RURAL IRELAND 2025 Foresight Perspectives - Coford

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Rural Ireland <strong>2025</strong> - Thematic Papers(iv) Growing importance of innovation and theknowledge economyA knowledge economy is characterised by a highemphasis on knowledge generation and application,the close integration of research and innovation,continual learning/relearning, informationprocessing, and reliance on information andcommunications technologies.Of interest to rural economies is the growingconcern to develop “regional innovation systems”.The focus is on the system – the totality ofinfrastructures for generating or accessingknowledge, for transmitting knowledge, and forsupporting its productive application in dealing withregionally specific challenges. 2As the services content and knowledge inputs infinal products increase, the traditional distinctionsbetween manufacturing and services become lessclear; the relevant distinction is between “oldeconomy” and “new economy” enterprises.(v) GlobalisationGeographical barriers are reduced as capital,enterprise, financial flows, products and servicesmove across the globe in networks that areincreasingly disconnected from the frontiers thatmark out the boundaries of sovereign states.(vi) International tourismAs a specific element of global trading, internationaltourism has grown rapidly and is expected tomaintain its rate of growth over the next 20 years.The main drivers of this growth are: higher levels ofdisposable income, increased leisure time, increasingavailability of affordable transport, reduction ofcross-border travel formalities, and wider access toinformation through information techonlogies.(vii) PoliciesRural change is driven by policies which supporttrade liberalisation, influence the location ofinvestment, assist regional development or fosterrural development. Some policies have a“restraining” influence on market liberalisation –especially those requiring compliance with “good”environment management.(viii) Counter trends to the dominant economic modelof changeThe foregoing drivers of rural change are, for themost part, integral to the development of a modernmarket-driven economy. This type of economy is alsocharacterised by values that espouse the free market,by consumption patterns and lifestyles that supportmass markets, and by ideologies that favourindividual freedom and limited state regulation ofeconomic affairs.However, there is evidence of counter trends thatchallenge this dominant economic model. Apart fromemerging “anti-globalisation” movements, these areevident in concerns for the physical environment; forsustainable development, environmentally andsocially; for safety, authenticity or traceability infood; for shorter food supply chains; for the socialinclusion of marginalised groups and cohesion acrossregions; and for an appropriate balance between workdemands and quality of life.2. KEY TRENDS AND EMERGING ISSUES(i) Labour outflow from farmingThe movement of labour away from farming willcontinue, mostly because of non-entry in the firstplace rather than because of career changes. The keychallenge will be to provide employment for ruralyouth, ideally in their own regions.However, jobs as such will not be sufficient. 3 Jobprovision will need to be complemented byopportunities for up-skilling and re-skillingespecially in light of the need to develop aknowledge-based workforce. The idea of life-longlearning is replacing traditional education-workretirementdemarcations.(ii) Realignment of land useThe extensification or even withdrawal of agriculturefrom regions with predominantly sub-viable farmswill adversely affect the unique natural and builtenvironment in upland or wetland areas. One2 “Innovation” is a broad term covering, e.g. new products or services, new processes, new markets, or novel approaches in organisational structures ornetworks, etc.3 Household Budget data show low earnings for non-farm workers in farm households (Commins 2003).38
2. The Broader Rural Economyconsequence is a likely reduction in theamenity/tourism value of these areas with the risk ofjeopardising the opportunity to developmultifunctional and “public good” land use strategies(see Thematic Paper No. 6 on Rural Environment).(iii) Rising costs of doing businessAlthough not specifically a rural issue, costs inIreland have risen substantially above those of ourcompetitors, e.g. housing, insurance, energy,broadband, refuse disposal, dining etc. (ESG2004:21). By comparison, of the ten highest rankingcountries in the league table of competitiveness, fiveare Nordic despite their high taxes (EconomistOctober 16-24, 2004:102). The ESG noted (p.22) inthis context that domestic competition in Ireland isunderdeveloped while there are also public sectorinefficiencies.(iv) Heavy reliance on foreign direct investment(FDI) 4The country’s economic performance over the pastdecade has been driven largely by the internationallytraded goods and services sector, and by the growthof FDI. In 2002 the stock of FDI in Ireland wassecond highest in the world, in per capita terms, afterHong Kong. Foreign firms account for the following(of agency supported firms):All Firms 15%Jobs 50%Corporation Tax Yield 47%Expenditures in Ireland 51%Exports 90%However, FDI firms have a number ofweaknesses. They:• Are strongly production oriented (whereasmodern growth is in traded services);• Are at low points in the value chain;• Are reliant on their external parent organisationsfor R&D and for marketing (activities thatunderpin competitive strength).The central issue here is the growingattractiveness of other countries for the type of FDIthat Ireland has secured in the past (Time MagazineOctober 11, 2004). Since 2001 there has been a netoutflow of 15,000 Irish jobs from the internationallytrading foreign-owned base 5 . This means reducedopportunities for the sub-supply and indigenous base(ESG 2004:19). Judged from data pertaining to theBMW region, rural areas have a disproportionateshare of low technology, old economy enterprises(textiles, clothing, wood products, leather, etc.)(BMW 2004:33).(v) Low investment in R&D and low innovation ratesIreland’s gross expenditure on R&D remainssignificantly below that of, e.g., the Nordic countries(1.4% of GNP compared to 3-4%). Businessexpenditure on R&D is concentrated in large andforeign-owned firms (ESG 2004:30). Moreover, theR&D focus has been on technology for products orprocesses, while non-technological innovation hasbeen neglected (e.g. in marketing, supply chainmanagement, etc.). The rate of European patentapplications (per million inhabitants) in Ireland isabout half that in the EU 15 and one-quarter that ofFinland (ESG 2004:30).(vi) Rural (urban generated) employment growthCensus data show widespread employmentexpansion in rural areas – more than offsetting labourlosses in farming. Apart from the likelihood that thejobs are low-paying (see footnote 3 above), it seemsfrom data on the BMW region that this employmentboom is based on building construction, wholesaleand retail services, and public services.Manufacturing employment has declined; nationallyit is currently at its lowest point since 1996.The issue is whether this kind of employmentgrowth is sustainable given that construction, inparticular, has attained inordinate prominence in theeconomy over the past decade 6 .4 Data here and under the next heading are mainly from the ESG Report (2004).5 This mobility also means opportunities for Irish firms to remain competitive by moving to low cost environments.6 In 2004 Ireland built almost 80,000 new dwelling units. Britain has 15 times as many people but builds only twice as many houses as Ireland. Thesector accounts for 15% of GNP here, or over twice as much as Britain (Economist 16 October 2004).39
Page 1 and 2: RURAL IRELAND 2025Foresight Perspec
Page 3 and 4: Rural Ireland 2025CONTENTSForeword
Page 5 and 6: Rural Ireland 2025FOREWORDWill the
Page 7 and 8: Rural Ireland 2025EXECUTIVE SUMMARY
Page 9 and 10: Rural Ireland 2025INTRODUCTIONPROJE
Page 11 and 12: Rural Ireland 2025 - Synthesis Repo
Page 35 and 36: Rural Ireland 2025 - Thematic Paper
Page 37 and 38: 1. Economic Conditions in the 2025
Page 45: 2. The Broader Rural Economy2. The
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Page 59 and 60: 3. Some Spatial Dimensions4. ATTAIN
Page 61 and 62: 3. Some Spatial DimensionsAPPENDIX
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Page 69 and 70: 4. Foresight Study of the Agri-Food
Page 77 and 78: 5. Foresight Report on the Forestry
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Page 87 and 88: 6. The Rural Environmentconsumption
Page 89 and 90: 6. The Rural Environment• An EU S
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RURAL IRELAND 2025 Foresight Perspectives - Coford

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