STRATEGIES FOR INDIGENOUS DEVELOPMENT

During the crisis of the 1980s, analysts proposed – often in hope rather than conviction – a variety of “models” for tackling the dilemmas of industrial development in the Irish economy. For most economists, and particularly with Thatcherism in full swing in nearby Britain, the solution was a more resolute shift toward a market-driven economy. Economic development was to rely on the positive effects of foreign investment and/or the emergence of local entrepreneurs through the selection mechanisms of the marketplace. As we have seen, we cannot rely on FDI as an explanation of the indigenous-software success story, nor can upgrading be ascribed to entrepreneurship given free rein through the market. The “supply of entrepreneurs” in Ireland in the 1990s was no higher than elsewhere and probably lower, given massive professional emigration; nor can the “selection effects” of the “shake-out” of Irish industry in the 1980s, leaving only the strongest firms standing, explain the Irish miracle. Important segments of the revived indigenous industry are dominated by new firms, and what is most striking is the emergence of new technical–professional entrepreneurs in a complex interaction of market, state, and society where entrepreneurship was profoundly shaped and promoted by a dense network of public and semipublic institutions. The critical difference between the 1980s and the 1990s was a state–society alliance between this technical-professional class and relevant state agencies – in economists' terms, improving the productivity of the entrepreneurial base rather than simply increasing its supply.