Prof. Dr. Mary Lambkin (Professor of Marketing, University College Dublin; Ireland)

10.03.2011 - Interview conducted by Agnieszka Mystek

Q1. †Given the economic situation in Ireland and one of the reasons the recession is still so deep is because Irish people are still not spending money. Do you have any recommendations for how the Irish economy could be stimulated using Irish money?

The main thing is to try and boost consumer confidence. In my presentation I tried to show Irish peopleís lack of trust in institutions at the moment. All those little things are all symptomatic of the lack of confidence. We are very beaten up by the experience we have had with the economy and we are also fearful of the bailout by the IMF which finally happened. We have had a really tough budget where we had tax increases and everyone is worried to know how much money they will have left, therefore they are afraid to spend. And at the moment, we had a huge level of savings. The current index of savings as a percentage of disposable income in Ireland is 12%. That is way out the line. The average of any other country in normal times is about 4-5%. So it means that quite a few of people have money, but are afraid to spend it because they have been so fearful of what was going to happen: would they lose their job, how much would the tax go up, would they have enough money to cover normal expenses, etc, so they postponed all other purchases. Thatís why it is nearly more about psychology than it is about economics. Itís about getting people to feel that the future is looking positive, that they can afford to take a risk, that they donít need to be making emergency savings all the time and that they can just resume normal living: dine out, buy a new outfit or replace their car. I am hopeful that the new government we have will set the tone of communication right from the beginning and that this is going to start a new dawn, leave all that past behind and that they are going to tell the truth. If they deliver on that, then I think in quite short time, peopleís confidence with lift and spending will resume.

Q2. Ireland is generally branded as traditional, cultural and green country. What direction do you see the Ireland brand taking in the future?

We will continue to build on that. You donít throw away the good things, but rather you build on your strengths. Just last week, we had a group of 40 Belgian students from Leuven came and as I was talking to them and asked them was what images they had of Ireland, the first response from most of them was: green and lots of sheep. And these are young people, yet they still have the old images. So you donít turn against that, but rather you build on those strengths. But what we have done is to say that if you look at the research, on top of that, it says Irish people are spontaneous, creative and lateral thinkers.† Those are all things that are associated with innovation. So basically what we are saying is to build on the old images, but to twist them in new ways that are relevant to modern needs. So the catch phrase that our IDA, the investment agency is using is ďIreland, the land of vibrant possibilityĒ. What they are trying to capture is that sense of creativity and innovativeness, and that great things could be made in the future. So itís building of that kind of magic that comes from the old, but trying to recast it in a way that is relevant for the new world, and I think that it is working quite well.

Q3. Ireland has experienced a reduction in investment from multinational corporations during the recession. For example, companies like Dell have moved their operations overseas to reduce costs. What steps can Ireland take to encourage multinational corporations to continue and invest in Ireland?

Well the thing about that is that it depends on which companies you are targeting. The first stage of our economic development was targeting manufacturing companies to come and manufacture in Ireland.† That included Dell and Intel, which were making computer chips. But it was always recognized that that was what is called ďfootloose investmentĒ, which will go where the lowest cost is. So that was the first generation. We are not targeting those kinds of companies anymore.† Now we are targeting second-level investment, which is high value-added investment that have a high level of intellectual property associated with it. For instance, we have a very successful international financial services sector and the people working there are all graduates, sophisticated, many of them are from overseas and they are selling complex products. So that is the reason that those companies are staying: they can find people, particularly young people, who have those skills. This is completely different than manufacturing. So we are trying to replace anything weíve lost, and we havenít lost that much actually.† We lost the Dell but we have actually held more than we have lost. And the ones that we are trying to replace them with are scaled up higher value added ones that are more sustainable in the longer-term.

Q4. Last year, for the first time in a number of years, there was a reduction in the amount of UK tourists visiting Ireland. How important is it to maintain this link with UK and what steps has Ireland taken to ensure that his link does not further deteriorate?

Itís very important. The UK was always our main trading partner because theyíre right next door. And that was the same for tourism as it was for exports. We exported products there and tourists would come from there, many of them Irish people who had emigrated to the UK to work back when there wasnít much work in Ireland. But in terms of spending power, all countries were hit by the financial recession. All those countries, just like all airlines that flew those people, have had a recession. They need to get back their spending power and their confidence to resume traveling and I think probably this year that will happen. I also think that the government have allocated a much bigger budget this year, 30 million or so, to do an intensified communications campaign in the UK to try to kick-start that process, to accelerate it and to win back that business.

Q5. Have Irelandís long-term relations with other EU states been affected by the IMF/EU bailout package and have offers from the UK, Denmark and Sweden shown that European cooperation is very much alive and that other states are will to cooperate with Ireland?

†I think it is actually really nice to see that all of those countries are willing to help us out when we have need. Itís a sign of solidarity and collegiality among those countries and we should be pleased that that is the case. Because you see, Ireland is a neutral country and we donít have so many enemies thankfully. We have more friends than enemies and a lot of the smaller countries, like Denmark and the Netherlands, feel a kind of fellow feeling towards us. We are all on the periphery of Europe with the big powers like France Germany and Italy in the middle and the small guys have to help each other out and thatís very nice. But on the other hand, we donít like being in the situation of needing help. Itís like accepting charity in that itís a hard thing to do. We have pride and because we have grown and been so successful in the past, we were used to thinking of ourselves as independent and as a country that we could help other people, and not that they would help us. So just as it would be on a personal level, if you were wealthy and then you lost all of your money and had to go ask all your relatives for help, it would be a terribly hard thing to do. Thereís a terrible loss of face, so psychologically itís very damaging and a terrible thing to have to do. But more worrying is that with the IMF and the ECB, while itís a good thing to help us, there is a subtle loss of sovereignty. They are now making the decisions about our economy and telling us: sorry your costs are too high or this has to be done or those state assets have to be sold, and in that situation you are ceding a certain amount of your political sovereignty. And we fought so hard for that, that that is a very sort of thing that Irish people find very hard to do. But then it will be a case of negotiation. After all, itís not unilateral, itís bilateral. So you would hope that if we have a strong government and a strong leader, that things will be reasonably well-balanced and that there will be reasonable chance that we could manage our own affairs.

Q6. In recent years, Ireland has seen an influx of foreign cultures, many of which have complemented and blended with existing Irish culture. However, given the Germany and the UKís announcements that multiculturalism in their countries has failed, do you think that Ireland will soon change its policy or can Ireland be marketed as a multicultural country?

Well itís an interesting thing because Ireland was a single culture until almost the mid-1990s. If you would walk the streets in Dublin, you would see mostly local people and some tourists, which you could immediately recognize because of general appearance. So itís a very new thing that weíve become multicultural. And the first thing to say is that the people who have come have actually been well received. There has not been a negative reaction. But it terms of being absorbed into the country, we have not enough experience of this to say how it will work out long-term. Also, I would say the majority of the people who have come to our country are from central and eastern Europe. We have 120,000 Poles and quite a few Latvians, Lithuanians, Estonians and Moldovans. They are all Europeans, so they come from a relatively similar world view. I have also lived in Canada, where the majority of the immigrants were also Europeans and I would say that that country has succeeded better with multiculturalism.† It wasnít global culture but rather it was more of a European culture, which was more coordinated and easy to absorb. Whereas in the UK, you had all the African countries, the Asian countries, and you have a much more multicultural mix. I may be wrong, but I had the impression that more of the problems came from some of those other cultures that are just so much more alien to each other and so distant that it takes a lot more integration. The more diverse the intake, the bigger the challenge for integration. And ours is predominantly I would say European integration, which isnít so difficult.

Thank you so much for your time.