Key findings of European Commission report on Ireland’s competitiveness
In line with SFA’s findings on the competitiveness of the small business sector in Ireland, a recent report of the European Commission on the state of the Irish economy shows that productivity growth in Ireland is mainly driven by multinational companies. The productivity performance gap between these firms and Irish indigenous firms — mostly small and medium-sized enterprises — is increasing.
The high international mobility of some of the multinationals and current uncertainties may put the sustainability and resilience of the Irish economy at risk in the longer term. Recent research has revealed that Irish-owned firms draw limited spillovers and benefits in terms of productivity growth, innovation and export performance from the activities of multinationals in Ireland. However, Irish firms that carry out research and development efforts do benefit from spillovers from multinationals. Public sector incentives to carry out research and development and increasing the availability of skilled workers to Irish small and medium-sized enterprises would foster the diffusion of new technologies in those firms.
It comes as no surprise that one of the recommendations for the Irish government is to foster productivity growth in Irish firms, especially of small and medium enterprises, by stimulating research and innovation with targeted policies, more direct forms of funding and more strategic cooperation with foreign multinationals, public research centres and universities.