Research on Internationalisation and Competitiveness has been prioritised in the ESRI Research Strategy 2008-2013 with the objective to provide empirical evidence to inform research, policy makers and civil society on key factors and policies underlying Ireland’s economic growth and competitiveness in the context of increased global interdependencies. It is organised as a research centre, the Centre for Internationalisation and Competitiveness. Research in this area is based on the most recent theoretical models in International Economics and Economic Growth and focuses on the links between international integration and technological change and their effects on innovation, productivity, and economic growth.
Research in this area has been funded to a large extent by national and international competitive research grants. Research findings have been published and cited in a significant number of peer reviewed journals and books as well as studies and policy documents by national and international bodies including Dáil Éireann, the European Commission, the European Parliament and the OECD.
(a) Internationalisation of Services, Innovation, and Productivity. This research is part of an international project (SERVICEGAP) funded under the EU RTD 7th Framework Programme. One strand of this project analysed international trade in service firms in four EU countries (Ireland, Finland, France and Slovenia) and established a number of stylised facts: (i) service firms appear to be less engaged in international trade than manufacturing firms; (ii) like manufacturing firms, service firms that engage in international trade are larger, pay higher wages and have higher productivity than firms that do not trade; (iii) service firms are more likely to engage in importing than exporting and trading goods is more likely than trading services. A second strand analysed the effects of foreign mergers and acquisitions of service and manufacturing firms on their productivity and employment growth in six European small open economies (Austria, Belgium, Denmark, Finland, the Netherlands and Sweden). It highlighted three key findings: (i) foreign investors tend to acquire larger firms in both manufacturing and services; (ii) in contrast to services, in manufacturing, foreign investors tend to acquire younger firms, more capital-intensive firms and firms with higher debt-to-assets ratios; (iii) foreign mergers and acquisitions had stronger effects on firm performance in services in comparison to manufacturing. A third strand of research examined the relationships between the internationalisation of firms in services, and their innovation and productivity performance. Using enterprise data from Ireland, Germany and the United Kingdom, this research highlighted four key findings: (i) service enterprises with international activities had higher innovation rates than enterprises serving only domestic markets; (ii) service enterprises more likely to invest in innovation were large enterprises and domestic exporters; (iii) service enterprises more likely to innovate successfully were larger enterprises, domestic exporters and enterprises engaged in co-operation for innovation activities; (iv) service enterprises with successful innovations had higher labour productivity.
(b) Globalisation and Export Performance. This research was funded under a grant from FBD. It has examined Ireland’s export performance in the context of increased globalisation over the past decade and compared it with the export performance of other European small economies. This analysis highlighted three key findings: (i) Ireland’s favourable product specialisation in dynamic sectors such as high tech knowledge intensive services is accompanied by a less favourable specialisation in sluggish export markets such as the US, UK and the Euro area countries; (ii) Decomposing export growth reveals that structural and competitiveness effects reinforce each other; (iii) product specialisation explain most of the structural and competitiveness effects, while export market specialisation plays a less important role.
(c) Labour Market Institutions and Innovation. This research was funded under the EU RTD 7th Framework Programme (NEUJOBS) and analysed the impact of the strictness of employment protection legislation on innovation performance in advanced economies. This analysis highlighted three key findings: (i) stricter employment protection legislation led to significantly lower innovation intensity in industries with higher job reallocation rates or higher layoff propensities; (ii) in industries with higher job reallocation rates or higher layoff propensities, the strictness of regulations on the use of temporary contracts had a stronger impact on innovation intensity than the strictness of employment protection for regular contracts; (iii) over and above the effects of employment protection legislation on innovation intensity, the generosity of unemployment benefit systems led to lower innovation intensity in industries with higher job reallocation rates or higher layoff propensities, while in the same group of industries, higher co-ordination and higher centralisation of wage setting led to higher innovation intensity.
Building on current work, future research will analyse:
- Macroeconomic effects of the EMU on the Irish economy;
- The effects of financial constraints on innovation, exporting and employment;
- The effects of international outsourcing on innovation and productivity growth;
- The effect of exporting by domestic and foreign-owned enterprises on the productivity of non-exporting enterprises;
- The impacts of structural reforms on exporting.
Programme Coordinator - Iulia Siedschlag
ESRI research in Internationalisation and Competitiveness is linked to research in Macroeconomics, Competition & Regulation, Education, Labour Markets, Demography and Migration.
According to RePEc, ESRI is ranked among the top 10 per cent institutions in the world in European Economics.