Exports..

jank

Right, I keep hearing that we the Irish people are going to export our way out of this mess. Now I don't believe a word of it BUT is there a reasonable economic case for this? Can anyone put some simple figures out there that says, if we exports x amount and grow this by y per year than yes we can service and pay off our debts.

I suppose it depends on the budget too but general ball park figures?

Amhran Nua

jank wrote: »

Now I don't believe a word of it BUT is there a reasonable economic case for this? Can anyone put some simple figures out there that says, if we exports x amount and grow this by y per year than yes we can service and pay off our debts.

The simple answer is an increae in exports, any increase in exports, is good for the economy, since it brings money in from other economies that we don't need to pay back. Ireland is a bit more complicated however, since we have a low corporate tax rate and work largely within the free trade zone, that benefit is less reflected by the value of exports than by the number of people employed in these industries, the income taxes they pay, and the VAT they pay on purchases.

If we had a few highly focused domestic export based industries, it wouldn't solve all of our problems overnight, but it would give us a strong economic backbone to build upon and a good fallback position. The Danish have green energy and turbines, Finland have Nokia, Switzerland has chocolate, clocks and banking, we will never match the likes of Germany for sheer exporting power, but we don't need to, we just need to focus on a few areas.

So perhaps a better question to ask is not "can we export our way out of this", but "how much would it help our position if unemployment and state assistance dropped by 300,000 and all of those people were on €35k a year". It would help a great deal, probably boosting exchequer returns by at least €3 to €5 billion a year. Couple that with the proposed €15 billion in cuts, and we are pretty much breaking even.

hobochris

Exporting graduates and skilled workers maybe. Other then that(I am open to correction on this) There is only so much in business exports a little country like us can do.

rumour

Amhran Nua wrote: »

The simple answer is an increae in exports, any increase in exports, is good for the economy, since it brings money in from other economies that we don't need to pay back. Ireland is a bit more complicated however, since we have a low corporate tax rate and work largely within the free trade zone, that benefit is less reflected by the value of exports than by the number of people employed in these industries, the income taxes they pay, and the VAT they pay on purchases.

If we had a few highly focused domestic export based industries, it wouldn't solve all of our problems overnight, but it would give us a strong economic backbone to build upon and a good fallback position. The Danish have green energy and turbines, Finland have Nokia, Switzerland has chocolate, clocks and banking, we will never match the likes of Germany for sheer exporting power, but we don't need to, we just need to focus on a few areas.

So perhaps a better question to ask is not "can we export our way out of this", but "how much would it help our position if unemployment and state assistance dropped by 300,000 and all of those people were on €35k a year". It would help a great deal, probably boosting exchequer returns by at least €3 to €5 billion a year. Couple that with the proposed €15 billion in cuts, and we are pretty much breaking even.

Totally agree, a simple precise and easily communicated way out of our problems. I like that.

Our focus and effort needs to be on what we can export with the resources we have and all the time keep imports to a minimum. I can't help but be drawn to wind power as the stuff is with us all the time and its free. Build the network infrastructure and export.
Just divert money from a few quangos and were off.

Amhran Nua

rumour wrote: »

I can't help but be drawn to wind power as the stuff is with us all the time and its free. Build the network infrastructure and export.
Just divert money from a few quangos and were off.

You'll have the free market mob in shrieking about subsidies if you're not careful, despite that the right to do so in enshrined in the constitution! Its a double whammy though, not only do you gain in income taxes etc., you also reduce the welfare bill by a similar amount. If we could make a decent run at it, the full €15 billion in cuts might not even be needed.

It doesn't do to underestimate the difficulties though, it took Denmark 20 years to build up their wind turbine industry, which employs a tenth of the number of people we need to get off government support, and brings in around €4 billion a year (total, not tax revenues). We definetely need to build on our FDI base in the interim.

Still, the sooner we get started the sooner we get finished eh.

ardmacha

There is only so much in business exports a little country like us can do.

This kind of talk belongs in the 1950s. We are about 0.4% of the developed world. All we need to do is secure a 4% market share in several sectors to earn a decent living.

rumour

Amhran Nua wrote: »

It doesn't do to underestimate the difficulties though, it took Denmark 20 years to build up their wind turbine industry, which employs a tenth of the number of people we need to get off government support, and brings in around €4 billion a year (total, not tax revenues). We definetely need to build on our FDI base in the interim.

Still, the sooner we get started the sooner we get finished eh.

Here's another one, vast vast areas of the west of ireland are doing nothing and these areas are whats known as commonage. Forest them. Being somewhat more drastic make the people on welfare plant them. This sounds drastic now but if your broke at least they are contributing to Ireland in the long term. I'd prefer to do that than do nothing.
This has untold benefits, can be used to offset carbon emmissions, creates tourist attractions and will encourage wildlife, provides a renewable resource that inturn can be used for industry (think ikea). Some EU legislation says we should not do this but its pretty limited. Additionally some will argue that we will loose handouts from EU, but we really ought to aspire to break handouts.
Here another one the famous Mr Myers came up with last week that made me think. For all the cows and animals in our fields why do we not have a leather industry. This is a an enormous industry which lets face it cannot be that difficult if you already have an ample supply of the raw material.

There is potential everywhere in this country arguably and ironically because we are so inefficient.

Amhran Nua

Well we can make a list of the criteria for potential areas of export as follows:

• They don't need to be especially wage sensitive, like the Pharmas and Google, these are high-margin industries. If we pick something too wage sensitive it can and probably will end up being done in developing countries. This also maximises the benefit of the corporate tax regime we have here.
• They need to have a broad international appeal or utility.
• They, or future derivatives of them, need to be in all likelihood still viable after at least a generation (thirty years). We can hedge our bets by picking a few of them.
• Where possible they should take advantage of the resources we have here, including the products of existing educational sectors and our geography (we are an island).

Thats a few off the top of my head, there are probably a few more as well. Broadly speaking though, the nearer to the above criteria we can strike in the selected industries, the better the odds of success will be. I am aware that Enterprise Ireland has already got vaguely something like that in terms of its conditions to assist, but they are targeted at existing companies which want to expand, not startup groups - this is a very different initiative.

jimmycrackcorm

It's not just about exports though, there is a lot to be said about import substitution. When you consider how much we could do to promote consumption of our own goods over imports we could have some wins.

But when people whine on tv that they are going to shop in the north "to teach our government a lesson" and how we actually import a lot of potatoes then I think we've no hope there.

rumour

jimmycrackcorm wrote: »

It's not just about exports though, there is a lot to be said about import substitution. When you consider how much we could do to promote consumption of our own goods over imports we could have some wins.

But when people whine on tv that they are going to shop in the north "to teach our government a lesson" and how we actually import a lot of potatoes then I think we've no hope there.

I agree with this also, its fundamental to the economy. This however becomes a competitive issue.

Here's an anology, some years ago the footpaths around St Stephens Green were refurbished. The specification required replacement granite kerbs. Now the original kerbs were from Wicklow, the kerbs that are there now are from China. How is it cheaper to ship stone from China to replicate stone from Wicklow?

Amhran Nua wrote:

Well we can make a list of the criteria for potential areas of export as follows:

• They don't need to be especially wage sensitive, like the Pharmas and Google, these are high-margin industries. If we pick something too wage sensitive it can and probably will end up being done in developing countries. This also maximises the benefit of the corporate tax regime we have here.
• They need to have a broad international appeal or utility.
• They, or future derivatives of them, need to be in all likelihood still viable after at least a generation (thirty years). We can hedge our bets by picking a few of them.
• Where possible they should take advantage of the resources we have here, including the products of existing educational sectors and our geography (we are an island).

Again I agree however I think the current 'en vogue' focus is on the high end specialised exports is to narrow. Somewhere we need to find a balance for this sector as a % of the overall economy. Simply I think in any population you will not have the required distribution of skills to service the high end specialised industries. What to do with the rest of the people?

I'd revert to having a good look around our island and identifying our resources, then select how best to employ our people (the biggest resource) most efficiently to harness what we have.

Fundamentally we must not let one sector of the economy threaten the viability of the state as we have just done.

Voltex

I am very surprised no-one has mentioned the food industry in Ireland. we have a fantatsic base that is repsected all over the World.

Our beef is highly valued, we manufactuer 80% of the Worlds infant milk formula, Kerry Group, Aryzta (aka IAWS), Glanbia, Dawn Foods, etc...etc.

We have great potential in these areas and they shouldnt be forgotten.

Amhran Nua

rumour wrote: »

What to do with the rest of the people?

The idea isn't a panacea, I've another thread somewhere on this forum about enhancing the tourism industry at the same time as boosting our archaeological resources, there's a lot that can be done in all areas.

Voltex wrote: »

I am very surprised no-one has mentioned the food industry in Ireland. we have a fantatsic base that is repsected all over the World.

Our beef is highly valued, we manufactuer 80% of the Worlds infant milk formula, Kerry Group, Aryzta (aka IAWS), Glanbia, Dawn Foods, etc...etc.

We have great potential in these areas and they shouldnt be forgotten.

Very true, and arguably some of the most successful domestic export based industries we have are agricultural co-ops. What can we do to expand and build on that however?

ei.sdraob

jank wrote: »

Right, I keep hearing that we the Irish people are going to export our way out of this mess.

no we are not

The crisis we face is not a temporary, but a structural one. In order to unwind a roughly 700,000 strong-army of surplus workers who are out work or grossly under-employed, Ireland will have to more than triple our entire exporting sector – a feat that even during the Celtic Tiger era would have taken some 25 years to achieve.

oppenheimer1

ei.sdraob wrote: »

no we are not

[Aside]
I have to wonder why Constantin Gurdgiev bought a house when he apparently knew that housing was in a bubble. (He says he is 40% in negative equity). Seems the doom merchants aren't infallible either.

[/Aside]

Amhran Nua

ei.sdraob wrote: »

no we are not

I searched through the myriad of complaints about his negative equity and that he bought during times of historically low interest rates on that libertarian echo chamber, complete with Randian homilies, for some inkling of the reasoning behind such a comment, only to find without surprise there was none.

At the end of the day, nobody is saying that we can magic export industries out of thin air and sail off into the sunset on a healthy economy in time to sort out the deficit- that's not going to happen. In fact the difficulties encountered by the Danish were touched on by myself above.

However by starting the process now, along with an increased focus on attracting FDI and a change of direction in tourism and domestic businesses, we can certainly lay the groundwork for being in a much stronger and safer position in even ten years than we are in today.

ei.sdraob

Amhran Nua wrote: »

I searched through the myriad of complaints about his negative equity and that he bought during times of historically low interest rates on that libertarian echo chamber, complete with Randian homilies, for some inkling of the reasoning behind such a comment, only to find without surprise there was none.

At the end of the day, nobody is saying that we can magic export industries out of thin air and sail off into the sunset on a healthy economy in time to sort out the deficit- that's not going to happen. In fact the difficulties encountered by the Danish were touched on by myself above.

However by starting the process now, along with an increased focus on attracting FDI and a change of direction in tourism and domestic businesses, we can certainly lay the groundwork for being in a much stronger and safer position in even ten years than we are in today.

Exports will be only one part of the solution, not the solution

We have a 19 billion or so a year deficit, assuming a corporation tax of 12%, we need companies exporting north of 200 billion worth of "something" a year and making a nice profit on this "something"

The deficit is simply too large for a country this small.

Instead we should be do everything to ensure that the export wing of the private sector is protected and handled with care, all this talk of increasing corpo tax and various high costs such as electricity are killing it slowly.

Amhran Nua

ei.sdraob wrote: »

Exports will be only one part of the solution, not the solution

Yes, this has already been said a few times.

ei.sdraob wrote: »

We have a 19 billion or so a year deficit, assuming a corporation tax of 12%, we need companies exporting north of 200 billion worth of "something" a year and making a nice profit on this "something"

Our corporation tax wheeze doesn't work like that, we don't make the revenue on the actual CT, we make it on the income taxes and VAT paid by workers employed by exporters, as well as the fact that we are reducing dole queues and hence the welfare bill simultaneously. Its win-win.

ei.sdraob wrote: »

Instead we should be do everything to ensure that the export wing of the private sector is protected and handled with care, all this talk of increasing corpo tax and various high costs such as electricity are killing it slowly.

I don't think anyone is seriously talking about increasing the CT.

rumour

ei.sdraob wrote: »

no we are not

Doomed, doomed , I tell you you're all doomed!!!!

We all know the problem and quite a few people see where it is going, at least quite a few do in these threads. That is good.

We're not going to starve, (well i suppose if people keep listening to our current politicians its a possibility, but not just yet). Its a fact now, whinging about it serves nothing. Staying informed and being actively critical are healthy, complaining that it won't put us back to 2007 well people who expect that are frankly IMHO part of the problem. The days of getting rich quick with no effort are gone (pretty much the same as in 1929)

So it will take a generation or more to sort this out, so what, are we all going to give up, the realistic answer is; no we are not. Any rational analysis will give us that conclusion. If that is the case we might as well start planning for it and try not to repeat past mistakes.

All we can do is try.

rumour

ei.sdraob wrote: »

We have a 19 billion or so a year deficit, assuming a corporation tax of 12%, we need companies exporting north of 200 billion worth of "something" a year and making a nice profit on this "something"

Yes thats the target, difficult isn't it.:o

ei.sdraob wrote: »

The deficit is simply too large for a country this small.

The deficit or the debt. The deficit will be re-adjusted quite soon, there're will be hardship. But in five years time that will have passed. The time to plan for this is now.

ei.sdraob wrote: »

Instead we should be do everything to ensure that the export wing of the private sector is protected and handled with care, all this talk of increasing corpo tax and various high costs such as electricity are killing it slowly.

Absolutely agree, if there is one job our public sector have, it is to ensure that this is nurtured. That is where their focus should be. As you know the change required to makethat happen is another difficult task. Very soon I think the PS will learn who feeds them. When they learn (and its coming their way, nothing can stop it now) we need to be ready to deploy this resource to its maximum benefit.