In my book, during speaking gigs, during conferences, and in the press, I've been ranting solidly about indigenous job creation: the only way to break the cycle of requiring FDI for growth and watching the jobs created from FDI disappear when macroeconomic conditions worsen, (Ferenka/Krups/Dell in Limerick, for example) is to build those jobs here.
Normally, during recessions, creating those jobs is the role of the government. Government-sponsored job creation requires borrowing from the international markets, which we can't do, so the only other option is the boat for Ireland's 420,000 plus unemployed. Our best policy response is to send our best abroad. This is the unspoken consensus in policy circles in Ireland at the moment.
Indeed, when lecturing on the causes of the crisis and the standard aggregate supply andaggregate demand response to the current crisis, including why Ireland can't spend it's way out of the crisis in a proto-Keynesian way, I've found myself preaching out of the other side of my face a little.
Surely, someone who cares about job creation-and local job creation-should be able to both theoretically back up, and empirically verify-what he's saying when it comes to the reduction of unemployment through non-market means? Surely, surely, there's a way to surmount the difficulties of accessing working capital, finding customers, stimulating demand for a new product, and ensuring you've the best people to do the job, in order to create jobs down the road, without vast government programmes we simply can't afford?
Your Country Your Call has, in my opinion, resolved the problem to my satisfaction. They understand that you can't (in general) spend your way out of the crisis, though some targeted investment could and should be undertaken. Your Country Your Call also seem to understand that in a credit-constrained, demand deficient domestic environment, setting up world class giant killer companies is a long shot. Finally, it is clear the expertise required to build a giant killer mightn't be `Irish' in any sense--we just have to get the right people to come here. So the operative question becomes: how does one get the right people here now, and keep them fed until they create the next google?
Your Country Your Call is at heart a competition. You describe your project, discuss its merits and demerits, your submission is judged, and the winner gets 100 grand and access to a network of contacts and all the PR they can handle. The unspoken message of Your Country Your Call is that this competition is a pilot--let's see how we get on with this competition, and perhaps the format may be generalisable to other areas, other industries, perhaps even to sub-sectors, and to the voluntary sector.
Let's watch Your Country Your Call with interests. They've got the money, the backing, and seem to have thought the process through far enough that the companies created from this process may have a chance of surviving, and thriving, and that will help Ireland in the process.
One question I've never seen addressed (and don't have the know-how to answer myself) is: is there a small open, export-oriented economy that has developed indigenous industry without FDI. I would suppose that we could count Finland a bit in telecommunications but I can't think of any other.
Once we identify countries, I would wonder what they did if anything to get the results they did: was for instance Nokia just good luck, or was it wholly or in part a result of some national policy or trend, whether accidental or not? And is it replicable where we are now?
Sorry Stephen: this is more a train of thought than a demand for answers, but I am curious as to why there's been no discussion of possibly useful experiences elsewhere.
To Ciaran: it really does depend on what your thresholds are for 'small', 'open' and 'export-oriented'. Finland really is good luck, it's not that they'd be a basket-case without Nokia... but that company is about half its stock exchange, so that tells you something.
Would you count South Korea as small? It got its house in order with some government-sanctioned cartels, then opened up to the world.
Almost by definition, though, the capital will be coming from somewhere, if not in the form of FDI then in the form of financial capital - as presumably one of the main reasons the small economy wants to develop is because it's lagging somewhat.
We've got the labour, and if we can't make capital out of thin air, then we do have to go off and attract it here. The only other exceptions would be resource-rich economies - and they generally don't have the best record at diversification.
@Ciarán,
I'm sure there are lessons to be drawn from other countries--in particular I wonder just why the centre of the VC/Technology world is Silicon Valley, rather than New York or Berlin, for example. I guess you'll always need FDI in some shape or form as a SOE, but the question for me, I guess, is can we generate enough domestic demand that our economy isn't destroyed when one or companies decide to leave, as has been the case in Limerick. I don't have an answer at the moment, but attracting the best and the brightest by this kind of competition might be a start.
@Ronan,
It always struck me as weird that our geography books began with 'Ireland has no natural resources;--I think we've loads, as long as you don't want to produce bits of steel. Simple things like cultural distinctiveness could be definitely used to our advantage, but I suppose its really about starting the ball rolling at this point. If you'd to pick two areas where we'd be able to compete, what would you pick?