proyecto reforma estructural del estado paraguayo (la experiencia irlandesa, donovan) abril 2011

8/7/2019 Proyecto Reforma Estructural del Estado Paraguayo (La Experiencia Irlandesa, Donovan) Abril 2011

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The Irish ExperienceDavid ODonovan

DirectorInvestment Promotion Agency Development

December 15, 2010

www.communique.ie


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Six Themes

I. Brief Facts

II. Irish Economic Transformation

III. Success Factors

IV. Current Irish Crisis

-.

VI. Conclusion


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Brief Facts Republic of Ireland

Small island on the western

edge of Europe rea: 70,000 sq m ess

than one sixth of Paraguay)

opu a on: . m Capital: Dublin (1.5m)

years o r s ru e

Independence: 1922 mem er s nce


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Irish Economic Transformation

From poor to rich in one generation:

one o e poores coun r es n urope w percapita of US$3,000

, ,

richest countries in the world

GDP: US$224 billion

Per Capita: US$52,000

Population has risen 50% to 4.24 million from 2.8 million in1961


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Per ca ita GDP as a of EU avera e

180

200

140

160

80

100

20

40

60

0

Source: WorldDevelopment Indicators


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Irish exports have changed dramatically:

Primarily agricultural High value added, high

services


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Ireland: Strategic Productive Transformation and Upgrading

Source: Devlin-Moguillasky (2009)


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Success Factors

Major factors underpinning rapid

rowth:

NATIONAL CONSENSUS/SOCIAL PARTNERSHIP

PPA BODIES FOR SPECIFIC FUNCTIONS

LOW TAXES

AGGRESSIVE CAMPAIGN FOR FDI

RD1


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Diapositiva 8

RD1 Add a "national medium-long term strategy fpr productive transformation" as first point. And in presentation can say the strategy emeged fromand was supported by the Partenrship and the Consensus it managed to develop.

Add after Education "Major public financial support for science and technolgy and innovation".Roberttdevlin; 13/12/2010


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Current Irish Crisis

crisis in Ireland which resulted in the recent il h IMF n E in n illi n

rescue package?..


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Partly, as a result of phenomenal growth:

Ireland over-invested in construction and property development

Fuelled by massive and cheap borrowing by Irish banks

Huge property bubble burst in 2008

Government bailed out Irish banks to prevent collapse

Result is massive public debt

Government forced to raise 15 billion over next 4 ears in reduced

expenditure and increased taxes to reduce deficit


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But also, institutional failure to anticipate

crisis:

Culture of light-touch regulation meant Central Bank/Financial

Regulator failed to spot build-up of excessive borrowing by Irish banks Public-Private Alliance bodies failed to recognize shift from

investment/export led economy to property construction led economy

Both the general public and policy makers blinded by phenomenalrises in incomes


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Public-Private Alliance

-Alliance bodies


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Based on Public-Private

1. National Level (Economic and SocialPolicy).

(Competitiveness and Industrial Policy)


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Public policy model adapted by Ireland was

that of a networked develo ment state: Different from more bureaucratic and authoritarian

As a small, liberal European democracy Ireland could not

a op a cen ra ze au or y mo e e e s an coun r es

Irish state interventions operate through networks of publicagencies and advisory councils all with strong private sector

involvement


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1. PPA at National Level (Economic

Policy failures from 1930s led to

Severity of crisis brought-

Private Alliance and NationalConsensus

New direction for economic and

industrial policy agreedEvidence-based approachadopted


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ew rec on op e

(1970s onwards):

Trade opening and expansion of

Private sector investment-ledrowth not overnment sector

growth

Private sector with stron stateencouragement/support to be theengine of growth


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Cornerstone underpinning rapid

Irish economic growth

Government, employers, labour,farmers academia and NGO

sectors all had voice indeveloping strategies

Under the umbrella of the National

Economic and Social Council(NESC) since early 1970s

Ministers Department

RD3


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Diapositiva 17

RD3 Add bullet "l NESC reports on consensus positions influential inputs in National Development Plan"Roberttdevlin; 13/12/2010


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1. PPA at National Level

Government Secretaries General of 7 departments (ministries)

Private Sector 5 from business associations Labour 5 from trades unions

Farmers 5 from farmer organisations

o un ary rom organ sa ons

Other 5 independent representatives, normally technicalexperts or academics

Term of Office is 3 years

RD2


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Diapositiva 18

RD2 Add another bullet saying how nominated and confirmed for 3 year term.

I think each sector nominates and PM confirms. Indicate whether confirmation process tends to be conflictive or not.Roberttdevlin; 13/12/2010


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In the early days, and up,of:

Interdependencebetweensocial partners

Tradeoffsboth betweenand within interest rou s

RD7


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New deal with trades unions wage moderation in

share in future growth

dialogue of the Alliance.

RD6RD7


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Diapositiva 20

RD6 You have to mention that the NESC partnership dialogue is supported by a neutral but very technical secretariat with a non political publicallyrespected DirectorRoberttdevlin; 13/12/2010

RD7 Add that a technically credible technical secretariat facilitates fact based dialogue and problem solving.Roberttdevlin; 13/12/2010


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Private setting to facilitate frank discussion

(25)

Political relevance by meeting once a month for half day or more

and presence of PM office Dialogue oriented to fact-based problem solving with support of

Representatives exclude themselves when discussion is on a

topic where there may be a conflict of interest 3-year public report of Alliance conclusions and periodic

publishing of Secretariat studies


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e o n us r a peace, wage mo era on anlow inflation with strong buy-in from Trades

250

STRIKES1.600.000

DAYSNOTWORKED

150

200SocialPartnership

800.000

1.000.000

1.200.000

1.400.000

Social Partnership

0

50

100

200.000

400.000

600.000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Source: ILO (International Labor Organization)


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But, unfortunately: urrent nanc a cr s s as put nto era e stra n onpublic-private alliance model

overnmen mp emen ng ma or cu ac s nexpenditure and increases in taxation

-years

Result collapse of PPA at National Level in area of

economic and social olic


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2. Public-Private Alliance at

Sectoral/Thematic LevelCom etitiveness and Industrial

Policy).


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2.PPA at Sectoral/Thematic Level

Competitiveness and Industrial Policy

Combination of government,agencies and advisorycouncils

Each with its own specialistfunction

All well funded bygovernment with focused

RD4


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Competitiveness and Industrial Policy

Boards contain both publicand private members

-for CEOs to help co-ordinate industrial policy

support programs Professional, permanent

change with changes of

overnment High degree of operational

autonomy for publicexecu ng agenc es

RD4


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Diapositiva 26

RD4 --How are board members named.--Mention can include representation from hosted MNCs who are important for the economy.Roberttdevlin; 13/12/2010


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2 PPA Sectoral/Thematic LevelRD5


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2.PPA Sectoral/Thematic LevelCompetitiveness and Industrial

Policy

National Competitiveness Council (NCC) has

16 Members:

Government 4

Private Sector 8

Academia 2


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Diapositiva 28

RD5 What does the NCC do in contrast to NESC?? How does it fit into a Division of Labor??Roberttdevlin; 13/12/2010

2 PPA Sectoral/Thematic Level


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2.PPA Sectoral/Thematic LevelCompetitiveness and Industrial

Policy

ecre ar a an pro ess ona researc ac esprovided by Forfas, the State Strategic

ann ng gency or n s ry oEnterprise, Trade and Employment

Reports directly to Prime Minister of the day


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Strengths

At National Level (Economic and Social

Polic NESC represented all the social partners and its reports were

NESC argued for a developmental welfare state

Good economic development and better social development

not opposed to each other but not guaranteed to occur

together

Argued successfully for better coordination between economic

and social policy


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Strengths

At National Level (Economic and Social

P li Led to eight national wage agreements over two decades

ac a e re an s ong erm eve opmen s ra egy eavy

investment in education, attraction of inward investment and

full European integration


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Weaknesses

o es a a ona eve an

Sectoral/Thematic Level (Forfas and NCC)

developed parallel but weakly connected analyses

Crisis of 2008-2010 exposed significant weaknesses

in Irelands overall policy approach


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Weaknesses

Major weaknesses seen to be: o ca

Institutional

Regulatory


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Weaknesses

Political:

Divergence between political decision making and policy analysis in

the institutons

Led to policy capture by influential actors from construction and

banking closely aligned to governing party

Won excessive tax incentives for construction further boostin a boom

already under way and created illusion mistaking asset inflation for

real wealth creation Led to loss of previous developmental focus


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Weaknesses

Institutional:

Trades Unions saw the creation of the National Competitiveness

Council as favouring the business agenda

Regarded it as giving employers a separate and stronger institutional

channel of policy influence with the Government

Probabl was a mistake to create the NCC outside the institutional

structure of the NESC as it balkanized the social dialogue

Ma or diver ence between wa e bar ainin in the ublic sector(highly centralized) and private sector (localized)


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Weaknesses

Regulatory:

Regulator to see the build-up of massive and excessive

Tragedy is that complacency at the macro/financial level and in

the Alliance created a crisis that undermined a very successful

strategic industrial policy for productive transformation at the

sectoral level


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Conclusion

Ireland enjoyed phenomenal growth and success in the period

1970 to 2008

Some lessons can be learned from that what made it work so

well

resulted in the current economic crisis

essons can e earne rom a oo

Nevertheless the economy still exhibits many sectoral

strengths in manufacturing, particularly high tech


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Conclusion

e e a e a ou e causes o e cr s s an our

future development rages on in Ireland

For those interested some interesting websites

con a n ng ese e a es are:

www.progressive-economy.ie www.irisheconomy.ie


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THANK YOU!

proyecto reforma estructural del estado paraguayo (la experiencia irlandesa, donovan) abril 2011

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