IRELAND CAN protect itself from the effects of economic downturns if it develops mid-sized, export-focused firms, a conference in Dublin was told yesterday.

Addressing the Chartered Institute of Management Accountants conference, Prof Stéphane Garelli from the Institute of Management Development (IMD) in Switzerland said such a strategy was extremely successful for the German economy.

"That's where you have the challenge, because in Ireland small is beautiful," said Prof Garelli. "You need to develop a layer of SMEs who can compete globally because it makes you more resilient and less susceptible to downturns."

Successful mid-sized firms were export-focused, embraced new technology and had identified a profitable niche, he added.

In a far-reaching address that covered the state of the global economy, Prof Garelli said the global economic downturn would present opportunities for firms.

"The good thing about a crisis is that it forces change," he said.

The difference from the recession of the early 1980s was that the global economy now has a much wider base. Last year, 110 economies grew at over 5 per cent. The economic growth, combined with population growth in Asia and Africa, would present opportunities for export-focused firms.

Prof Garelli said that between 2000 and 2007, 600 million people joined the middle classes. "The birth of the new middle class will be the engine of the world economy," he said. "They will want to buy brands, they want to buy happiness, that's the best definition I can give of it."

The most profitable opportunities lay in selling financial services, professional services and technology to these emerging markets.

His analysis was that a range of global factors was feeding inflation and that "we are going to have to live with it for the next few years".