Competitiveness is a defining feature of a successful economy. With a ranking of seventh in the 2016 index of World Competitiveness, Ireland is well placed in that regard. The State has shown a rapid improvement over the last five years as measured by IMD, a Swiss business school.
In 2011, the year of the financial bailout, Ireland had dropped to 24th in the global rankings. Within the EU, only Sweden and Denmark – both non euro members – now have a higher competitiveness rating. Among the 19 euro states, Ireland is viewed as the most competitive, securing its highest ranking since 2001.
Some 340 indicators are used by IMD to establish the global rankings, with the assessment covering four main categories: economic performance, government efficiency, business efficiency and infrastructure.
In addition, a survey of the views of international business executives is also assessed. Unsurprisingly, infrastructure – where Ireland is ranked in 24th place – remains the weakest link, with a depressing effect on the State’s overall competitiveness rating. Ireland is ranked 40th for basic infrastructure.
The gains in competitiveness, as a result of the recession and the harsh discipline imposed by the terms of the bailout programme which required difficult fiscal adjustments to regain control of the public finances, meant public investment in infrastructure – notably housing – has been minimal.
And from a societal perspective, we are paying a price. But this deficit has not yet adversely affected Ireland's capacity to attract foreign direct investment (FDI). Last year more than 10,000 jobs came from FDI projects, a 47 per cent rise on 2014. But as the National Competitiveness Council recognised in its response to the IMD survey, capacity constraints and structural issues cannot be allowed to become serious impediments.
Ireland’s sharp rise in the global index is far better than most had anticipated. However, the combination of high rankings for both the domestic economy and international investment (3rd) and the sustained weakness in the provision of infrastructure is an anomaly that must be addressed.