A report from Forfás, the body which advises the Government on industrial policy, says the Irish economy may be moving to a 'new stage of development'.
In its annual International Trade and Investment Report, Forfás says the trade surplus for goods, though large by international standards, fell for the second year in a row in 2004. This reflected slower export growth and a surge in imports, mainly driven by consumer demand and fuel.
At the same time, service exports expanded rapidly, particularly in computer, financial and insurance services, leading to a narrowing of the country's services deficit.
The Forfás report also shows that the amount of money invested abroad by Irish companies and individuals exceeded the amount flowing into the country for the first time in 2004. Foreign direct investment (FDI) outflows were €12.7 billion - a figure which excludes residential and commercial property investment - while FDI inflows were €9.1 billion, the lowest since 1999.
'Once seen as a relatively low cost manufacturing base, Ireland has become a higher cost economy,' the report says. 'This places a greater emphasis on value added activities such as high-skill manufacturing and internationally traded services as the key to Irish economic growth,' it adds.
Forfás says Ireland may now follow other developed economies by increasing its direct investments abroad.
