Study results augur well for economy

An OECD study identifies Galway as a template for those economists who believe Ireland will not be affected by the US economic downturn.

The creation of "clusters" and the embedding of foreign firms within the local economy will prove to be successful in sustaining an "extraordinary metamorphosis", the Organisation for Economic Co-operation and Development study says.

Carried out for the Paris-based international body by a team under Prof Roy Green of NUI Galway, the study says the experience of Galway in the 1990s is a microcosm of the success of Ireland as a whole in developing the information and communications technology (ICT) sector, as well as healthcare, financial services and pharmaceuticals.

The research is due to be published as part of a report, Innovative Clusters, on June 11th. It tracks the emergence of a powerful software sector in Galway after the Digital closure of 1993. This was the result of a combination of measures taken to attract foreign investment and to build local supply chains into what Prof Green describes as a "boundary-less" cluster.

By "boundary-less", he means that its global character defies traditional stereotypes of domestic rivalry and collaboration. There are 60 ICT companies in the Galway region, according to the database compiled by his team in the NUI Galway department of management - twice the number recorded by Enterprise Ireland and the Galway Chamber of Commerce. "Although Ireland is not completely protected against market conditions, the integration of investors within local clusters, the emphasis on linkages within research and educational institutions and the shift of firms higher up the value chain militate against closure or relocation," he says.

Tampere in Finland, where the Nokia mobile phone company is the biggest employer, and the cluster of multimedia companies in the Flanders "language valley" in Belgium are two European regions similar to Galway, Prof Green told The Irish Times. The study also charts how economic regions are becoming established without respect to the artificial borders of nation states.

Prof Green's research may come as cold comfort to those who have recently lost jobs in the IT sector in Galway - and the word among recruitment agencies is that there is a freeze on employment in this area for at least another month. However, the study notes that the presence of at least one large ICT operation is a useful catalyst and focus for cluster development.

Significantly, the Galway experience suggests that appropriate regional business support structures are the final major local ingredient in successful cluster development. Without such structures, skilled personnel would be unemployed or under-employed, or would emigrate.

"Boundary-less Cluster: Information and Communications Technology in Ireland" will be published in Innovative Clusters.