IRELAND is more attractive to foreign investment due to the drop-off in salaries because of the downturn.
The research, carried out by employers' group IBEC, found that the country has become a "favoured location" for investment.
IBEC said there is a need for measures to boost the domestic economy and to eliminate the development of a two-speed recovery.
The group said there is a thriving export sector but sluggish domestic demand and wants to see a well-targeted public capital investment programme put in place.
The business lobby group also wants to ensure that any changes to the tax system promote consumer confidence and encourage a return to more normal spending and saving patterns.
The report said that according to European Commission estimates, Ireland's unit labour costs fell by nearly 3pc in 2009.
Considering that in the 27 countries which use the euro, labour costs increased in the same period, this represents an improvement of nearly 7pc relative to the EU average.
The commission forecasts that the cumulative fall in Irish unit labour costs will be 9pc in the period 2008-2011 and relative to the EU average, this is an improvement of 13 percentage points.
This, IBEC said, is achieved through a combination of productivity improvements delivered by innovative workplace change and some reductions in wage costs.