IRELAND has made huge strides in improving growth and competitiveness and is now ranked the 16th most competitive economy in the world by the World Economic Forum. Ireland has jumped from 26th place to 16th and is ranked ahead of Germany and France in the 1997 Global Competitiveness Report.
Singapore and Hong Kong remain the world's most competitive countries while Britain has moved up to seventh position from 15th. The United States is the third most competitive country, displacing New Zealand and moving up from fourth position.
Competitiveness is defined by the Swiss-based World Economic Forum (WEF) as the ability of a country to achieve sustained high rates of growth in gross domestic product per capita. The rankings are designed to assess which countries have the best prospects for economic growth over the next five to 10 years on the basis of current economic conditions and institutions.
"Ireland, the fastest growing economy in the European Union throughout the 1990s, has also made huge strides in improving growth and competitiveness . . . Its real GDP grew by 7 per cent in 1996 with inflation well below the EU average. Thanks to strong inflows of foreign direct investment, Ireland is fast catching up in areas like `technology' and `management'."
Ireland scored well on the quality of technology, management and institutions. The highest score came in the "openness" category which includes measurements of tariffs and hidden import barriers, foreign direct investment and exchange rate policy. The lowest score was in the finance category.
Singapore and Hong Kong, excel in nearly every major area that counts in terms of competitiveness, according to the WEF. Their characteristics - open financial markets, corruption-free civil services, superb infrastructures and highly-educated labour forces - are suggested as "virtual recipes for growth".
The report forecasts a modest slowdown in growth for the Asian tigers, though it will remain high by international standards.
"The competitive nations are the ones that have chosen the institutions and policies that promote long-term growth," according to Prof Jeffrey Sachs, the co-chairman of the advisory board of the Global Competitiveness Report 1997 and director of the Harvard Institute for International Development.
Of the large economies - those with populations of more than 10 million people - the US is the most competitive. It is the leader in technology and management and strong in labour market flexibility. Canada moved from eighth place to fourth place because of its success in curbing its fiscal deficit while Britain's improvement reflects restructurings through privatisations and deregulations.
The report, which compares 53 of the world's major economies, included Slovakia, Ukraine, Vietnam and Zimbabwe for the first time this year. Countries are ranked according to standards under 155 different criteria compiled into eight factors determining competitiveness.
These factors were:
(a) openness of an economy to international trade and finance;
(b) the role of the government budget and regulation;
(c) quality of infrastructure;
(d) technology;
(e) business management;
(f) labour market flexibility;
(g) and the quality of judicial and political institutions.
The report is based on analysis of economic performance data and information collected from 3,000 executives throughout the world.
The WEF points out there are differences between executives' rankings of the most competitive countries and the outcome when all the data were assessed. Executives give a more positive assessment to large, wealthy, highly-visible economies even when they are not performing so well, while they neglect smaller, highly-competitive economies. For example, Japan was placed second in the executive survey but ranked 14th in the overall Competitiveness Index while Luxembourg was placed 11th on the index but only ranked 29th by the executives. Ireland was ranked only 33rd by the executives.
Government corruption and lawlessness pose some of the greatest challenges to the continued improvement in economic performance in all areas of the world, according to the report.
Monetary union is reinforcing Ireland's economic momentum, according to investment house Morgan Stanley.
The group, which first dubbed the Irish economy the Celtic Tiger, believes the prospect of monetary union has been dampening growth prospects for most likely participants.
The report also notes that Ireland's export markets are accelerating, reducing the impact of any loss of competitiveness and further supporting growth.
