Opinion: Economists need to switch focus to micro issues, writes Cliff Taylor, Economics Editor, in Kenmare

Economists appear in the media most days talking about the great macroeconomic issues of growth and inflation and their impact in areas like exchange rates. The impossibility of forecasting with much confidence in these areas is rarely a discouragement - and the media also feeds this focus.

The annual gathering of the dismal scientists in Kenmare, however, suggests that the key role for economists in Ireland in future will not be predicting where the dollar might go, or what GNP growth next year will be, but rather in examining the workings of specific markets, sectors and policies.

To use the economic jargon, "the future is micro" - with economists contributing a microeconomic perspective to the key debates facing society. Control of interest rates may have moved to Frankfurt and our budget is overseen from Brussels, so the move of focus to areas which Irish policy can affect is, no doubt, based on what economists like to call "rational expectations" about where work will be found in the future.

Mr John Fingleton, chairman of the Competition Authority, caught the mood when he called for economists to move from being commentators on these issues to getting their hands dirty.

Ways needed to be found for economists to feed into public policy in key areas, he told the conference, and the current structure of the public service was not conducive to this happening. But the profession is turning its intellectual fire on the big issues with papers presented to the conference on issues such as education, competition policy, and healthcare.

And it is clear that the Brennan commission report on health, the topic of yesterday's final session, was a fusion of a focus of accountancy and economic skills to a particular sector.

The agenda of economic reform and efficiency is broad and complex. The economic boom was based on a fairly simple formula of a stable overall economy, low interest rates and a tax regime designed to attract foreign investment. The consensus now is that policymakers face more complex challenges as competition builds for mobile investment and the challenge of promoting productivity and efficiency at home is faced.

There has been much talk among policymakers about moving industry "up the value chain" into higher value activities. Forfás chief executive, Mr Martin Cronin, tried to put some flesh on this idea at the conference. This year was likely to be the third in a row in which employment fell in manufacturing and internationally-traded services, he said.

Striking a note of caution, he said that while some of this may be due to normal structural change as lower value operations close to be replaced by higher value ones, the experience of other economies showed that regions could be hit by longer-term declines, as happened in North-East England with ship-building and Detroit with car manufacturing,

To answer this, he said more would be needed than the old formula of low taxes, a business-friendly environment and a ready supply of labour. The trick now, he said, would be to create an environment where state and industry could work together to create new and more complex areas of competitive advantage. He suggests that, as well as keeping down inflation and holding on to the old advantages including the low corporate tax rates, this requires a whole new focus on fostering innovation and turning it into profitable business.

Crucially, he also suggested that rather than merely considering the "business environment", a focus must be put on the competitiveness and conditions facing key growth sectors.

Both mobile foreign investment and domestic industry is, of course, crucially affected by the productivity of the domestic economy and competition policy, in particular, was a key feature of the conference.

Competition authority director Mr Fingleton pointed to the key issues of implementing reform policy in this area. The evidence "does not give Ireland high marks on implementation", he said, pointing to the slow reform of the utilities, where opening up markets was resisted for long periods and then implemented in a piecemeal fashion, and the taxi sector, where a High Court decision was required to open the market.

Mr Fingleton made the case that the competition agenda needs to be moved on through selling it benefits and accelerating regulatory reform.

However the organisation he heads, the Competition Authority, was criticised in a paper by former authority member Mr Pat Massey and UCD economists Mr Moore McDowell and Mr Paddy Lyons. Their paper pointed to the low level of prosecutions for competition offences and argued that the prosecution function should be removed from the authority. The authority also needs new transparent standards and accountability, they suggested.

The question for economists is how to get their viewpoint listened to in the key debates or how to get members of the profession involved at the implementation stage. Discussion at the conference made clear that many big decisions had been taken with little or no economic input - such as the abolition of third-level fees or the implementation of public pay benchmarking and many key areas, such as health, have had a minimal economic input.

Economists may have a high profile as media "hurlers on the ditch" - and there is no doubt that it is becoming increasingly influential in areas such as competition and regulation - but it appears there is some way to go before the profession gets a bigger say in the actual running of the country.