JOE GILL: Joe Gill: Tech infrastructure key to boosting Ireland’s standing

The Bank of England governor Mark Carney gave an illuminating speech in Liverpool last week.

Addressing a number of mega themes related to the global economy he outlined a series of long-term data points which underline the challenges and opportunities facing the international economy.

Some of these findings will surprise those who believe society is going backwards. For instance, today one billion fewer people live on less than $1.90 (€1.78) per day compared to the 1980s while life expectancy increased by two decades since 1960 and real per capita GDP has risen by two thirds in the same time period.

These mega trends can be attributed to advances in technology and the consequences of globalisation. Rapid leaps in the ability of computers to process data and provide fact-based solutions to a myriad of problems helps solve many societal problems, including health.

Globalisation has led to dramatic advances by economies across the world including so-called emerging countries. These have benefitted from access to developed markets while providing consumers in the west with competitively priced goods that have helped tame inflation.

In a world where nationalism appears to be on the rise it is important to remind ourselves that free-trade agreements can and have had mutually beneficial effects in importing and exporting countries.

Reversing these trends, and erecting barriers to trade, risk turning back the progress attained over recent decades.

There are serious challenges to address too. Wealth inequality is a key issue for politicians and policymakers. The proportion of wealth held by the richest 1% of Americans rose from 25% in 1990 to 40% by 2012.

Globally, the share of wealth held by the richest 1% rose from one third in 2000 to one half by 2010. Amid that level of divergence income differences are also evident. For example, a typical millennial earned £8,000 (€9,500) less per year during their 20s than their predecessors.

Since 2007 those over 60 have seen their incomes rise at five times the rate of the population as a whole. This set of facts points to a shift of wealth across generations that may explain some of the political earthquakes that have shaken up establishment politicians in Europe and north America over the past two years.

Within Ireland you can see these mega trends at play, too. Being a fully open economy Ireland is hugely dependent on imports and exports, with the latter being a key beneficiary of free- trade agreements.

If you want a live example of that just watch the three daily long-haul flights to the Gulf from Dublin Airport. Each of those has cargo holds packed with everything from botox to salmon heading for markets as diverse as Australia and China.

I heard the head of a large logistics company say over the weekend that Irish exports are booming currently, despite the uncertainties surrounding Brexit. You can also see echoes of the income disparity trend at work domestically.

It seems to me that young people in their 20s are earning less than my generation did at that stage in life.

Housing assets, which form a core part of wealth for older age cohorts, are hard to access for younger earners. Pensions are a major challenge for those starting out in their careers.

All of these factors can play a role in the political process despite headline unemployment rates being in decline.

The Carney paper had one other telling piece of data. In 2000, fewer than 0.5 billion people had access to the internet. Today that figure is 3.5bn and mushrooming.

Ireland has to further embrace that mega trend and adapt its telecommunications infrastructure to optimise the potential to mine the global online market and further strengthen its place in the global economy.

Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.


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