Economy

CSO figures reveal new record for overseas trade

Cantillon: Multinationals behind Republic’s growing wealth and falling unemployment

The pharmaceutical industry, along with technology, were exports’ star performers last year.

Sat Feb 15 2020 - 06:19

Exports shrugged off a decline in business with the UK last year to set a new €152.5 billion record, according to Central Statistics Office (CSO) figures that on Friday became the latest report to highlight how well overseas trade is doing.

Earlier this week, the Central Bank of Ireland and the Organisation for Economic Co-operation and Development (OECD) produced figures predicting that the Republic's wealth will continue increasing while unemployment will fall, aided by continued growth in exports.

All three bodies agreed on something else, that multinationals are responsible for much of this expansion. The CSO calculated that pharmaceuticals accounted for one-third of exports last year.

The Central Bank took it a step further, producing a list of drugs such as Bristol Myers Squibb’s cancer treatment, Opvido, which are contributing to this growth. That industry, along with technology, were exports’ star performers last year, the financial watchdog said.

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This is good news. Pharmaceuticals and technology are the mainstays of multinational investment in the Republic. Drug-makers, in particular, spend vast sums building plants here that employ mainly well-paid highly skilled workers.

As always, there is a downside. Irish companies struggle to achieve anything like the multinationals’ stellar performance. There are reasons for this, not least that many homegrown companies do not have the resources to develop high-selling pharmaceuticals.

Nevertheless, figures in the OECD report paint a stark picture of the differences in productivity. Between 2008 and 2017, the “value added per worker” in Irish companies remained steady, just below €100 an hour, while in multinationals it rose from just under €300 to almost €400. The organisation says this gap means workers in multinational companies earn more than those in homegrown businesses.

This makes us highly reliant on multinationals. That would not matter too much if risks such as Brexit, tax harmonisation, trade wars and growing protectionism were not looming on the horizon. If these were to derail multinational growth, we would not have much of a safety net, unless homegrown businesses could work some kind of productivity miracle.

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