State agencies key to climate of success

There is no doubt that Ireland has developed over the last decade and has become successful in generating employment and developing business and sustaining business growth. But, the question is, who is responsible for this success?

As much as individuals come up with business ideas and banks provide bank loans to give businesses much-needed cash, it is arguably the Government that creates a climate for business development and growth.

The Government's commitment to increased productivity is evident in the £40 billion (€50.8 billion) National Development Plan (NDP) 2000-2006. NDP investment is aimed at ensuring that Ireland has a business environment and infrastructure to help it attract the best foreign direct investment (FDI) projects as well as improving growth in the indigenous sector. The massive funding will be devoted to infrastructural and other development in the regions. They will see upgraded water and roads networks, broadband communications connections, extensions to the natural gas pipeline, investments in third-level institutions and more.

A total of €5.7 billion has been designated for the productive sector, which includes manufacturing industry, natural resources based industries, agriculture and internationally traded services. Some €2.4 billion will go towards research, technological development and innovation (RTDI); €2.4 billion to industry (indigenous and FDI); marketing €428 million; agricultural development €353 million; and fisheries €57 million.

There are three Government agencies directly involved in creating a climate for business development and growth: Forfas, the national policy and advisory board for enterprise, trade, science, technology & innovation in Ireland; Enterprise Ireland, the Government organisation charged with assisting the development of Irish enterprise; and the IDA (Industrial Development Authority), which has national responsibility for securing new investment from overseas in manufacturing and international services sectors. The IDA is also responsible for encouraging existing foreign enterprises in Ireland to expand their businesses.

Forfas is also the body through which powers are delegated to Enterprise Ireland for the promotion of indigenous industry and to IDA Ireland for the promotion of inward investment.

According to Forfas chief executive, Mr John Travers, there is a series of things that are important from the point of view of developing business in the Republic. He cites infrastructure, the quality of people coming out of our educational system, the taxation system and the cost of doing business in Ireland as key to business development and growth.

To ensure that the current standard of living increases, he says, "is to ensure that the types of businesses developed in Ireland are more sophisticated and add more value than was the case in the past".

One of the key ways of helping that happen is to help firms invest in research and development and the generation of knowledge that will be useful in a global market.

Some £560 million of the National Development Plan's RTDI funds have been channelled towards the Technology Foresight Fund, the largest single investment in research in the history of the State. Last July, as a result of the findings of the Technology Foresight report, the Science Foundation of Ireland was set up to administer the fund. It is charged with developing advanced research capability in niche areas such as information and communications technology (ICT) and biotechnology. It is expected it will create the foundations to support future industrial development.

Enterprise Ireland, another Government agency responsible for creating a climate for business growth and development, launched its new regional development strategy last week. The new strategy is built on a four-pillar approach which is focused on developing the competitiveness and export potential of existing business; enhancing the operating environment for business; supporting an increased level of new high potential start up companies; and facilitating the expansion of companies on the east coast to regional locations.

The three-year strategy includes: 50 new high potential start-up companies; 30 expansions of Dublin-based companies into the regions, assisting 150 companies from outside Dublin to become exporters for the first time and making 360 major investment commitments outside the Dublin area.

Some 30 per cent of Enterprise Ireland's financial supports to companies will be committed to projects in the Border Midlands West (BMW) region, which currently accounts for 20 per cent of the total output by Enterprise Ireland client companies.

However, business development and growth is about more than just Irish companies; foreign companies have a big part to play and this is the focus of the IDA. Mr Colm Donlon, IDA spokesman, says that its strategy for economic development goes back to the 1970s. It was decided then that for Ireland to be successful, a small number of industrial and business sectors, compatible with the available resources, had to be targeted.

These sectors included electronics, pharmaceuticals and software. The most successful decision at the time was to continue providing a low corporate tax environment. Flagship companies such as Microsoft, Apple and Intel were attracted so others would follow - this drove a whole new era of growth, he says.

That trend continues today, and the output of the IDA companies at the moment is £27.8 billion per annum compared to £7.9 billion in 1990. The value retained in the Irish economy in 1990 was £2.6 billion and is now £9.5 billion. "The value of the whole IDA portfolio of companies has made a massive impact in the economy," he says.