Radical Economic Transformation: the Irish Way

Jul 26, 2018 | HomePage, Industry Trends, Market & The Economy | 1 comment

Estimated Time To Read: 2 minute(s) 14 seconds

I recently returned from a family holiday in Ireland, which was full of surprises. The weather was so good that my South African wife finally had a chance to wear shorts after being unable to during our previous 11 holidays in the country. Mind you, after six weeks with no rain, the Irish have had to implement a hose pipe ban!

Aside from the great weather, the best news that greeted us was that Ireland has now finally emerged from the 2008 financial crisis after going through a torrid time. By creating conditions conducive to investment, such as cutting corporate tax rates down to 12%, Ireland has attracted global giants ranging from Amazon to Facebook, Google, LinkedIn and Pinterest. They have set up their European operations in the country, employing Irish people and bringing in foreigners from all around the world to service their global clients.

Financial services are thriving, and also benefiting from the fallout of Brexit, as US companies and employees choose to be based and to live in Ireland rather than Paris or Frankfurt, with a common language being an obvious advantage.

The economic pull back after 2008 led to construction companies’ turnovers collapsing by as much as 75% and forced young construction professionals to look for opportunities elsewhere. No new houses were built, forcing many young Irish people to move from the country in search of affordable living. With no new hotels being developed, there were no rooms at the inns, and you had to pay a small fortune if you found one.

But all of this is also changing. Young professionals are being lured back to Ireland to sustain new growth. New hotels and houses are being developed to meet demand, and many construction companies are even becoming a bit nervous about whether they will have sufficient skills and capacity to service swelling order books.

On another level, Limerick has become Ireland’s pharmaceutical hub, creating many new jobs and developing new products through local research and development expertise.

Imagine if our political class in South Africa thought of Radical Economic Transformation in these terms. Radical economic transformation in Ireland has been all about creating conditions for the development of new industries and new wealth. Apple was the only high tech global company with a base in Ireland 10 years ago, but the country has focused on building strong competitive advantages to also attract the Amazons and Googles. Aside from investment incentives, Ireland has taken other measures to attract new industries, such as aligning its universities to be able to meet the need for new skills.

Sadly, radical economic transformation in South Africa appears to mean the opposite. It focuses on looking to the past, on redistributing existing wealth and reforming old industries, such as mining, rather than on creating industries and sectors that will meet future demand, on training our people in new skills and on creating new wealth.

Now is the time for us to reassess these views and practises and for us to break out of the past and become braver and bolder.

1 Comment

  1. Those in charge seem to be focused on exactly what you say and the sad truth is that efforts are focused on taking from others what has been created by them rather than looking at ways to develop new business opportunities and future foreign investment – the challenge is how do we as a nation change this thought pattern? Big business seems powerless to do so ,the recent financial commitment by China may have potential to do thisalthough there must be payback ssomewhere.

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