The last 10 years have been the most successful period for growth in indigenous Irish industry since the foundation of the State, according to Mr Eoin O'Malley, a senior research officer at the ESRI.
In a special article in the ESRI's latest Quarterly Economic Commentary, he says there has been "a substantial and sustained improvement" in the growth performance of indigenous Irish industry since 1987.
Not only has the record of Irish-owned industry improved greatly by comparison with its own previous experience, but its growth performance over the last decade has also been stronger than that of industrial countries generally.
"The record of Irish indigenous industry has changed from one of relatively weak growth trends by international standards to one of relatively strong growth by international standards," Mr O'Malley says.
The volume of production in Irish-owned industry grew by about 4 per cent per year in the period since 1987, around twice as fast as industrial growth in the European Union or OECD. There also has been a rising trend in the level of indigenous manufacturing employment.
After falling by 32,000, or more than 22 per cent, between 1980 and 1988, full-time permanent employment in indigenous industry increased by 9,800 or 8.8 per cent between 1988 and 1997.
Meanwhile, exports from indigenous Irish industry have also grown more rapidly in the last 10 years than the manufactured exports of the EU and OECD.
Less of these exports are now going to Britain with 42.1 per cent destined for that market in 1995 compared with 55.2 per cent in 1986 although most of this diversification took place in the 1986 to 1989 period.
Mr O'Malley says the improvement in Irish-owned industry has occurred across a wide range of sectors. However, it has been well above average in high technology sectors such as electronics and pharmaceuticals as well as in areas like machinery and equipment and electrical machinery and appliances.
Combining to bring about the improvement in the competitive performance of Irish-owned companies, he says, are: the successive national pay agreements since 1987; improvements in education and training; a strengthening of the quality of management; and improvements in infrastructure and the relatively stable macro-economic environment over the last 10 years.
The rapid growth of foreign-owned manufacturing in Ireland has also assisted the growth of indigenous industry by contributing to the growth of the Irish economy and helping to generate strong overall domestic demand.
In addition, the growing expenditure by foreign companies on inputs produced by the indigenous sector and improved labour force skills in certain sectors because of their presence has helped Irish-owned industry. "The role of foreign-owned companies as discerning customers requiring high standards from their suppliers probably also helped to prepare indigenous suppliers to meet standards required in international markets," Mr O'Malley says.
Finally, the increased emphasis in industrial policy on the objective of developing indigenous Irish industry should not be overlooked, he says.
