work together to ensure that business costs, including energy, environmental and rates are in line with competitor markets. If we don’t tackle these rising costs immediately, we will run the risk of further eroding our competitive position and losing our attractiveness as a location of choice for foreign direct investment,” she added.

On a more positive note, Ireland retained its sixth place ranking for economic performance and improved its business efficiency rating, climbing to 10th place from 11th last year. Government efficiency also improved, with Ireland now ranking 10th – up one place on 2004.

The US retained its number one position in the rankings, followed by Hong Kong, which was ranked sixth last year. These were followed by Singapore, Iceland and Canada. The biggest surprise was China, which fell from 24th to 31st position. The fall was attributed to doubts within the international business community about the sustainability of China’s rapid expansion amid strains on its financial system, infrastructure and weaknesses of corporate governance.

The IMD World Competitiveness Yearbook has been compiled annually since 1989, and rates the competitiveness of 60 economies according to criteria split into four categories: strength of domestic economy; impact of government policies on competitiveness; extent to which enterprises are performing in an innovative, profitable and responsible manner; and the extent to which basic, technological, scientific and human resources meet the needs of business.

By Brian Skelly