Ireland’s Competitiveness: A Global Leader in Business and Innovation

By Mick Lavin, Coach, Agile Coach, Mentor

Ireland has established itself as one of the most competitive economies in the world. The country consistently ranks near the top in renowned global competitiveness reports such as the IMD World Competitiveness Rankings and the World Economic Forum’s Global Competitiveness Index. Ireland’s strong performance is driven by a combination of factors that make it an attractive location for business and investment. In this brief article, we analyse Ireland’s competitiveness rankings, the key factors driving its success, and the headwinds it may face in sustaining competitiveness in the future.

Ireland’s Competitiveness Ranking

In the most recent 2023 edition of the IMD World Competitiveness Rankings, Ireland ranked 2nd out of 63 economies. This is the country’s highest ever position in the rankings and marks a significant improvement from 7th place in 2021. The top-ranked economies in the IMD rankings tend to have high productivity, strong innovation ecosystems, developed infrastructure and supportive government policies – strengths that Ireland has focused on cultivating.

Similarly, in the World Economic Forum’s Global Competitiveness Index 2022, Ireland ranked 7th out of 141 economies assessed. The country has remained consistently in the top 10 in this index for over a decade. Ireland’s robust performance has been acknowledged as an exemplar for small open economies aiming to succeed through competitive business environments.

Key Factors Driving Ireland’s Competitiveness

Several factors have converged to make Ireland one of the most competitive economies globally.

Firstly, Ireland has a highly skilled and educated workforce. The country has invested heavily in education and ranks in the top 10 globally for higher education and training. This skilled workforce has attracted significant foreign direct investment into the economy.

Secondly, Ireland has an extremely business-friendly environment. It ranks in the top 20 globally for ease of doing business. The corporate tax rate is just 12.5% and the government actively collaborates with industries to promote economic growth.

Thirdly, Ireland has world-class infrastructure. It ranks highly for the quality of its transport, utilities, and digital infrastructure. The government has prioritised infrastructure investment to strengthen connectivity.

Fourthly, Ireland has a dynamic and innovative economy. It ranks in the top 10 for innovation and has particular strengths in ICT, Biopharma and MedTech. Strong policies support R&D, technology commercialisation and high-tech start-ups.

Finally, Ireland’s membership in the EU provides it access to a huge single market. It also benefits from EU funding programs, open labour mobility and a common trade policy.

Headwinds Facing Ireland’s Competitiveness

While Ireland scores highly on competitiveness rankings currently, maintaining this position presents some challenges.

Brexit has created significant uncertainty and risks for Ireland given the close economic ties with the UK. Any disruption in trade or mobility could dampen growth.

Ireland faces capacity constraints as the economy nears full employment. Labour and skills shortages, as well as infrastructure gaps, could emerge as bottlenecks.

While Ireland’s low corporate tax rate has attracted FDI, global tax reforms could reduce this advantage going forward.

Ireland has an over-reliance on foreign investment and exports. Domestic innovation capabilities must be strengthened to drive the next wave of growth.

And finally, Ireland’s high cost of living, especially housing, threatens wage competitiveness. Tackling this requires increasing housing supply and improving affordability.

In conclusion, Ireland’s strong competitiveness position is underpinned by a skilled workforce, business-friendly policies, world-class infrastructure, and innovation capacity. Sustaining this will require proactive government policy to tackle risks like Brexit, capacity constraints, tax changes and the high cost of living. With continued focus on competitiveness fundamentals, Ireland can solidify its position as a standout knowledge-driven economy.

To see the IMD World Competitiveness Rankings click here