Small wonder as to which international visitor to our shores this week attracted most media attention and political deference.
But while Tim Cook’s brief visitation to the earthlings of this island did indeed herald very positive and welcome news for Cork and the economy as a whole, another American, speaking at the same time as the Apple leader blessed us with his gifts, delivered a significant message in its own right.
Catherine Mann is Chief Economist with the OECD and was the keynote speaker on Wednesday at a conference on tax policy hosted by the Department of Finance.
No doubt she had been tipped off by her host, Michael Noonan, about the good tidings about to be enunciated down the street, though she didn’t reference any kind of fruit, corporate or otherwise, in her presentation.
"Irish people employed by multinationals (and domestic firms) can be underemployed and underpaid relative to their skills and potential, because the alternative is either unemployment or emigration."
She did acknowledge all the positives about how well Ireland has performed over the years in attracting foreign direct investment; the factors other than our low corporate tax rates that attract firms here; and the employment and broader economic benefits they generate.
But she also highlighted some of the longer term risks attaching to an over-dependence on foreign direct investment for our economic growth.
These weren’t of the usual and wholly valid variety; namely that some types of multinational enterprises can uproot at relatively short notice to relocate to a cheaper manufacturing base or lower tax environment; or that some are forced to close due to a more competitive business environment or insufficient profitability and, either way, devastate the economy of a town or region in the process.
One of the key longer-term challenges she highlighted was that our over-dependence on foreign direct investment seems to be one of the contributors to our falling productivity relative to other advanced economies. And falling productivity over time will make it more difficult to provide the jobs required by our young people, the social welfare supports required by our more vulnerable citizens, and the pensions required by our growing cohort of elderly people.
This is occurring, in some instances, because of the nature of the employment on offer – the Irish people employed by multinationals (and domestic firms) can be underemployed and underpaid relative to their skills and potential, because the alternative is either unemployment or emigration.
It’s also occurring because, thus far, there has been insufficient linkage in terms of intellectual property and business expertise, between the multinational organisations based here and our indigenous firms.
In other words we are not gaining the business leverage and know-how from our overseas guests – some of whom have been here for many decades – sufficient to stand more solidly on our corporate feet.
Catherine Mann acknowledged that the introduction of the new lower, “knowledge box” corporate tax rate may attract greater research and development activity to Ireland, on the part of overseas firms, and that this may help lift all boats over time.
But she also stressed that our own taxation and economic policies need to address this indigenous productivity and innovation deficit directly.
The OECD has a whole range of metrics we might improve in this regard. Amongst those she highlighted briefly, were greater and more sustained collaboration between our third level institutions and the world of business and technological innovation, and higher and more focussed investment in research and development where we lag behind many of our peer competitors.
Interestingly, she suggested that we may need to change, at least partially, our current policy of offering broadly-based, if insufficient, tax credits to encourage R&D investment, to direct and targeted grant aid for a smaller cohort of companies that are deemed more likely to innovate, grow and prosper.
One trend she didn’t reference, but which is of immense significance also to this debate, is the bias of most founders/owners of SMEs that do develop and grow to a certain scale, to sell out to overseas buyers.
While this provides welcome financial return for the risk, time and energy expended by those individuals, the benefits to the wider indigenous business ecosystem of a growing number of mid-to-large Irish-based and Irish-owned, multinational enterprises, the likes of CRH, Kerry and Ryanair, is lost.
We should celebrate the continued, multi-generational success of our policy to attract foreign direct investment and, within reason, welcome the leaders of such businesses when they land amongst us with good news.
It’s more difficult and less rewarding perhaps, to listen to and respond appropriately to lower profile, less celebrated visitors who outline the slow, grinding measures required to leaven our policy mix, to develop more of our own “Mittelstand” champions, and who knows, to create a few of our own Tim Cooks in time.
