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... Thus, total employment in foreign-owned manufacturing companies grew strongly after 1988. Inflows of FDI from the USA into Ireland grew particularly fast at that time, both because US FDI inflows into the EU increased sharply and because Ireland's share of these inflows also increased substantially (Barry et al. 1999b, Figures 3.8 and 3.10; Barry 2005, Figure 3). ...
... Consequently, it can be concluded that improved market access in the single EU market was a significant cause of the surge in FDI coming into Ireland. In addition, however, Ireland's share of the US FDI inflows into the EU also increased dramatically in the early 1990s (Barry et al. 1999a(Barry et al. , 1999b, and this would have to be explained by other factors that were more specific to Ireland. ...
A prolonged surge in FDI became the main driver of the boom, especially in the 1990s. Initially, this mainly involved high-tech manufacturing, with services becoming increasingly prominent later. The high-tech manufacturing sectors were less important in terms of net foreign earnings than they appeared to be in terms of exports, while the reverse was true for services. The purchasing linkages and R&D intensity of foreign-owned firms did not develop strongly during the boom, but they did increase their skill levels as more advanced activities were introduced. The overall effect was probably to make them more embedded in the Irish economy and more capable of sustaining higher pay levels, although less integrated than they would be in their home countries. The surge in FDI was not primarily caused by new policies in Ireland. Rather, it was mainly a result of new developments outside Ireland, particularly the introduction of the single European market and the rise of new fast-growing high-tech industries. At the same time, however, existing tax and grant incentives and other conditions in Ireland were very well suited to taking advantage of the new opportunities to attract FDI.
... Employment in foreign-owned manufacturing began to grow from 1987 onwards after declining for some years previously. By the late 1990s, foreign-owned MNCs accounted for over 45% of employment, about 65% of gross output and over 80% of exports in manufacturing industry (Barry et al. 1999b). Murphy (2000) estimated that, in the absence of the contribution coming from high-tech MNCs' exports, Ireland's GDP would have grown by only about 3.5% per year in 1990-96 instead of the actual rate of 7.6% per year. ...
... Rather they highlighted disadvantages and weaknesses in a form of economic growth that depended so heavily on such foreign MNCs, so that they were not impressed by the nature or likely 4 Many studies have discussed some or most of the reasons for FDI mentioned in the two foregoing paragraphs. These include Krugman (1997), Breathnach (1998 and, OECD (1999), Barry et al. (1999b), Murphy (2000), Mac Sharry and White (2000), Gallagher et al. (2002), Ruane (2003), Barry (2005), Crafts (2005), Buckley and Ruane (2006), Romalis (2007), and O'Malley et al. (2008). sustainability of this growth process. ...
The first section of this chapter presents a survey of the literature that has aimed to explain what caused the boom. It aims to discuss virtually all the economic explanations that have been put forward. These include fiscal stabilisation, tax cuts, delayed or belated convergence, strong demand growth in export markets, supply of labour, education, the single European market, EU structural funds, social partnership, foreign direct investment, the small/regional nature of the economy, Irish indigenous industry and some other explanations. The second section undertakes a preliminary assessment of the suggested explanations, arguing that some of them are not very convincing and that it will not be necessary to consider them further, whereas the others will call for further consideration and assessment in later chapters. The suggested explanations that remain for later consideration as potentially significant causes of the boom are strong demand growth in export markets, foreign direct investment, the single European market, education for fast-growing industries, the small/regional nature of the economy, Irish indigenous industry, EU structural funds and social partnership.
... Gracias a las ganancias estáticas (explotación de economías de escala y eliminación de las ineficiencias X 15 ) y dinámicas (aprender haciendo, acumulación de capital humano e I+D) de la apertura comercial la productividad de Irlanda se incrementó significativamente (Barry, 1999). Además, la apertura produjo una mayor competencia la cual forzó la racionalización de algunos sectores, en especial del sector de distribución (logística) (Barry et al., 1997). ...
... Posiblemente el canal de política más importante que ha sustentado el éxito económico de Irlanda es su "estrategia intervencionista orientada hacia el exterior" (Barry, 1999): el uso constante de incentivos fiscales y financieros para atraer flujos de inversión extranjera, principalmente en la manufactura, desde finales de los años cincuenta. De hecho durante el período 1985-2000 se estima que los flujos de IED llegaron a representar el 2 por ciento del PIB de Irlanda por año, de los cuales un 80 por ciento provenían de los EE.UU. ...
La transformación productiva desde una producción basada en materias primas a una producción de mayor valor añadido, requiere de muchas actividades intensivas en conocimiento, las cuales constituyen el corazón de la transición desde una economía de ingreso medio a una economía de ingreso alto. Lograr tal objetivo demanda el desarrollo de capacidades nacionales de innovación a fin de generar un crecimiento sostenido de la produc¬tividad. Este crecimiento de la productividad a su vez constituye la característica distintiva entre los países de ingreso medio-alto que han transitado a países de ingreso alto y aquellos que no lo han logrado. De allí, la importancia de entender los determinantes del creci-miento de la productividad, objetivo fundamental del presente documento. Además de una análisis general de lo indicado por la literatura sobre los determinantes de la productividad, se estudian las principales políticas que Estonia, Finlandia e Irlanda, así como la Comunidad Autónoma del País Vasco, en España, implementaron para lograr impulsar su crecimiento económico mediante un aumento sosteni¬do en la productividad, y alcanzar y mantener el estatus de país de ingreso alto.
... Studies have suggested that the owners of many successful businesses worked previously for foreign multinationals, forming contacts and learning about technological advances before striking out on their own (O'Malley and O'Gorman, 2001;Bandelj, 2008). Studies such as Barry et al. (1999) and Acs et al. (2007) note the importance of such experience working in multinationals for the Irish software industry. The proportion of entrepreneurs in this sector that previously worked in foreign companies rises from one third to two thirds in later studies. ...
Both domestic small- and medium-sized enterprises and foreign direct investment are often seen as key parts in helping economies to withstand and recover from shocks. What is less clear is the impact that a greater presence of foreign-owned firms has on domestic enterprises’ ability to withstand such shocks and for entrepreneurial activity to renew itself after economic shocks, described as local entrepreneurial resilience. To examine how foreign influence affects local entrepreneurial resilience rather than considering the relationship between foreign influence and domestic firm births or deaths at a given point in time, this study takes a more dynamic perspective. The relationship between foreign influence and the change in local firm births, deaths, and their overall impact in terms of net births and business churn after the financial crisis is examined. UK data are examined at the local level to account for the within-region heterogeneity of foreign investments that will lead to quite different outcomes being found for domestic enterprises in the same regions. The results indicate that those areas with greater foreign business influence in the labour market are likely to have seen firm birth rates remain higher and recover more quickly. There are policy implications for localities with both higher and lower levels of foreign business ownership.
... Related to this, Barry, Bradley, and O'Malley (1999) highlight the weak performance of the indigenous manufacturing sector historically. They allude to the restrictions placed on the ability of indigenous firms to perform better than they did on past economic policies (through protectionism in the 1930s) and much later, a lack of policy attention in favour of a concentration on TNCled inward FDI. ...
This paper offers a critical evaluation of recent Irish industrial policy (IP) experience. It argues that whilst Ireland managed to get some things “right” through its IP, substantial tensions arose through making foreign direct investment (FDI) attraction the centrepiece of policy, without at the same time adopting a more holistic approach in IP which inter alia also placed an emphasis on indigenous firms and entrepreneurship more generally. In particular, greater efforts should have been made much earlier in attempting to embed transnational corporation (TNC)-led activity better into the wider economy, in fostering domestic small firms and entrepreneurship, in promoting clusters, and more generally in evaluating IP more fully – notwithstanding the context which mitigated against such actions. As a result, Ireland as an economy remained vulnerable to strategic decisions made elsewhere by TNC decision makers, with IP effectively contributing to a situation that can be characterised as institutional and strategic failure. Overall, the paper suggests that wholesale emulation of the Irish IP approach is problematic.
... Foreign-owned firms have been shown to be larger, more productive and more technology intensive than domestic firms (for Ireland see e.g. Barry et al. (1999)). As a consequence they may be using more advanced production technologies and upgrade their production facilities and machinery more frequently. ...
We use a translog cost function to model production in the Irish manufacturing sector over the period from 1991 to 2009. We estimate both own- and cross-price elasticities and Morishima elasticities of substitution between capital, labour, materials and energy. We find that capital and energy are substitutes in the production process. Across all firms we find that a 1% rise in the price of energy is associated with an increase of 0.04% in the demand for capital. The Morishima elasticities, which reflect the technological substitution potential, indicate that a 1% increase in the price of energy causes the capital/energy input ratio to increase by 1.5%. The demand for capital in energy-intensive firms is more responsive to increases in energy prices, while it is less responsive in foreign-owned firms. We also observe a sharp decline in firms’ responsiveness in the first half of the sample period.
... In services, almost all firms were small or very small, often family-run; but the 2 per cent of larger firms accounted for about half of all employment and half of all turnover in the sector (Central Statistics Office 2008b). Although the domestic sector remains small by comparison, the presence of the foreign-owned sector has been credited with creating opportunities for upskilling and innovation there too (Barry, Bradley and O'Malley 1999;O'Malley and O'Gorman 2001). Consistent with its 'liberal' features, Ireland rates relatively highly in business-friendly practices such as minimizing delays in transacting official business and labour market flexibility (OECD 2007). ...
The international economic crisis hit Ireland hard from 2007 on. Ireland’s membership of the Euro had a significant effect on the policy configuration in the run-up to the crisis, as this had shaped credit availability, bank incentives, fiscal priorities, and wage bargaining practices in a variety of ways. But domestic political choices shaped the terms on which Ireland experienced the crisis. The prior configuration of domestic policy choices, the structure of decision-making, and the influence of organized interests over government, all play a vital role in explaining the scale and severity of crisis. Indeed, this paper argues that Ireland has had to manage not one economic crisis but three – financial, fiscal, and competitiveness. Initial recourse to the orthodox strategies of spending cuts and cost containment did not contain the spread of the crisis, and in November 2010 Ireland entered an EU-IMF loan agreement. This paper outlines the pathways to this outcome.
... Hence, if more productive firms use more advanced technology, this would be another reason to expect a positive relationship between exporting and spending on the environment or investing capital in pollution control. The subsidiaries of foreign-owned multinationals also tend to be more productive than domestic firms (e.g. Barry et al. (1999) for Ireland), therefore a similar argument holds. Besides, foreign multinationals may apply the same standards across their operations in all (Western) countries, these could be higher than those prescribed by Irish legislation. ...
We examine the determinants of firm’s current environmental expenditure and firm’s capital investment in equipment for pollution
control in Irish manufacturing industries using a Heckman selection model. The main determinants for the two types of expenditure
are similar: larger, exporting and energy-intensive firms are more likely to spend. Being subject to environmental regulation
also has an effect. Once the decision to commit resources has been taken, larger, older, foreign-owned, exporting and energy-intensive
firms incur higher environmental expenditure. For the amount of capital investment only firm size and age play a role. This
suggests that the economic and regulatory incentives in place are such that it is the largest and most polluting firms that
do most to reduce pollution.
KeywordsCapital expenditure on pollution abatement–Environmental expenditure–Firm-level analysis–Manufacturing
... There were phases when all this capital intensification and human capital development seemed to produce only 'jobless growth'. But by the boom period of the 1990s, this was generating much greater levels of successful startups and autonomous development of Irish-owned manufacturing and services, and correspondingly rapid employment generation opportunities (Barry et al. 1999;O'Malley 2004) A flurry of social legislation in the early to mid 1970s has sometimes been understood as a form of catch-up in areas of income maintenance (Breen et al. 1990;Curry 2003;McCashin 2004). To some degree this can indeed be understood as a form of modernization, flowing from increased awareness of British and continental European social provision; but it might also perhaps be understood in the context of the real growth in economic insecurity attendant upon trade liberalization. ...
The ‘compensation hypothesis’ holds that increasing trade exposure gives rise to pressures for an expansion in public spending, especially on welfare items. We argue that the underlying relationship between economic openness and public spending and particularly on welfare effort in Ireland shows a surprising consistency that is at odds with this hypothesis. Our preliminary estimates show a persistently weak relationship between trade openness and ‘social compensation’, unlike the experience of other small open economies. We seek to explain these findings with reference to both structural economic constraints and domestic political preferences.
... In many respects Ireland in the 1990s has been a model of economic liberalism, where market-conforming policies in the areas such as taxation, labour market, and regulatory policy, have been in evidence. A consistent industrial policy stance facilitated strong FDI-led growth and an associated modernization of the rest of the economic structure and upgrading of the employment structure (O'Connell 2000;O'Connell and Russell 2007;Barry et al. 1999). But in some respects its economic governance arrangements -the ways in which these policies have been arrived at -have been quite unusual. ...
