Summary and Conclusions

W hilst Ireland's economic growth to date has certainly been shaped by exogenous

factors such as th e rise in foreign direct investm ent, the Irish state has played - and

continues to play - a central role in the economy. This is not least in th e provision of

a highly skilled and technologically adept w ork force and in th e highly proactive and

targ eted industrial strategy since the late 1980s.

D eliberate state policy has played a vital role in Ireland's ability to attract

international firms. This policy change occurred in the late 1950s following nearly

th irty years o f protectionism . Ireland deliberately targeted MNCs in technologically

sophisticated sectors such as Electronics, pharmaceuticals and softw are and these

have in turn m ade th e m ajor contribution tow ards th e States rapid economic

progress in th e 1990s and early part of th e new century. FDI has been the m ajor

contributor in Ireland's classification as a 'Knowledge econom y'. H ow ever this is not

reflected in the w id er economy as the state is regarded as middle tie r in the

'investm ent in knowledge' (OECD) index and it is also regarded as an innovation

fo llo w er in Europe (CIS).

Far from representing a model o f neo-liberal free-m arke t capitalism then, th e Irish

case highlights how state activism through its economic developm ent agencies

m ight contribute to economic grow th. W hereas the Irish state sees its role as

facilitating the activities o f MNC's in Ireland, it appears to see its role as one of

'developing' indigenous industry developm ent. H ow ever policies underpinned by

this contradictory 'neoliberal interventionalist' or 'neoliberal developm entalist'

ideology may be sub-optim al (Breznitz, 2007:2012).

FDI policy has been successful so far fo r Ireland on an em ploym ent level, how ever

th e state is constantly seeking ways to 'em bed' this m obile investm ent m ore deeply

into the econom y (See: Table 3.1). Results on the benefits o f direct linkage and

indirect 'spillover' linkage effects o f FDI have so far been below expectation -

reflecting both th e size of the domestic econom y and th e international experience

to date. Approxim ately ninety per cent o f Irelands' exports by value are accounted

fo r by FDI, dem onstrating once again the host country's overdependence on it.

International developm ent o f indigenous industry has proved to be more

problem atic fo r the state, despite the states active role in SME developm ent since

th e 1980s. It is clear th a t enterprise policy has lagged behind FDI policy - indeed the

country does not yet have a stated enterprise or entrepreneurship policy. Aspects

o f enterprise policy appear in oth er policy documents, but this policy area lacks a

clear vision and coherence.

In th e next phase o f economic developm ent it would seem im perative th at

indigenous industry is assisted through enlightened 'enterprise policy' to fulfil its

potential as a m ajo r growth driver fo r the economy, to com plem ent to a greater

degree in the fu tu re the gains made by FDI policy to date.

To develop this enlightened enterprise policy requires m ore in-depth knowledge of

th e influencers, determ inants (and barriers) o f economic growth in small states, of

indigenous firm growth in those states, o f the internationalisation o f those firms

and o f the role and impact of the state in assisting SME's grow

-through-100 | P a g e

internationalisation. A public consultation docum ent on a national Enterprise policy

statem en t was released in M ay 2013 for publication in quarter four which may re­

focus policy makers on the merits of indigenous industry.

Appendix 1

2) A Q u ality Education System th a t ensures th a t citizens are equipped to acquire, use, and share knowledge. The IM D W orld C om petitiveness Yearbook 2007 ranks Ireland's education system 5th from 60 countries surveyed for m eeting th e needs of a com petitive econom y. They also rank Ireland 4th for level of university education attained.

3) A D ynam ic In fo rm a tio n Infrastru ctu re th a t can facilitate the effective com m unication, dissemination, and processing of inform ation. Ireland has significant international connectivity capacity to support current and futu re enterprise activity. High levels o f capacity and diversity have resulted in strong com petition and very com petitive prices. Ireland currently offers the lowest in ternational leased line costs in the OECD. Ireland also has an extensive national fibre netw ork.

4) Innovation Systems th a t bring tog eth er researchers and businesses in com mercial applications of science and technology.

Science Foundation Ireland

(SFI) invests in academic researchers and research team s w ho are most likely to generate new knowledge and leading edge technologies and also advances cooperative efforts among education, governm ent, and industry.

General as the international economy performed strongly over much o f the year. In flation in consumer prices

A n m u it C O P Growt.ir 2 0 0 0 - Jf.OOS fF.xtxjrmrf Trsjifc?

"The IMD World Competitiveness Yearbook. '2007 ranks Ireland fourth for GDP per capita at Purchasing Power Parity (PPP), ahead of Switzerland (7th) and the UK (lG th ).

According to the Economist Intelligence Unit Business Environment Rankings, Ireland will remain one of the most attractive business locations in the world throughout the period 2007-2011. Ireland is ranked LO“‘ globally out of 82 countries.

Ireland is ranked 14th by the IMD World Competitiveness Yearbook 2007 in terms of exports of goods as a percentage of GDP, ahead

Enterprise Ireland financial supports fo r indigenous firm s including repayable equity grants (Public V e n tu re C ap ital)*

Established SME Funding

This section sets out the main funding supports and program mes for established small and m edium sized enterprises in the m anufacturing and internationally traded services sectors. An Established SME client is a com pany th a t is not a HPSU (High Potential Start-ups) client, has an established trading record, th e company (or its group of companies) employs betw een 10 and 250 em ployees, has either an annual turnover of less than €50m or an annual balance sheet of less than € 43m . Previous funding approved by Enterprise Ireland m ay im pact on the firm 's eligibility for the follow ing supports. Firms are encouraged to consult w ith th e ir Enterprise Ireland Adviser to discuss th e ir requirem ents.

Financial supports (Grant and share investm ents) are grouped under the follow ing headings:

• M a rk e t research and internationalisation supports

• In-com pany and collaborative research and developm ent supports

• Supports to enhance and develop the m anagem ent team

• Productivity and business process im provem ent supports

• Com pany expansion packages

The supports most relevant to this dissertation are:

Enterprise Ireland Tailored Expansion Packages

If an indigenous firm is undertaking or planning to undertake an ambitious expansion th a t will create em ploym ent and grow its sales in international m arkets, Enterprise Ireland can discuss a financial support package. Funding will typically be by way of grant a n d /o r redeem able preference shares. However Enterprise Ireland also invests in ordinary shares a n d /o r a com bination o f ordinary and preference. See: Enterprise Ireland annual reports 1999 - 2005.

W h o is eligible fo r support?

Tailored Com pany Expansion Packages are considered on a case-by-case basis. SME and large companies are eligible to apply fo r this funding if th e firm is an existing m anufacturing or eligible internationally traded services com pany employing ten or m ore people. Funding fo r firm s w ith less than ten is available from th e County and City Enterprise Boards which now also fall under Enterprise Irelands rem it.

Typically companies are existing clients of Enterprise Ireland circa 3 ,5 0 0 firms. h ttp ://w w w .e n te rp ris e

-ireland.com /en/Events/O u rEvents/lntern ational-M arkets-W eek-2011/Fin an cial-Supp ort-for-B usiness-Start-u ps-an d-G row th-C om panies.pdf.

However, if th e firm is not currently a client, it is advised to contact its local Enterprise Ireland regional office to discuss its expansion plans.

W hat expenditures can be supported and w hat is the maximum funding?

Enterprise Ireland Tailored Expansion Packages can support new or increm ental investm ent in:

Capital assets and job creation

Need for financial support for the project, Anticipated grow th targets,

* Enterprise Ireland's Preference shares, unlike ordinary shares, have no ownership or voting rights. Enterprise Ireland's Preference Shares typically take the follow ing form , Enterprise Ireland is entitled to receive dividends (based on an annual % coup on/interest rate) and seek repaym ent (redem ption) o f its investments at a specified tim e (Enterprise Ireland generally seeks redem ption on the fifth anniversary of the investm ent). The dividend and redem ption payments can only be paid out of distributable funds. In certain cases Enterprise Ireland will take equity shares in addition or in preference to preference shares if it deems it appropriate. The firm 's stage of developm ent will determ in e the type of share investm ent. It can also take cum ulative convertible redeem able preference (CCRP) shares which can be converted to equity shares depending on firm perform ance. These apply prim arily to HPSUs but th e same principles are com mon to all stage investments.

See: h ttp ://w w w .slideshare.net/keithbo hanna/enterprise-irelan d-in vestm ent-p ro cess-the-legal-elem en t and http ://w w w .m irc .ie/m w e p /d o c u m en ts/E IF in a n c ia lS u p p o rt.p d f fo r fu rth e r inform ation.

* Sourced and adapted from : h ttp ://w w w .en terp ris e -ire la n d .co m /E I Corporate/en/funding-supports/Com panv/Esetablish-SME-Funding/

Chapter 4