The Economic and Social Re iew, Vol. 35, No. 1, Sp ing, 2004, pp. 27-53
S a e, Compe i ion and Indus ial Change in
I eland 1991-1999
SEÁN Ó RIAIN*
Na ional Uni e si y o I eland, Maynoo h
Abs ac : As job losses inc eased apidly in 2003 amid calls o inc eased compe i i eness, i
becomes all he mo e c ucial o unde s and he cha ac e and causes o such indus ial upg ading
ha did occu in I eland in he 1990s. This pape a gues ha despi e a con inuing eliance on
o eign in es men , he e we e signi ican elemen s o local indus ial upg ading wi hin he I ish
economy in he 1990s. Con a y o pe spec i es which emphasise he lea ning e ec s associa ed
wi h o eign i ms, he pape sugges s ha such upg ading only eme ged when and whe e local
and na ional ins i u ions we e es ablished o suppo ela ions o inno a ion and o ganisa ional
de elopmen . The cu en di icul ies in he I ish economy can be aced in signi ican pa o he
ailu e o deepen and ex end his eme gen sys em o inno a ion. The emphasis on
‘compe i i eness’ in con empo a y policy deba e h ea ens o unde mine he public in es men ,
social ela ions and collec i e ins i u ion building ha ha e been, and will con inue o be, cen al
o indus ial upg ading in I eland.
IINTRODUCTION
As he ‘Cel ic Tige ’ uns in o di icul ies, i becomes all he mo e impo an
o unde s and he p ecise cha ac e o he ans o ma ions ha occu ed
in he I ish economy in he 1990s. This pape ocuses on indus ial change,
which was cen al o he imp o ed g ow h and employmen pe o mance o he
I ish economy in he 1990s. How signi ican was indus ial change in I eland
and wha ac o s migh explain such ans o ma ion ha did ake place?
27
*Thanks o F ed Block and wo anonymous e e ees o commen s and o D . Rhona Dempsey a
Fo ás o assis ance wi h da a. This esea ch has been suppo ed by he Facul y Resea ch G an s
o he Uni e si y o Cali o nia, Da is.
The con en ional explana ion o he e i al in I ish economic o unes
since 1987 emphasises he ongoing commi men o Fo eign Di ec In es men
(FDI) and ee ade. Ba y (2000) emphasises how a combina ion o shi ing
ex e nal ci cums ances and domes ic policies acili a ed ‘con e gence’ wi h
economies in he EU and OECD. Ex e nally, a boom in FDI occu ed a he
same ime as he Single Eu opean Ma ke p ojec was being implemen ed,
c ea ing an eno mous oppo uni y o I eland. P o ec ionis policies,
ag icul u al suppo s, low le els o educa ion, p ominen s a e-sec o
monopolies and plu alis indus ial ela ions inhibi ed I ish bene i s om he
ma ke be ween 1950 and 1988. Acco ding o his iew, ee ade, declining
ag icul u e, ising le els o educa ion, s a e de egula ion and ‘ esponsible’
cen al wage ba gaining enabled ma ke s o ope a e mo e smoo hly in he
1990s and s imula ed g ow h. Paul K ugman pu s he con en ional
explana ion succinc ly: “Thanks in pa o luck, in pa o policies …, I eland
go a head s a o e o he Eu opean loca ions in a ac ing wha became a
su ge o inwa d FDI; he ea ly in es men s bo h gene a ed a cascade h ough
in o ma ional e ec s and, e en ually, c ea ed ex e nal economies ha u he
ein o ced I eland’s ad an ages” (K ugman, 1998, p. 51; see also Ba y, 2000).
Al hough inspi ed by dependency heo y, O’Hea n’s explana ion o I ish
g ow h sha es wi h he o hodox economis s he iew ha he dynamic o
indus ial g ow h is d i en by FDI, acili a ed by a neo-libe al s a e ge ing
he condi ions ‘ igh ’ (O’Hea n, 1998, 2001). The logic is e y simila o
K ugman’s: “Ame ican co po a ions made majo mo es o inc ease hei
p esence in he Eu opean ma ke ; hey ended o agglome a e hei new
p ojec s o ake ad an age o he lexibili y his allowed; and I eland was
o una e enough o ecei e a majo sha e o Ame ican-owned elec onics
p ojec s in Eu ope because hey agglome a ed a ound o he majo i ms such
as In el” (1998, p. 153). FDI gene a es sho - e m g ow h spu s, i will no
con ibu e o he long- e m de elopmen o he local economy o a wide
a ie y o easons – he low le els o linkages be ween TNCs and he local
economy, he epa ia ion o capi al and decapi alisa ion o he local economy,
he disa icula ion o he local economy be ween an ad anced, o eign
domina ed sec o and a backwa d indigenous sec o (O’Hea n, 2001, p. 193).
Whe e bo h dependency and o hodox economic accoun s la gely discoun
he ole o he s a e in s uc u ing ma ke s, Ce ny (1995) a gues ha neo-
libe al globalisa ion has seen a g ea ly inc eased ole o he s a e as an
‘en e p ise associa ion’ which p omo es en ep eneu ialism and compe i ion.
D awing on Ce ny, Ki by (2002, pp. 142-144) a gues ha he I ish s a e is bes
desc ibed as a ‘compe i ion s a e’ which p io i ises mic oeconomic in e -
en ion, lexible esponse o compe i i e condi ions and con olling in la ion
and en e p ise o e maximising wel a e h ough expanding he s a e is-à- is
28 THE ECONOMIC AND SOCIAL REVIEW
he ma ke . Fo Ki by, while he s a e is pe asi e wi hin he I ish economy,
he s a e-socie y alliance unde pinning wha indus ial upg ading has aken
place is seamlessly in eg a ed wi h he demands o global compe i i eness,
c ea ing a ‘compe i ion s a e’ (Ki by, 2002, p. 143).
Whe e Ki by is igh ly c i ical o he desi abili y o such a delimi ed ole
o he s a e in he economy, he concep o he ‘compe i ion s a e’ has been cas
mo e posi i ely by ce ain impo an elemen s wi hin he I ish poli y. The
Na ional Compe i i eness Council closely moni o s many aspec s o I ish
socie y o hei compe i i eness implica ions while An Taoiseach, Be ie
Ahe n, decla ed in Ap il 2003: “This go e nmen does no belie e ha ma ke
o ces alone deli e g ow h and jobs. We ha e o be sma . We ha e o c ea e
he condi ions in which en e p ise can lou ish, while in e na ional capi al
lows in o pu ou people o wo k in high alue, high pay ac i i y…. This is
he so o S a e ha I wan o lead”. Bo h he app o ing and c i ical accoun s
o I eland as a Compe i ion S a e sha e a simila logic o explana ion o
indus ial change – an ex ensi e ole o he s a e bu one which adhe es
closely o ma ke p inciples.
Each o hese se s o heo ies con ibu es o ou unde s anding o he
Cel ic Tige . The poin s made by dependency analys s ega ding he limi s o
FDI as he basis o a de elopmen s a egy a e well aken. Howe e , as he
o hodox economis s a gue, o eign in es men can b ing esou ces which can
be mobilised in an economic de elopmen s a egy. Nei he pe spec i e o e s
a sa is ac o y unde s anding o how local ins i u ions and poli ics shape
whe he he cos s o bene i s o FDI a e emphasised. Ki by’s analysis o he
‘compe i ion s a e’ gi es a mo e cen al ole o poli ics and poin s up he deeply
p oblema ic ela ionship be ween g ow h and inequali y in he I ish case.
Howe e , by comple ely subo dina ing he poli ics o economic de elopmen o
he logic o he ma ke , he concep o ‘ he compe i ion s a e’ unnecessa ily
na ows ou ield o inqui y in o he social cons uc ion o ma ke s and he
possibili ies o poli ical and economic ans o ma ion con ained wi hin he
ins i u ions ha play a c i ical ole in cons uc ing hose ma ke s.
This pape de elops a ‘c i ical economic sociology’ o indus ial change in
he Cel ic Tige ha a gues agains he e ishisa ion o ma ke p ocesses
wi hin bo h o hodox and c i ical explana ions. Fi s , I a gue ha , al hough
I eland e ained subs an ial elemen s o an en epô economy, he e was
signi ican upg ading in he 1990s – pa icula ly in he mos dynamic and
echnology in ensi e sec o s. Second, he pape a gues agains he
con en ional posi ion o suppo e s and c i ics alike ha his indus ial
change can be explained by he g ea e con o mi y o ‘ he ma ke ’ by he
ins i u ions o he I ish economy. A shi in he ins i u ions and s a e-socie y
ela ions wi hin which indus y in I eland is embedded – mo e na owly pu ,
STATE, COMPETITION AND INDUSTRIAL CHANGE IN IRELAND 1991-1999 29
a change in he s a e-led na ional sys em o inno a ion – has been c ucial o
indus ial upg ading and e idence om a a ie y o s udies suppo s his
in e p e a ion o a posi i e ‘s a e e ec ’ on indus ial change. Finally, I a gue
ha he ‘compe i i eness’ agenda (pa icula ly when ocused on a ac ing
FDI) can unde mine he e y ins i u ions which ha e been c ucial o hose
genuine gains ha ha e been achie ed du ing he ‘Cel ic Tige ’ yea s. The
‘Cel ic Tige ’ does no ep esen an ‘end poin ’ o a p e-o dained de elopmen
pa h bu i is a e ain o poli ical s uggle whe e much emains o play o and
whe e he ins i u ions which p o ided economic success may hemsel es be
po en ial ools o social and poli ical ans o ma ion.
1
II INDUSTRIAL CHANGE IN THE 1990S: UPGRADING
WITHIN THE BUBBLE
FDI has been he bed ock o I ish indus ial policy o ou decades.
Th oughou he 1960s FDI g ew apidly wi h o eign i ms accoun ing o 2.3
pe cen o g oss ou pu in 1960 bu 15.9 pe cen in 1973 (O’Malley, 1989,
p. 102). The in low o FDI in he 1960s and 1970s ueled a pe iod o apid
economic g ow h, al hough only minimally p og essing beyond an ‘expo
pla o m’ indus ial s uc u e and ul ima ely unde pinning economic disas e
in he 1980s (O’B ien, 1986; Mu ay and Wickham, 1987; Eolas, 1989; Sklai ,
1988). Has he FDI boom o he 1990s changed he cha ac e o ansna ional
co po a ions in I eland?
Fo eign In es men : Upg ading Wi hin En epô s
O’Hea n (1998) claimed ha he de iciencies o FDI in I eland ende ed
he Cel ic Tige phenomenon a mi age, an a e ac o c ea i e accoun ing
a he han a genuine ans o ma ion in socie al and o ganisa ional
capabili ies. The e is mo e han a g ain o u h o his a gumen . Honohan,
Mai e and Con oy poin ou ha “ he I ish manu ac u ing sec o con ains
‘in isible en epô s’ – in angible ac o s a i ing and lea ing like ca goes
h ough g ea anshipmen po s” (1998) which a e concen a ed in he
sec o s o chemicals, so wa e ep oduc ion, compu e s and p oduc ion o cola
concen a e. These en epô s a e mo i a ed by a desi e o ake ad an age o
he ax bene i s o an I ish loca ion in o de o e ain he highes possible
30 THE ECONOMIC AND SOCIAL REVIEW
1
In his espec , he analysis in his pape has much in common wi h o he pe spec i es which,
despi e hei di e se e alua ions o he Cel ic Tige and i s ins i u ions, emphasise he ole o he
poli ical in shaping de elopmen p ocesses (O’Donnell, 2000; Munck, 1999; Ó Riain and O’Connell,
2000).
sha e o p o i s on he p oceeds o he in ellec ual wo k ypically ca ied ou
close o he headqua e s (usually in he US). These dynamics a e u he
in ensi ied by he ans e p icing ac i i ies o US mul ina ionals in I eland
(S ewa , 1989) and by he cha ac e o much high echnology indus y whe e
he cos s ha e inc easingly shi ed owa ds he design p ocess (p ima ily
e ained in he US) and away om he p oduc ion p ocess (which is mo e
likely o be loca ed in I eland). Clea ly his ac i i y is signi ican wi hin he
I ish economy. Honohan e al. (1998) es ima ed ha o e one- hi d o
manu ac u ing ou pu and app oxima ely 10 pe cen o manu ac u ing
employmen was accoun ed o by hese sec o s.
Howe e , we canno ely on his phenomenon, signi ican hough i is, o
explain I ish indus ial g ow h in he 1990s. Fi s , his ac i i y has been
p esen wi hin he I ish economy since a leas he mid-1970s (Honohan e al.,
1998; S ewa , 1989; O’Hea n, 1998) and has pe sis ed ac oss slump and
boom. Fu he mo e, ocusing on his ac o alone canno explain he ela i e
upg ading o in es men , esea ch and de elopmen , skills and p oduc i i y
h ough he 1990s (see Table 1).
Table 1: Key Indus ial Indica o s in he Manu ac u ing Sec o by
Na ionali y o Owne ship 1991–1999
Na ionali y Key Indica o s 1999 Pe cen age Change in
o owne ship Indus ial Indica o s 1991–1999
To al Ou pu Labou R&D Employ- P o es- Ou pu
Employ- Cos s as men sional
men % o Labou
Ou pu Fo ce
%%% %
I ish 125,401 14,152,497 14.7 185.2 15.3 28.1 45.4
Uni ed Kingdom 12,660 2,308,864 12.7 –2.6 11.3 62.2
O he EU 23,852 3,111,358 14.9 18.7 49.1 98.7
All o eign:
141.6
Uni ed S a es o
Ame ica 74,781 35,960,866 4.3 91.7 124.0 453.3
O he non–EU 10,826 3,260,475 6.8 –26.6 –1.8 94.4
To al 247, 520 58,794,060 7.8 141.6 26.5 50.4 181.4
Sou ce: Unpublished Census o Indus ial P oduc ion da a, 1991 and 1999, p o ided by he
Cen al S a is ics O ice; R&D da a om Fo ás (1999).
STATE, COMPETITION AND INDUSTRIAL CHANGE IN IRELAND 1991-1999 31

In manu ac u ing indus y, in es men lows inc eased and shi ed
owa ds ‘in angible’ in es men s such as R&D spending. Manu ac u ing
employmen inc eased o e he pe iod and saw a signi ican deg ee o
‘upskilling’, a leas as measu ed by occupa ional ca ego y. ‘Adminis a i e
and echnical’ wo ke s ( hese do no include cle ical wo ke s) g ew by 50 pe
cen ac oss manu ac u ing, almos double he a e o gene al employmen
g ow h. Al hough ou pu igu es a e ela i ely meaningless o he en epô
sec o s discussed abo e, i is s iking ha ou pu expanded s eadily ac oss all
na ionali ies o i ms (Table 1) and almos all sec o s (as ou lined below).
The e was howe e a ma ked sec o al shi wi h apid decline in ‘olde ’ sec o s
such as ex iles, clo hing and lea he , e en as he ‘high ech’ sec o s expanded
apidly. Fu he mo e, ou pu pe employee g ew s eadily, wi hin as well as
ac oss sec o s, indica ing an inc eased le el o p oduc i i y.
In manu ac u ing, US owned i ms a e clea ly he p ima y culp i s in
pu suing en epô ope a ions bu hese i ms also had some o he la ges
inc eases in in es men and made a signi ican con ibu ion o
p o essionalisa ion o he labou o ce. The o eign ‘ ood, d ink and obacco’
sec o appea s o be he only ‘pu e’ en epô sec o wi h in es men and
employmen alling as ou pu inc eased. The o he sec o s – ep oduc ion o
eco ded media (so wa e design and duplica ion), chemicals and compu e s –
all saw expansions in in es men , R&D and some p o essionalisa ion.
Howe e , in hese en epô sec o s, p o essional employmen expanded only
ma ginally mo e apidly han o e all employmen .
‘O he non-EU coun ies’, p ima ily Japanese companies, we e less likely
o pu sue en epô ope a ions, had a much g ea e ela i e a e o
p o essionalisa ion wi hin hei wo k o ces and made eno mous leaps in e ms
o p oduc i i y. This in es men is o a ‘highe quali y’ han US in es men bu
hese coun ies ha e less in es men in I eland and ha in es men inc eased
less quickly han US in es men . Accessing he EU is a majo mo i a ion o
in es men in I eland as in es men om wi hin he EU has been much
slowe han om non-EU coun ies. Howe e , in es men om non-US i ms
is mo e capi al-in ensi e and p o essional-o ien ed han he massi e in low o
US in es men o e he pas en yea s has been.
While he e a e s iking en epô cha ac e is ics o o eign i ms in
I eland he e o e, he e is also e idence o signi ican indus ial upg ading
ac oss a wide ange o sec o s. We see g ow h almos comple ely ac oss he
boa d in in es men , R&D, employmen , p o essionalisa ion and p oduc i i y.
Pe haps he cen al con adic ion o I ish indus ial de elopmen ha has
os e ed he con o e sies o ecen yea s is ha en epô ac i i y and
indus ial upg ading bo h occu ed wi hin he same sec o s and e en wi hin
he same i ms. An in iguing aspec o I ish de elopmen is he eme gence o
32 THE ECONOMIC AND SOCIAL REVIEW
local deepening and upg ading om wi hin hese non-p oduc i e lows o
capi al.
This pic u e o ela i ely widesp ead indus ial upg ading is consis en
wi h na ional ends in R&D spending and pe sonnel. G oss domes ic
expendi u e on R&D was 0.6 pe cen o GDP in 1981, 0.9 pe cen in 1990,
1.28 pe cen in 1997 and 1.21 pe cen in 1999 ( ailing o keep up wi h he
su ge in g ow h in he la e nine ies) – al hough s ill well below he EU a e age
o 1.8 pe cen and he OECD a e age o 2.2 pe cen . Consis en wi h he
labou in ensi e cha ac e o he I ish ans o ma ion, I eland does
signi ican ly be e in e ms o esea che s pe en housand labou o ce –
going om 17 in 1981 o 32 in 1989 o 57 in 1995, passing he EU a e age o
49 and he OECD a e age o 55. Among OECD coun ies, I eland and Ko ea
show he as es a es o inc ease in R&D spending in he 1990s – a e
espec able a e age annual g ow h a es o 6.0 pe cen in he 1980s I ish
R&D spending inc eased by an a e age o 16.7 pe cen be ween 1991 and
1995 and 12.0 pe cen be ween 1995 and 1997. The a e age a e o inc ease
in he EU om 1995-1997 was 1.9 pe cen . I eland shows by a he as es
a e o inc ease o esea che s – wi h inc eases o 7.4 pe cen om 1981-1985
and 9.9 pe cen om 1985-1989 (abo e he OECD a e age o 4.4 pe cen ). In
he 1990s when OECD g ow h slowed d ama ically, he I ish esea che
labou o ce ook o – inc easing o an a e age o 10.5 pe cen pe annum
om 1991-1993 and 15.2 pe cen om 1993-1996 ( igu es om OECD, 2000).
The e is also e idence o signi ican ans o ma ion o ac i i ies wi hin
i ms. A 1996-1997 su ey o a ep esen a i e sample o en e p ises in I eland,
ca ied ou by he G adua e School o Business a Uni e si y College Dublin,
ga he ed da a on a wide ange o wo kplace p ac ices and modes o wo kplace
go e nance. Roche and Gea y (2000) ind ha , while he e has been apid
ecen change wi hin I ish wo kplaces, I eland is no ‘ahead o ’ o he
indus ialised coun ies no can he incidence o eamwo k be used o explain
i s g ow h pe o mance o he pas en yea s. Howe e , he su ey esul s
show ha he e has been a signi ican shi owa ds ‘ eamwo k’ wi hin i ms
in I eland (Gea y, 1999; Roche and Gea y, 1999). Employee in ol emen is
mos de eloped in he a ea o quali y imp o emen wi hin eams, less so in he
o ganisa ion o wo k ac i i ies hemsel es and leas o all in he con ol o
eam and o ganisa ional bounda ies (Gea y, 1999, p. 877).
Sec o al Di e ences in Local Lea ning
The acid es o indus ial de elopmen is he de elopmen o
e i o ialised, embedded indus ial and inno a ion capabili ies. Pe haps one
o he mos su p ising aspec s o he I ish g ow h expe ience was he g ow h
o indigenous I ish indus y in he 1990s. F om 1991 o 1999 (and pa icula ly
STATE, COMPETITION AND INDUSTRIAL CHANGE IN IRELAND 1991-1999 33
a e 1994) I ish-owned manu ac u ing indus y saw signi ican ises in
in es men , R&D, employmen , p o essionalisa ion and p oduc i i y (see
Table 1). This would ha e been inconcei able in he 1980s when employmen
in indigenous i ms was plumme ing. None heless, despi e hese less han
p omising o igins, an indigenous sec o eme ged. A close look a he s uc u e
o I ish indus y con i ms ha he e we e impo an changes alongside he
g ow h in ou pu and employmen (see Table 2).
Table 2 combines a numbe o sec o s wi h simila cha ac e is ics oge he
in o b oade g oupings. The i s g oup o sec o s alls unde he heading o
he ‘knowledge economy’. These a e sec o s ha a e undamen ally based on
he p ocessing o in o ma ion o whe e, o he mos pa , indigenous i ms
spend a simila o g ea e p opo ion o hei e enues on R&D han he
OECD a e age o hei sec o (see Fo ás, 1999, p. 12).
2
As well as being he
mos knowledge in ensi e sec o s, hese sec o s a e he as es g owing, in
e ms o employmen , ou pu and R&D spending.
The sec o s include: so wa e, elec onic and elec ical equipmen
(including compu e s and elecommunica ions), inancial se ices and
ins umen s. Wi hin I ish-owned elec onics i ms, Ruane and Go g (2001)
show ha he ‘high skill’ sub-sec o s ha e inc eased hei sha e o o al
employmen om 9.3 pe cen be ween 1982-85 o 33.3 pe cen be ween 1991-
1995. Al hough OECD s a is ics on R&D a e no a ailable o so wa e and
inancial se ices, R&D spending pe employee clea ly indica es ha hey a e
among he mo e knowledge in ensi e indus ial sec o s. ‘R&D spend pe
employee’ is a use ul measu e as i gi es us a measu e o R&D esou ces om
he pe spec i e o employees, p o iding a sense o how much R&D ac i i y and
esou ces wo ke s migh be able o a ail o . Gi en he p oblems wi h ou pu
igu es in he I ish con ex , his measu e gi es us a signi ican ly di e en
pic u e om ha p o ided by ‘R&D spend as a pe cen age o ou pu ’, which is
a be e measu e o i m’s ela i e commi men o R&D ( a he han o he
in es men , wages, p o i - aking e c.)
In ac , he indus ial s a is ics mask a mo e in e es ing se o
ela ionships among hese sec o s. Gene ally, so wa e capabili ies ha e
become inc easingly impo an in in o ma ion and communica ion echnology
indus ies – e en in sec o s which a e os ensibly ocused on ‘ha dwa e’. The
indigenous so wa e indus y’s majo sub-sec o s include communica ions
34 THE ECONOMIC AND SOCIAL REVIEW
2
Gene ally, ca e mus be aken wi h such compa isons ac oss OECD coun ies as he su eys
which o m he basis o he igu es a e o en no s ic ly compa able. Fu he mo e, gi en he
ange o go e nmen incen i es o inc ease R&D he e is some dange ha i ms ha e in la ed
hei R&D spends in hese s a is ics. Howe e , he pa e ns a e clea enough ha we can iden i y
basic pa e ns wi hin I ish indus y, pa icula ly gi en ha hese pa e ns e lec case s udy
e idence on he eme gence o pa icula esea ch based i ms.
STATE, COMPETITION AND INDUSTRIAL CHANGE IN IRELAND 1991-1999 35
Table 2: I ish–Owned Indus y 1991–1999
Sec o Key Indica o s 1999 Pe cen age Change in Indus ial R&D Indica o s
Indica o s 1991–1999
Ou pu Employ- To al P o essional R&D R&D as % o R&D R&D pe
(million men Employ- Employmen Ou pu (OECD pe P o essional
pounds) men A e ages) Employee Employee
1. ‘Knowledge Economy’ (High G ow h, R&D In ensi y simila o o abo e OECD A e age)
So wa e
1
N/A 16,504 258% N/A 841% N/A 5,521 N/A
O he
In e na ionally
T aded Se ices
1
N/A N/A 59% N/A N/A
Elec onics and
Elec ical Equipmen 222.8 4,437 84.7 90.6 570.8 6.3 (5.6) 5,593 29,401
Ins umen s 31.9 719 245.5 199.1 1030.5 5.9 (7.0) 4,343 15,480
2. Manu ac u ing/ Sub–Supply
(a) R&D In ensi y low bu simila o OECD A e age
Rubbe and Plas ic 219.3 3,720 68.1 121.7 218.8 1.3 (1.2) 1,045 8,243
Me als, me al p oduc s 490.6 9,039 28.7 28.2 79.8 0.7 (0.7) 480 3,957
Machine y and
Equipmen 236.7 5,302 46.8 60.8 276.7 2.2 (2.1) 1,557 11,496
(b) R&D In ensi y low and below OECD A e age
Pape , P in and Publishing
(including Reco ded Media) 776.9 13,297 23.5 37.9 170.5 0.2 (0.4) 153 931
Pha maceu icals and Chemicals 455.4 3,305 35.4 18.4 51.7 1.1 (11.5/3.2*) 1,548 7,761
Non–me allic Mine als 461.1 8,194 7.5 26.0 50.2 0.4 (0.8) 437 3,234
3. ‘T adi ional’ Indus ies
Food/ D ink/ Tobacco 5,436.3 31,790 8.9 90.6 44.6 0.3 (0.3) 609 4,968
Clo hing/Tex iles/ Lea he 359.7 11,944 –35.0% 83.4 –19.8 0.8 (0.3) 365 3,537
Wood, Fu ni u e 174.0 3,718 20.0 14.9 1034.7 0.9 (0.2) 741 7,820
1
Expo o ien ed i ms only.
Sou ces: R&D da a om Fo ás (1999) and special abula ions; employmen da a o so wa e and in e na ional se ices om
Fo ás (2000); all o he da a om special CSO abula ions o Census o Indus ial P oduc ion da a.
*11.5% in Pha maceu icals and 3.2% in Chemicals.
agencies ocused g an aid almos comple ely on companies p oducing
so wa e p oduc s o expo – a emp ing o s ee companies away om he
‘easy’ p o i s o labou con ac ing. The s a e ac ed in impo an ways
he e o e o de ine he cha ac e o I ish indus y, wi hou a emp ing o
de ine he speci ic s a egies o be ollowed by i ms.
Howe e , he s a e has also made mo e di ec con ibu ions. I s second
con ibu ion was o ‘making winne s’. P i a e capi al was no a majo ac o in
he g ow h o I ish indus y and i is only since 1998 ha p i a e in es men
capi al, om bo h domes ic and o eign sou ces, has become abundan e en in
leading sec o s such as so wa e. The s a e was he e o e he majo p o ide
o ex e nal capi al o indigenous indus y. Fu he mo e, his mo e di ec
in ol emen o he s a e was signi ican ly mo e e ec i e in p omo ing
p oduc i e in es men han p e ious schemes aimed a p o iding business
expansion unds o s a -ups. These schemes, wi h less s a e agency
o e sigh , became mo e poli icised and degene a ed in o subsidies o well-
es ablished i ms o in o a peculia ly e ec i e means o a oiding ax (see
S ewa , 1992).
The impo ance o he s a e in p o iding inancing and in s imula ing
p i a e in es men is indica ed in Table 4 which p o ides da a on p i a e
equi y in es men s be ween 1997 and 1999, he pe iod when p i a e,
inc easingly in e na ional, in es men su ged in I eland. These in es men s
a e concen a ed in compu e ela ed sec o s, elec onics, ‘o he
manu ac u ing’ and (in 1999) communica ions. The I ish sha e o Eu opean
p i a e equi y in es men inc eased om 0.3 pe cen in 1995 o 0.8 pe cen
in 1998 and 1.2 pe cen in 1999.
In 1997 all in es men was om domes ic sou ces and one- hi d o ha
was om he s a e. A signi ican po ion o he emaining in es men would
ha e been s imula ed by he s a e h ough ‘ma ching unds’ a angemen s –
pe haps up o an addi ional 25 pe cen . In 1998 he e is a sha p inc ease in
in es men as domes ic in es men inc eases bu , mo e impo an ly,
in e na ional in es o s lood in o he inc easingly success ul I ish economy.
The p ima y sou ce o unds was now p i a e indi iduals as ins i u ions such
as pension unds, banks and insu ance unds lag behind. In 1999 – well in o
he boom yea s – ins i u ional in es o s ook he lead in in es men unds.
Non-Eu opean sou ces accoun ed o ully one- hi d o unds in 1999, up om
a qua e in 1998.
By 1999 I eland was well in eg a ed in o in e na ional ins i u ional
in es men ci cles and he s a e began o wi hd aw om i s p e iously
dominan ole as a sou ce o unds. Howe e , indi idual and ins i u ional
in es o s la gely ollowed a he han led he g ow h o he high ech
42 THE ECONOMIC AND SOCIAL REVIEW

indus ies in which mos o his unding was concen a ed. Al hough hese
in es o s began o p o ide he la ge amoun s o unding equi ed by he mos
p ominen companies, hey only did so once he g ow h po en ial o he
so wa e indus y and o he high ech sec o s had been clea ly demons a ed.
I onically, he isk ake he e is he s a e, which was he p ima y sou ce o
unding h oughou he impo an pe iod o ini ial g ow h and consolida ion.
Table 4: T ends in P i a e Equi y In es men 1997–1999 (000s o I ish
pounds)
1997 1998 1999
To al Funds 27,713 163,626 316,232
To al S a e Funds 10,048 20,775 12,151
Selec ed Majo Types o In es o s % % %
Go e nmen 36.3 12.7 3.8
P i a e Indi iduals 13.7 26.2 21.7
Banks 17.1 3.7 25.0
Pension Funds 7.3 8.2 26.8
Geog aphic B eakdown o P i a e Equi y Raised
% Domes ic 100 44.7 42.8
% O he Eu opean 0 35.7 19.6
% O he Non–Eu opean 0 25.2 32.0
Sou ce: Eu opean Ven u e Capi al Associa ion, Annual Repo s.
Fu he mo e, s a e agencies p omo ed a gene al company de elopmen
p og amme h ough hei g an gi ing p ac ices in a a ie y o a eas including
ma ke ing, managemen de elopmen , aining and R&D. G an gi ing
became mo e selec i e, as ecommended by he Culli on Repo (1992), and
s a e agencies ‘seeded’ en u e capi al unds. The p ecise o m his ook was
qui e lexible depending on he company i sel bu he s a e agencies equi ed
ha such e o s a company de elopmen ake place. Some IDA execu i es
had e en been in ol ed in company de elopmen in he 1980s be o e he policy
shi had ound i s way in o o icial policy.
Thi d, he s a e played a c i ical ole in he c ea ion o a ne wo k o
indus y and ade associa ions, uni e si ies, inno a ion and echnology
cen es and o he o a and g oups which p o ide an associa ional
in as uc u e o in o ma ion-sha ing, coope a ion and inno a ion. While
hese bodies a e ou side he s a e o semi-au onomous om i , in mos cases
hey ha e been ounded h ough s a e ini ia i es and unde w i en by s a e
STATE, COMPETITION AND INDUSTRIAL CHANGE IN IRELAND 1991-1999 43
gua an ees and unding. None heless, hey o m a dis inc laye o
ins i u ional spaces and social ne wo ks be ween he s a e agencies and he
companies in he indus y. A di use s a e in luence h oughou he indus y is
buil in o he o ganisa ional s uc u e o he ins i u ions. These ins i u ions
a e ypically loca ed wi hin he uni e si ies; s a ed by academics and
indus y people; usually ha e ad iso y boa ds con aining indus y, academic
and s a e ep esen a i es; and ha e ex ensi e ies o indus y h ough
consul ing, in o ma ion days and o he ac i i ies unde aken a leas pa ly
o unding pu poses. In many ways hese associa ions and ne wo ks pe o m
some o he in eg a i e unc ions ca ied ou wi hin he co po a ion in
e ically in eg a ed, la ge i ms.
Assessing he E ec o Ins i u ional Suppo s
The e is signi ican a p io i e idence ha s a e suppo s ha e made a
di e ence. Ag icul u e emains pe haps he p ima y ‘clus e ’ wi hin he I ish
economy (O’Malley and Van Ege aa , 2000) and ag icul u al upg ading has
been unde pinned by he eme gence o signi ican basic and indus ial
esea ch capabili ies wi hin he uni e si ies and Teagasc. S agnan since he
1960s, I ish ou ism enjoyed he highes a es o g ow h in he OECD since
1986 and saw a signi ican upg ading in i s ‘p oduc ’ as well as enjoying
g ea e in e na ional demand (Ba e , 1997). Ba e p o ides da a ha
sugges s ha public subsidy accoun ed o app oxima ely 30 pe cen o he
apidly inc easing in es men in ou ism, while he p i a e sec o accoun ed
o a ound 22 pe cen . While he commen s on he en -seeking oppo uni ies
gene a ed by his unding, i seems much mo e likely ha s a e suppo has
enabled his apid expansion by p o iding aluable unds o ‘kick s a ing’
small and medium sized ou ism o ien ed comme cial ope a ions, as well as
imp o ing in as uc u e.
In manu ac u ing, O’Malley e al. (1992) ind ha in he 1980s “bo h new
and al eady exis ing g an -assis ed indus ies ha e made a subs an ial
posi i e con ibu ion o employmen , and ha exis ing g an -assis ed indus y
has had a subs an ially be e employmen eco d han co esponding non-
assis ed i ms” (1992, p. 89). Fu he mo e, hey ind ha g an -assis ed i ms’
employmen pe o mance imp o ed signi ican ly as e han non-g an -
assis ed i ms and ha his could no be explained by a one- ime boos gi en
by he g an unding. They conclude ha hei analysis “sugges s ha he
g an s we e no only awa ded mo e selec i ely by means o e aining om
aiding weake i ms, bu ha hey we e also awa ded o he s onge i ms
wi h good g ow h p ospec s in a manne o in a con ex which aised he
a e age pe o mance o such i ms in succeeding coho s o g an ecipien s …
i is clea in he ci cums ances ha job c ea ion in ela ion o s a e
44 THE ECONOMIC AND SOCIAL REVIEW
expendi u e mus ha e imp o ed conside ably since 1984” (O’Malley e al.,
1992, pp. 97-98).
Resea ch in he so wa e indus y in he 1990s shows ha indigenous
i ms ha ecei ed g ea e amoun s o g an aid employed mo e s a , we e
mo e likely o ocus on p oduc s a he han se ices, mo e likely o expo and
mo e likely o be in ol ed in in e na ional echnology and business alliances
(as well as less likely o be in ol ed in subcon ac ing ela ionships) (Ó Riain,
2004). The s a is ical e idence ega ding he posi i e e ec o g an aid on
I ish so wa e i ms is suppo ed by he s a emen s o he i ms hemsel es
(O’Go man e al., 1997). While many i ms complained abou he
adminis a i e demands o illing ou g an applica ions analysis o g an -
aided and non-g an aided i ms shows ha h ough he ea ly 1990s a leas
g an aided i ms signi ican ly ou pe o med non g an aided i ms – bo h in
he so wa e indus y (Cla ke, 1995) and in he economy as a whole (O’Malley,
1992; O’Malley, Kennedy and O’Donnell, 1992).
Al hough i is no o iously di icul o assess he e ec s o such ins i u ions
on i ms, a se ies o public and quasi-public e alua ions ha e e u ned la gely
posi i e assessmen s o a ious ins i u ions and p og ammes – bo h by
in e na ional expe panels and by i ms hemsel es. The e is also e idence
ha hose so wa e i ms ha ely mos on uni e si ies as a sou ce o
inno a ion a e likely o p oduce p oduc s o expo and o be engaged in
in e na ional echnology alliances – sugges ing ha in e na ional echno-
logical sophis ica ion is embedded in local ins i u ions (Ó Riain, 2004).
The e is s ong e idence hen ha shi ing s a e s a egies ha e had a
subs an ial impac on i m pe o mance. These s a egies, embedded in he
social ela ions and p ac ices o his ‘indigenous inno a ion’ alliance, ha e
con ibu ed handsomely o making he connec ions be ween he TNC economy
and local upg ading.
5
In he absence o his alliance, and i s ins i u ions and
p ac ices, i is di icul o see how he I ish economy would ha e b oken – o
e en he ex en i did – ou o i s icious cycle o a ‘hollowing ou ’ o local
capaci y by oo loose capi al and mass emig a ion. In each o he h ee b oad
ways in which he s a e shaped he o ms o ma ke pa icipa ion o i ms, i s
ac ions shaped social ela ions and he cha ac e is ics o socio-economic ac o s
such as i ms. The upg ading ha occu ed ook place as some o he elemen s
STATE, COMPETITION AND INDUSTRIAL CHANGE IN IRELAND 1991-1999 45
5
One eason why an indigenous chemicals and pha maceu icals indus y has no eme ged in a
simila ashion o he IT clus e is ha he pa icula mode o I ish s a e in e en ion is no based
on mobilising la ge amoun s o capi al o science-based i ms bu on dis ibu ing ela i ely small
amoun s o capi al linked o employmen – a model which has been used e ec i ely by so wa e
i ms. The Science Founda ion I eland model o esea ch unding does appea o be based on he
o me app oach, al hough i has o da e emained dange ously isola ed om he exis ing sys em
o inno a ion and indigenous i ms.
o a ‘na ional sys em o inno a ion’ we e s ill being de eloped – signi ican
esea ch and in es men unding only eme ged a e g ow h and indus ial
lea ning we e well unde way (see Hobday, 1995 o a simila poin ega ding
indus ial upg ading in he Eas Asian ‘Tige s’). S a e suppo ed, socially
embedded ela ionships o echnological and o ganisa ional lea ning we e
c i ical o no only gene a ing economic g ow h bu also o c ea ing he
coali ions which buil poli ical suppo o hese new economic ela ions and
ins i u ions.
IV A CONTRADICTORY ALLIANCE: SOCIAL INSTITUTIONS AND
MARKET COMPETITION
As economic g ow h has slowed and indus ial employmen declined in
2002 and 2003, policy deba es in I eland ha e ocused hea ily on
compe i i eness. The consis en policy ocus o he Na ional Compe i i eness
Council has been he es ic ion o public spending (pa icula ly on social
se ices) and he con ainmen o wage g ow h, among o he componen s o
cos compe i i eness. Howe e , his esponse o indus ial di icul ies is based
on a mis eading o he cha ac e and causes o indus ial de elopmen in he
1990s. The low co po a e ax egime, he declining sha e o public spending in
GDP and he ocus on o eign in es men can help explain he en epô
economy and he su ge in employmen in o eign i ms. Howe e , i canno
explain he elemen s o indus ial upg ading in he 1990s, such as inc easing
le els o expo ing, R&D and p o essionalisa ion.
The e is no doub ha ‘compe i i eness’ has become cen al o he
ac i i ies o he I ish s a e. Assu ing a ‘compe i i e business en i onmen ’ has
been a cen al policy goal, ‘compe i i eness’ has become a aken- o -g an ed
desi able alue in public discou se and ins i u ions such as he Na ional
Compe i i eness Council ha e been c ea ed o en o ce he compe i i eness
discou se in socio-economic p ac ice. Al hough Ki by (2002) does no p o ide a
sus ained empi ical analysis o I eland as a ‘compe i ion s a e’, I eland clea ly
con o ms o many aspec s o he model.
Bu he language o compe i i eness obscu es he oo s o indus ial
upg ading in a complex o public in es men , social ins i u ions and a ne wo k
o poli ical and economic suppo s. The e a e o he espec s in which he I ish
expe ience is incomple ely desc ibed by he ‘compe i ion s a e’ model and
add essing hese a eas opens up impo an a eas o poli ical s a egy and
ac ion.
Fi s , he no ion o a compe i ion s a e does no cap u e how he logic o
s a e agencies and social ins i u ions di e ed om a pu ely ma ke calculus
46 THE ECONOMIC AND SOCIAL REVIEW
and, he e o e, i unnecessa ily na ows ou unde s anding o he ins i u ions
unde pinning economic g ow h. The na ional sys em o inno a ion is be e
unde s ood as a s a e and social embedding o ma ke ac ion, no as an
ins i u ion which is comple ely subse ien o ma ke compe i i eness. O icial
esponses o job losses in I ish indus y ha e la gely aken he o m o o e
calls o es o ed compe i i eness when he oo s o hese di icul ies a e in an
indus ial sys em whe e he sys em o inno a ion is concen a ed on a small
ange o sec o s and whe e i s ins i u ions con inue o ha e o ba le o
esou ces wi hin a sys em ocused on he needs o o eign i ms.
Second, he no ion o a ‘compe i ion s a e’ ails o ecognise he in e nally
con adic o y na u e o “ma ke libe alism” i sel . In ac , as Polanyi (1944)
and mo e ecen ly G ano e e (1985) a gued, ma ke ela ions a e simply
unsus ainable wi hou some o m o social embedding. The e o e, a s a egy o
he c ea ion o a disembedded ma ke socie y, along he lines o he neo-libe al
poli ical p ojec , ine i ably sows he seeds o i s own des uc ion – albei
c ea ing eno mous casual ies along he way. Fa om being smoo hly
in eg a ed wi h ma ke compe i i eness, he ins i u ions o he sys em o
inno a ion in ac need o be p o ec ed om excessi e ma ke isa ion o he
ins i u ions o he economy and pa icula ly om he g owing inancialisa ion
o i s i ms and ins i u ions (Lund all e al., 2002). The ‘sho - e mism’ o
inancial ma ke s and ‘ lexible i ms’ o en only se es o unde mine he
ongoing social ela ions o coope a i e lea ning and in es men in compe ence
building which a e c i ical o inno a ion in a knowledge economy.
Simila ly, a emp s o make inno a ion-suppo ing ins i u ions
comme cially iable ha e been la gely disas ous. Fo example, pe haps he
p ima y eason o he collapse o he Na ional So wa e Cen e in he 1980s
was he con lic gene a ed by he demands pu on i o unde ake a mission o
‘upg ading’ he indus y, while a he same ime equi ing i o be
comme cially iable. Caugh be ween de ol ing in o a de elopmen se ices
o ganisa ion o compe ing wi h he majo i ms in he indus y, he Cen e los
indus y suppo and was ul ima ely closed (Ó Riain, 2004). The P og amme
o Ad anced Technology (PAT) cen es ha e also su e ed a imes unde
p essu es o be sel - unding. One such cen e was he Cen e o So wa e
Enginee ing, widely ecognised as an impo an pa o he so wa e indus y’s
ins i u ional suppo sys em, bu which has been se iously damaged by ecen
cu backs in hi d le el unding. Mo e gene ally, he decline in public spending
as a pe cen age o GDP has mani es ed i sel in he p ac ical hal ing o hi d
le el esea ch unding, he inc easingly mass cha ac e o hi d le el
educa ion and he c isis in p ima y school acili ies and access. The
‘compe i i eness’ agenda unde mines he in es men and collec i e ins i u ion
building which is c ucial o indus ial upg ading. I ‘laissez- ai e was planned’
STATE, COMPETITION AND INDUSTRIAL CHANGE IN IRELAND 1991-1999 47

(Polanyi, 1944) hen laissez- ai e also a acks he e y planning which
sus ains p oduc i e ac i i y and ul ima ely he ma ke i sel .
Finally, his mo e complex, con adic o y pe spec i e on he global and
I ish poli ical economies is no simply a ques o complexi y o i s own sake.
To simply desc ibe he ins i u ions o a ‘na ional sys em o inno a ion’ (NSI) as
o ien ed owa d compe i i eness igno es he many poli ical possibili ies ha
he ins i u ions o economic de elopmen p esen o u u e ans o ma ion.
The NSI can be unde mined by neo-libe al s a egies o i can be pa o he
economic basis o a mo e owa d he social democ acy – indeed he concep o
he NSI, in i s b oad o m as he social embedding o inno a ion ac i i y, was
de eloped as a way o unde s and he economy which unde pinned
Scandina ian social democ acy (Lund all e al., 2002; Mjose , 1992). Ra he
han educing he complexi ies o ins i u ions and poli ics in capi alis
de elopmen unde globalisa ion o ‘compe i ion’, we need o p o ide be e
unde s anding o he e ec s and possibili ies o ins i u ions such as hose o
he NSI as well as o he c i ical ins i u ional ealms as indus ial ela ions,
social pa ne ship and he wel a e s a e. A c ucial pa o his unde s anding
and poli ics will o cou se be he acing o he conc e e o ms o in luence and
powe o ansna ional capi al wi hin hese ins i u ions and in indus ial
poli ics.
VCONCLUSIONS AND IMPLICATIONS
This pape has a gued ha a signi ican ans o ma ion and upg ading
occu ed in I ish indus y o e he 1990s, albei wi hin a ‘bubble’ o en epô
FDI; ha his upg ading was p omo ed p ima ily by a s a e-socie y alliance
which de eloped new ins i u ions o a sys em o inno a ion whe e he na ional
le el in eg a es local, na ional and global elemen s; and ha his alliance
should be seen as exis ing in a ense and con adic o y ela ionship o he
ins i u ions o he ma ke , no as simply subse ien o ma ke
compe i i eness.
The analysis o indus ial upg ading shows ha he link be ween FDI and
local lea ning and indus ial upg ading is a con ingen one. FDI is less likely
han indigenous indus y o gene a e a local dynamic o indus ial
ans o ma ion – and i is no likely o p omp indigenous i ms in o upg ading
wi hou a u he local coali ion ha mobilises o ha end. Local ins i u ions
a e c i ical in s a egically building upon FDI and in suppo ing he
de elopmen o a new ‘logic’ o indus ialisa ion wi hin he economy. Pe haps
he majo challenge ha FDI poses o such a p ojec o indigenous
de elopmen is ha i ends o unde mine he e y ins i u ions ha a e
48 THE ECONOMIC AND SOCIAL REVIEW
necessa y o p omo e indigenous g ow h, by shaping he o ganisa ions o he
s a e such ha hey a e ocused on FDI and ee ade a he han indigenous
inno a ion and local capabili ies. Howe e , such an e ec is no ine i able i a
poli ical coali ion can mobilise agains i .
Fu he mo e, he analysis implies ha s a e and social embedding o
economic ela ions and he de elopmen o ins i u ions which can shape
ma ke ela ions a e c ucial o economic de elopmen . I ax concessions and
o he measu es a ac ed a disp opo iona e sha e o FDI o I eland, i was
local non-ma ke ins i u ions, and c ucially s a e aids, ha suppo ed he
indus ial upg ading a ound hem. This is a pa icula ly c ucial lesson, gi en
ha he I ish expe ience o a ac ing disp opo iona e amoun s o FDI, by
de ini ion, canno be eplica ed ac oss a wide ange o economies. I also
ollows ha low co po a e ax in i sel is no necessa ily desi able o economic
de elopmen , as i was he ole o lowe I ish ax in a ac ing
disp opo iona e amoun s o FDI which was c i ical. Low co po a e ax in and
o i sel has no been c i ical o g ow h and de elopmen . Once again, his is a
s a egy ha canno be ‘expo ed’ inde ini ely as he e can only be a limi ed
numbe o ‘winne s’ in such a game – and he implica ions in e na ionally o
ax e enues a e disas ous. Nei he should we make a e ish o low pe sonal
income ax a es – a dynamic economy suppo ed by a ich na ional sys em o
inno a ion is compa ible wi h much highe a es o ax han in I eland (e.g.
Finland). Indeed, i low ax a es damage in es men in labou and
ins i u ions, hey will unde mine economic de elopmen . The mos aluable
compa a i e lesson o he I ish expe ience is he con inuing impo ance o
s a e in e en ion and s a e-socie y embedding o ma ke ela ions, e en in a
con ex o globalisa ion and egionalisa ion. S a e aids we e a c i ical
ins umen o policy – no o ‘p opping up’ indigenous i ms bu o p omo ing
lea ning and inducing and suppo ing upg ading. Gi en his, he EU a ack on
s a e aids is sho -sigh ed and p omises o unde mine he possibili ies o he
new EU membe s o ‘ca ch up’ e ec i ely.
Finally, he unde s anding o I ish indus y p o ided he e sugges s some
possibili ies ega ding ackling inequali y and exclusion in he I ish poli ical
economy. Since he mos dynamic i ms in he I ish economy a e embedded in
ne wo ks o public and semi-public ins i u ions, he e a e a a ie y o
possibili ies o using such ins i u ions o ackle social exclusion. Linking
ac i e labou ma ke policy mo e closely o he na ional sys em o inno a ion
would gi e communi ies and s a e agencies mo e le e age o nego ia e i m
pa icipa ion in aining and labou ma ke access p og ammes. Unions will
need o explo e new s a egies and issues o o ganising he mos dynamic new
sec o s (see Benne , 2002 o in e es ing examples om he US). The egula
‘skill sho ages’ expe ienced by ‘high ech’ sec o s o e egula oppo uni ies
STATE, COMPETITION AND INDUSTRIAL CHANGE IN IRELAND 1991-1999 49
o s a e and social ac o s o ba gain wi h i ms o p omo e measu es o ackle
social exclusion h ough he ins i u ions o social pa ne ship and he sys em
o inno a ion.
All o his oo is unde pinned by a mo al poli ics (Lako , 1996; Block,
2002). The c i ics o he ‘Cel ic Tige ’ ha e igh ly poin ed o he missed
oppo uni ies o ackle inequali y and exclusion, bu ha e yielded he s o y o
‘economic success’ o he ma ke and ha e been le wi hou a basis o a guing
o he esponsibili y and accoun abili y o hose g oups ha ha e expe ienced
eno mous success in he ma ke in he 1990s. The analysis p esen ed he e
implies a e y di e en mo al s o y o be old abou he Cel ic Tige han ha
o e ed by s o ies ocused on he ma ke . The ‘Cel ic Tige ’ is no a p oduc o
he oic en ep eneu s in he ma ke bu is a (pa ial) success made possible by
he embeddedness o en ep eneu s and wo ke s in dense social ins i u ions.
The e is a signi ican collec i e con ibu ion o he success o hose who ha e
bene i ed ‘ om he ma ke ’ and hose social g oups a e he e o e subjec o
legi ima e claims om hose collec i e ins i u ions. Socie y’s claim on he
echnical-p o essional classes and en ep eneu s who ha e bene i ed mos
om he ‘Cel ic Tige ’ is no one o guil o cha i y, bu one o igh , as he
success o hese i ms and social classes es s hea ily on collec i e social and
s a e ins i u ions.
6
Recognising he impo ance o s a e and social embedding o economic
ac ion no only makes o be e economic policy bu also opens up new
poli ical possibili ies wi hin he I ish poli ical economy. The s a e s ill ma e s
because ( o use Ce ny’s, 1995 e ms) i is bo h a ci ic associa ion, an a ena o
ad ancing legi ima e poli ical claims, and an en e p ise associa ion,
p omo ing economic de elopmen . Unde s anding ha ma ke ac ions and
ou comes a e deeply embedded in ins i u ions o s a e and socie y p o ides no
only an accoun o ins i u ions which can shape g ow h, de elopmen and
equali y bu also he s a ing poin o a mo al poli ics o he ‘Cel ic Tige ’
which can p o ide a basis o legi ima e claims upon he social esponsibili ies
o hose social g oups ha ha e bene i ed mos om he Cel ic Tige .
50 THE ECONOMIC AND SOCIAL REVIEW
6
This pape has ocused on he collec i e con ibu ion o he na ional sys em o inno a ion o
success h ough indus ial upg ading bu we migh also conside , among o he s, he con ibu ions
o wel a e s a e ins i u ions and household labou o social ep oduc ion, and o social pa ne ship
ins i u ions o collec i e p oblem sol ing and in as uc u e de elopmen .
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