Tuesday 27 September 2016

We should be paving the way, not putting up barriers to foreign talent and investment

Constantin Gurdgiev

Published 23/07/2015 | 02:30

A lot more must be done to attract growing numbers of new companies and entrepreneurs to Ireland
A lot more must be done to attract growing numbers of new companies and entrepreneurs to Ireland

As numerous schools, conferences and think-ins mark the summer calendars of "official" Irish economists, this is a busy season for policy debates and "big theme" reports.

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A new ESRI research paper touches on a policy of pivotal importance to our future: the migrant workforce. Specifically, the ESRI research looks at the inflows of skilled workers, investors and entrepreneurs from outside the European Union.

During the post-Celtic Tiger era, our immigration system has become more business-friendly. This, however, is hardly surprising as the collapse of the domestic economy saw our dependency on export-producing multinational corporations (MNCs) rising.

In 2007, exports amounted to 88pc of our real GDP: in 2014 this figure stood at just under 115pc.

Ireland-based services exporters are predominantly reliant on hiring employees with skills that are in short supply domestically.

Spurred on by the MNC-led search for international talent, Irish policymakers and civil servants managed to open up our traditionally EU-centric system of migration to allow more skills and human capital to flow into the economy from outside the European borders.

Based on ESRI numbers, business and employment-related visas hit 17pc of all entry permits issued in 2014. Some 90,400 people came to Ireland from outside the EU for short or long stays relating to commerce, investment and work.

The geography of these inflows reflects the changing nature of our trade and investment ties. In 2014, 30pc of business-related visas were granted to Indian nationals, most likely reflecting that country's ICT expertise; 18pc went to Chinese nationals, mirroring growth in our connections to the Asia Pacific region; and 13pc were from Russia, signalling strong inflows of ICT, R&D and technical finance and statistics/data analytics specialists.

Given the hoops these people had to jump through to obtain their visas and work permits, they brought with them higher quality human capital than an average EU migrant.

However, the ESRI report also flags some less salutary aspects of our changing migration realities.

Since 2012, only 85 permits have been granted for residency under the Immigrant Investor Programme and Start-up Entrepreneur Programme. In other words, we are still failing in the game of attracting to Ireland internationally mobile, high-potential start-ups and entrepreneurs.

There are several key reasons. First, while offering a favourable business regime for companies, Ireland has very high capital and income-related taxes that discourage promising entrepreneurs. High costs of moving here, such as securing housing, healthcare and childcare, coupled with the relatively low - by international standards - quality of these services further undermine Ireland's attractiveness.

Secondly, there is a need for more active international profiling of Ireland as an enterprise-building and scaling-up location; we are yet to be recognised globally as a top-tier domicile for investors and entrepreneurs.

Thirdly, our public services systems need some serious reshaping: it still takes too long to process new entrepreneurial ventures and migrants for entry to Ireland.

There remains a culture of low-risk tolerance in our civil service when it comes to entrepreneurship, and there is still too much red tape.

This problem is made worse by the remaining culture of low aspirations that permeates our public sector. As per the ESRI report, the Department of Justice and Equality officially feels that the two key programmes for attracting high-potential investments and start-ups are working just fine.

Yet, quoting again from the ESRI report, in 2014 there were only 10 non-EU business permissions granted in Ireland, down from 38 in 2012.

We have a serious problem on our hands: Ireland desperately needs to attract new companies and entrepreneurs, investors and top-level scientists, designers and engineers, specialists and managers to locate in and put down their roots here.

We need them in order to push our economy out of the pre-crisis path of boom-and-bust domestic investment-based growth; to improve the sustainability of our pensions and public systems funding; to support growth of Irish exports worldwide and to attract much-needed investment into the country.

And we need them to enrich and expand career development opportunities for our own people.

The ESRI report shows that, when forced, we can make the right policy choices.

But the same report also shows that our civil service is yet to become more pro-active in facilitating changes in more risky, innovation-sensitive areas such as growing support for foreign entrepreneurship and enterprise development here.

Irish Independent

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