The continued strong performance of the Irish economy
over the past year has been outstanding. Sustained
economic growth has brought many benefi ts to our
society, including improvements in real living standards,
the continued availability of good quality jobs, and sustained
improvements in real take home pay. Ireland’s international
competitiveness has played a crucial role in building this
success. Therefore, in order to build on the success and
to ensure that living standards continue to rise, it is vital
that we maintain and develop the competitiveness of the
economy. Competitiveness will be enhanced by well-designed
social policies and services, making Ireland an attractive
place to live in and supporting higher participation in
employment. Economic and social progress are inherently
interlinked, and associated policies should complement and
reinforce each other.
At present Ireland faces challenges to our competitiveness on several fronts. Increased competition
both in Europe and globally makes it diffi cult to compete on the same basis as in the past. We need
to protect our current strengths and develop new bases for competitive advantage. Ireland is no
longer a low cost economy. In order to maintain and enhance competitiveness in the context of a
higher cost economy, a greater focus on productivity across all sectors of the economy is essential.
Important policy issues in the medium term include developing our innovation potential, the human
capital of our country and our economic and technological infrastructure. The Government is
currently investing almost 5% of GNP in public capital projects, twice the EU rate.
Competitiveness is a key focus of Government policy. The Government is determined that the
conditions for enterprises operating in Ireland should be as favourable as possible. This encompasses
policies on the skills needs of the population, the knowledge capital in the economy, the physical
infrastructure, the costs that businesses face, the utilities and other services that businesses need,
the regulatory environment and other factors. Many aspects of these issues are benchmarked in
this report.
The National Competitiveness Council provides a valuable input to the formation of Government
policies through its work on competitiveness benchmarking. I would like on my behalf and that
of my colleagues in Government to thank the Council for its important work and I am pleased
to introduce the Annual Competitiveness Report 2005.