90 research outputs found

    Evaluating the Net Additionality of Industrial Development Assistance in Ireland

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    In recent years, industrial policy evaluation has been a theme under much debate internationally much of which has been spurred on through the significant EU structural fund transfers of the 1990s. Despite this, there are still few well-established methodologies to aid the evaluation process and this remains a serious issue with which researchers in this field continue to grapple. An important question in any evaluation is what would have happened in the absence of assistance. One of the key questions regarding the effectiveness of industrial policy is the extent to which growth in individual firms can be attributed to the financial assistance provided by the appropriate agency. In reality, all or part of the employment created for example might have come into existence anyway. This is referred to as deadweight. In this paper, two methodological approaches for measuring the impact of grant assistance are developed. The data employed in the evaluative frameworks were gathered during face-to-face interviews with the relevant personnel of 40 firms that received grants from Enterprise Ireland (EI) in the Republic of Ireland (ROI) in the years 2000 and 2001. An important dimension of the analysis will be to investigate whether there are regional deadweight effects in Ireland by structuring the analysis in terms of the Dublin Region, City Regions and Rural areas. Approach 1: The Case Study Approach This approach involved the use of a questionnaire during face-to-face interviews. The aim of this technique was to utilize the views of individuals (firms) directly affected by policy in an attempt to identify a 'counter-factual position'. To assess deadweight directly respondents were asked to answer the hypothetical question of what would most likely have happened if they had not received assistance from EI. This definition of deadweight accounts for the various degrees or levels of deadweight as measured by time location and scale. The paper thus distinguishes between the various degrees of deadweight ranging from 'pure' ('full') and 'partial' to 'zero' deadweight (a dimension which has been overlooked in similar research to date). Approach 2: The Control Group Approach A counter-factual position may be achieved with the use of control groups of non-assisted businesses in Ireland and elsewhere. This approach is based on the principle that any observed difference in the growth performance of assisted and non-assisted businesses can be used to construct estimates of the net additionality of public policy support to assisted businesses. The implication here is that the difference in growth rates, whether measured in terms of employment, turnover, productivity or profitability, can be interpreted as the scale of the impact of the policy intervention - in this case financial assistance by EI. The main problem, as articulated by Storey (2000) and Roper et al (2001) , is that to interpret the difference in the growth rates between assisted and a non-assisted control group as the scale of the impact of financial assistance is fraught with methodological difficulties. The solution is essentially the need to construct a methodology which seeks to explore whether any observed differences between assisted and non-assisted control groups of businesses are due to differences in the characteristics of these groups or can be directly attributed to the effects of assistance. Further, there is a need to accurately isolate the effects of 'selection' and 'assistance' on those assisted businesses that had grown faster than non-assisted businesses. For example, where it is found that assisted small businesses grew faster than non-assisted businesses it is not clear whether their faster growth reflects: · the benefits of assistance; · a tendency for faster growing firms to be keener to apply for assistance; · or, whether assistance was successfully targeted on faster growing firms Within the terms of reference for this study it was not possible to construct a suitable methodology to undertake the necessary econometric modelling to address the separation of 'selection' and 'assistance' effects. Nevertheless, whilst recognising the constraints of the approach we would, however, argue that the use of control groups in this case do provide an important element in the definition of the counter-factual policy position. Finally, a comparison of the results obtained using the two methodological approaches is provided. Of key concern here is to assess the value of proceeding with evaluations which rely solely on asking policy recipients what they would have done in the absence of assistance. Do the results of such studies provide similar or different results from approaches which rely on large-scale databases of assisted and non-assisted controls? Further, is there a need for more elaborate evaluation methodologies in order to guide the nature and scale of industrial policy as operated by development agencies such as EI? Although the evaluative frameworks developed in this paper have been 'tested' in an Irish context, the logic is clear and the evaluative frameworks have a much wider international applicability regarding the evaluation of industrial policy interventions. Industrial policy evaluation is very much in its infancy in Irish academic and policymaking circles. As the adoption of evaluative approaches in the Irish context is set to increase (largely EU driven), the findings of this paper should provide timely and valuable lessons to those charged with the task of carrying out such evaluations.

    Innovation policy in Ireland and Northern Ireland, 1991 to 2001 – the changing face of enterprise-level financial incentives for R&D

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    Systemic thinking on innovation policy highlights the breadth of policies which can influence innovation e.g. skills, inward investment, enterprise, regulation and competition policy. This suggests that innovation policy must be examined holistically, both in terms of the framework conditions to promote innovation as well as in terms of more targeted or specific policy to promote innovation at the enterprise level e.g. financial incentives to enterprises. It has been suggested that national innovation policy tends to reinforce the strengths of a country’s industrial system, particularly in relation to large firms and the promotion of R&D in core technologies and focuses less on innovation transfer which is often left to regional technological policy initiatives. In lagging regional economies, which are often dominated by SME’s, this presents specific challenges for innovation policy. This paper presents a comparative analysis of innovation policy at both the national and regional levels in Ireland and Northern Ireland respectively, over the 1990s. In both Ireland and Northern Ireland the period from 1991-99 was marked by expansion as measured by steady output growth for manufacturing as a whole (albeit at substantially lower levels in Northern Ireland than in Ireland). In Ireland this largely reflected rapid economic growth of output in the high-tech sectors, itself a consequence of inward investment and re-investment. Despite growth in gross expenditure on R&D over the 1990s closely related to output growth, Ireland’s investment in R&D (at 0.95% of GNP) lags behind Slovenia, Norway, the UK, Austria, Netherlands, Belgium, Denmark, France, Germany, Finland, Sweden, the US and Japan. This paper assesses the role of national innovation policy in Ireland and regional innovation policy in Northern Ireland. A number of issues are addressed, such as; to what extent did innovation policy in Ireland and Northern Ireland merely sustain prevailing economic strengths or was it instrumental in overcoming specific deficiencies in R&D investment and moulding current economic strengths? What effect does the underlying industrial structure have in shaping innovation policy in terms of industrial sectors, ownership and the size distribution of firms? What differences are evident between national innovation policy initiatives and regional innovation initiatives, particularly in a lagging region? Innovation policy is examined in terms of targeted assistance i.e. direct government financial support for business sector investment in R&D. This is based on a database of all grant offers (Northern Ireland) and payments (Ireland) made by the industrial development agencies in Ireland and Northern Ireland over the 1991 to 2001 period which was developed for this paper. The paper emphasises issues concerning the concentration of R&D investment, change in the balance between pre-competitive and near market R&D and the move towards financial incentives for innovation transfer of R&D.

    Tiger, tiger, burning bright? Industrial policy “lessons” from Ireland for small African economies

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    The chapter examines possibilities for industrial policy in African countries through the lens of lessons that can be learned from the industrial policy approaches pursued in Ireland as well as in East Asia. As latecomers to industrialization, the small African economies are well positioned to undertake such an exercise, we suggest. This chapter provides some novel insights by providing a comparison between Ireland and the small African economies. To our knowledge such a comparison offers a unique contribution. Cognizant of the fact that a “one size fits all” approach to industrial policy is not appropriate in the African context, we argue in favor of the adoption of a more “holistic” approach to industrial policy in these economies. Such an approach we argue should focus simultaneously on demand and supply factors of industrial development, and on microeconomic as well as macroeconomic factors

    New business formation in a rapidly growing economy: The Irish experience

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    The extraordinary growth of the Irish economy since the mid-1990s - the 'Celtic Tiger' - has attracted a great deal of interest, commentary and research. Indeed, many countries look to Ireland as an economic development role model, and it has been suggested that Ireland might provide key lessons for other EU members as they seek to achieve the objectives set out in the Lisbon Agenda. Much of the discussion of Ireland's growth has focused on its possible triggers: the long term consequences of the late 1980s fiscal stabilisation; EU structural funds; education; wage moderation; and devaluation of the Irish punt. The industrial policy perspective has highlighted the importance of inflows of foreign direct investment, but a notable absence from the discourse on the 'Celtic Tiger' has been any mention of the role of new business venture creation and entrepreneurship. In this paper we use unpublished Irish VAT data for the years 1988 to 2004 to provide the first detailed look at national trends in business birth and death rates in Ireland over the 'take-off' period. We also use sub-national VAT data to shed light on spatial trends in new venture creation. Our overall conclusions are that new business formation made no detectable contribution to the acceleration of Ireland's growth in the late 1990s, although we do find evidence of spatial convergence in per capita business stocks

    Innovation policy in Ireland and Northern Ireland, 1991 to 2001 – the changing face of enterprise-level financial incentives for R&D

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    Systemic thinking on innovation policy highlights the breadth of policies which can influence innovation e.g. skills, inward investment, enterprise, regulation and competition policy. This suggests that innovation policy must be examined holistically, both in terms of the framework conditions to promote innovation as well as in terms of more targeted or specific policy to promote innovation at the enterprise level e.g. financial incentives to enterprises. It has been suggested that national innovation policy tends to reinforce the strengths of a country's industrial system, particularly in relation to large firms and the promotion of R&D in core technologies and focuses less on innovation transfer which is often left to regional technological policy initiatives. In lagging regional economies, which are often dominated by SME's, this presents specific challenges for innovation policy. This paper presents a comparative analysis of innovation policy at both the national and regional levels in Ireland and Northern Ireland respectively, over the 1990s. In both Ireland and Northern Ireland the period from 1991-99 was marked by expansion as measured by steady output growth for manufacturing as a whole (albeit at substantially lower levels in Northern Ireland than in Ireland). In Ireland this largely reflected rapid economic growth of output in the high-tech sectors, itself a consequence of inward investment and re-investment. Despite growth in gross expenditure on R&D over the 1990s closely related to output growth, Ireland's investment in R&D (at 0.95% of GNP) lags behind Slovenia, Norway, the UK, Austria, Netherlands, Belgium, Denmark, France, Germany, Finland, Sweden, the US and Japan. This paper assesses the role of national innovation policy in Ireland and regional innovation policy in Northern Ireland. A number of issues are addressed, such as; to what extent did innovation policy in Ireland and Northern Ireland merely sustain prevailing economic strengths or was it instrumental in overcoming specific deficiencies in R&D investment and moulding current economic strengths? What effect does the underlying industrial structure have in shaping innovation policy in terms of industrial sectors, ownership and the size distribution of firms? What differences are evident between national innovation policy initiatives and regional innovation initiatives, particularly in a lagging region? Innovation policy is examined in terms of targeted assistance i.e. direct government financial support for business sector investment in R&D. This is based on a database of all grant offers (Northern Ireland) and payments (Ireland) made by the industrial development agencies in Ireland and Northern Ireland over the 1991 to 2001 period which was developed for this paper. The paper emphasises issues concerning the concentration of R&D investment, change in the balance between pre-competitive and near market R&D and the move towards financial incentives for innovation transfer of R&D
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