For the National Competitiveness Council, the goal of national competitiveness is to provide Ireland’s people with the opportunity to improve their living standards and quality of life. Improving livings standards depends on, among other things, raising incomes (and providing employment). To raise incomes, productivity gains are necessary but in an economy with a small domestic market, this requires a healthy exporting sector to achieve economies of scale necessary for productivity gains. For a vibrant exporting sector, Ireland must maintain its national competitiveness.
Competition Policy refers to regulation that prohibits the abuse of monopoly power and collusive behaviour in markets. In other words, competition policy is about the internal workings of markets and, in Ireland, it is administered by the Competition Authority.
National competitiveness, on the other hand, refers to the ability of ‘Ireland Inc.’ to trade on global markets. It is a broad concept encompassing a diverse range of factors and policy inputs. While having more competitive markets within Ireland should boost Ireland’s national competitiveness, it is just one of many factors, including education and training, entrepreneurship and innovation, Ireland’s economic and technological infrastructure and the taxation and regulatory frameworks at work here.
What do exporting firms need? What constitutes a competitive economy? National competitiveness is a broad concept that encompasses a diverse range of factors and policy inputs, including education and training, entrepreneurship and innovation, Ireland’s economic and technological infrastructure and the taxation and regulatory frameworks at work here. To help draw together these various strands, the NCC has developed the National Competitiveness Framework model.
The ‘competitiveness pyramid’ below illustrates the framework used by the National Competitiveness Council for understanding national competitiveness. It distinguishes between the ‘inputs’ to national competitiveness – over which policymakers can have greatest control – and the essential conditions for national competitiveness.
The Annual Competitiveness Report (ACR) is organised around this framework
The 'inputs' (in the bottom row of the competitiveness pyramid) represent the foundation stones of the economy and are the primary drivers of competitiveness. The NCC believes that it is within these particular areas that policymakers can have the greatest impact on competitiveness. It is very important to measure Ireland's competitiveness at the input level and then benchmark it in relation to Ireland’s economic peer group – the role of the Volume 1 of the Annual Competitiveness Report. This allows policymakers to identify weaknesses and opportunities and thus design specific policies to address these concerns – the role of the Volume 2, Ireland’s Competitiveness Challenge.
The second stage of the competitiveness pyramid is the 'essential conditions' stage. If the inputs are in line with best practice, this should be reflected in measurements of the essential inputs for Ireland’s continued sustainable growth.
As outlined earlier, the NCC’s goal of promoting Ireland’s national competitiveness is to further improve the quality of life for people in Ireland. To assess Ireland’s quality of life, a range of national performance indicators are examined. The NCC believes that these indicators are not directly within the control of policymakers, but that Ireland’s performance in these areas is directly related to the quality of previous policies instituted at the input level. Competitive gains at the lower levels of the pyramid allow growth potential to be maximised at the apex, whilst providing suitable conditions for sustainable development
© 2007 National Competitiveness Council Secretariat
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