National Competitiveness Council publishes bulletin on economic concentration
As the Irish economy continues to grow, ensuring our competitiveness remains sustainable takes on even more importance. The NCC is concerned that the sustainability of growth could be threatened by heavy dependence on the performance of a narrow base of firms and economic sectors. At the same time the indigenous exporting base exports a narrow range of products and services and relies on a small number of export markets. Brexit has exposed how Irish export markets are geographically concentrated and the range of products and services exported has become increasingly narrow.
To remain competitive, the NCC highlights the need for a relentless focus on innovation, export diversification, productivity enhancement and new markets. Broadening our enterprise and export base is key to ensuring the economy is resilient and adaptable. Supporting the internationalisation and market diversification of Irish enterprise would contribute to making the economy more resilient to external market shocks, such as Brexit.
Key findings of the bulletin are:
- Concentration of output among a very small cohort of sectors and firms represents a risk to sustainable growth. High value-added sectors, such as chemicals and ICT, account for a significant share of output and exports.
- Ireland’s labour productivity performance is strong in an international context but driven by a narrow base of enterprises, disguising the majority of underperforming firms where productivity growth is stagnant or falling.
- Ireland is also exposed to a relatively high degree of export concentration by trading partner and product exports.
- A third of total exports are accounted for by five firms. 39% of corporation tax is paid by the top 10 companies.
- The bulletin exposes the vulnerabilities in the Irish economic model. Fixing these is not easy and remaining competitive requires a relentless focus on innovation, export diversification and productivity enhancement.
The bulletin is available here