In this paper – part of a series on the institutional innovations of the 1950s, and related to my paper of last year on the 1956 introduction of export profits tax relief – historian Mícheál Ó Fathartaigh and I describe the circumstances surrounding the establishment of the Industrial Development Authority in 1949 and chart its evolution and expansion of influence over the following decade.
11 replies on “Origins and Evolution of the IDA”
The way things are going the IDA should splinter into an Official and a Provisional wing.
Spain clearly has a similar set of tax reliefs and other encouragements for business:
“Last year businesses in Spain paid corporate tax on just 11.6 percent of their profits, according to figures from the tax authorities to which EL PAÍS has had access.”
http://elpais.com/elpais/2012/09/24/inenglish/1348487610_693863.html
“”Seán Lemass, upon his return to office in 1951, was still clearly wedded to importsubstituting industrialisation. The I.D.A., from its position of independence, refused to ‘concentrate all their activities’ on seeking to develop the sectors that Lemass specified and rejected this as their ‘sole and specific task’.”
While acknowledging the success of the IDA in breaking from the shackles of departmental government, the import substitution policy espoused by Lemass, should not be shelved as being old fashioned. It was merely the wrong policy in an age of developing industrialization and trade.
I would argue that import substitution, is even more worthy of consideration today, in an era when Ireland no longer produces most of the non-food consumer or industrial products purchased here. Products that did not exist or were simply barely consumed back in 1950s and 1960s.
Take, for example, substitution of home heating products with home produced timber. That does not appear to high on any agenda today but it is a worthwhile economic consideration.
[This year we read that Born Na Mona workers are to be idled for lack of work, while Bord Na Mona has thousand of hectares requiring rehabilitation, re-forestation or conversion to productive use.]
“The establishment of the I.D.A. also raised some industrial relations concerns, with a delegation from the Association of Executive and Higher Executive Officers in the Civil Service complaining that the appointment of staff to the I.D.A. was done through interdepartmental competition, rather than through promotion from within the Department of Industry and Commerce.”
Plus la change.
Excellent and interesting paper.
The Iron Law of Irish politics: significant institutional change happens only under non-FF governments.
Excellent paper Frank many thanks for posting.
This analysis concerns events which took place more than half a century ago. It has taken that long for us to be able to see the FDI phenomenon a bit objectively. While there are still a substantial number of manufacturing jobs, this contribution to our economy has definitely peaked, and the services/financial flow dynamic increasingly predominates. As Michael H always notes, this sector is highly GDP distorting and will not and cannot provide more net jobs. We have no other strategy for employment now, as we staked it all on FDI.
It would be even more interesting to trace the evolution of transfer pricing, aka corporate tax evasion, and to look at the processes, institutional and personal links whereby the IDA’s original economic development aims were subtly reduced to those of a pliable local agent for overseas capital, largely US. I imagine that some of the cover for the process was provided by academics with corporate connections.
It looks like a great paper. I had a scan of the foreign companies involved – More than a few went belly up in the recession that followed the end of les trente glorieuses. I remember Cork getting a triple whammy in the early 80s- Verolme , Ford and Dunlop. At the time Cork had a good hurling team and there was one of the players whose occupation was “unemployed”.
Considering what Ford did to Detroit subsequently maybe Cork was better off without the company.
The establishment of the IDA was likely the most beneficial reform of the inherited Victorian civil service system, since independence.
Radical reform of course is rare in Ireland and those currently worried about their comfortable seats at third level, have little to fear.
The crisis simply isn’t bad enough to upend the status quo. After all when it comes to educational reform, Ireland isn’t Greece… sorry…I meant Finland.
Google Ireland doesn’t fret about the dearth of native Russian speakers in Ireland. So we should keep in mind also that there is an international market in PhDs. We don’t have to cover every angle.
@ seafóid
Eaten bread is soon forgotten and if Frank ever gets around to writing the definitive history of FDI (foreign direct investment) in Ireland, Ford should have a place of honour.
In terms of employment, more than 7,000 were employed at Henry Ford & Son, Cork in early 1930 – – a record for an FDI operation in the history of the State.
By comparison, 1,680 were employed by Guinness at St James’ Gate in 1886 when he firm was floated on the stock exchange. That number had risen to 3,460 by the early 1900s.
What was striking about Henry Ford was that a leading American businessman of his time and descendent of settlers from Somerset who had moved to West Cork during the Plantation of Munster in the late 1500s, would be so interested in his Irish heritage.
Ford was born in Michigan in 1863 and his decision to establish a tractor factory in Cork was a personal one. Henry Ford & Son was not initially part of the Ford Motor Company and Cork wasn’t the most ideal location in Europe for such a factory.
After independence, tariffs became an issue for Ford’s Cork operation and even more so in the early 1930s. Some of the Cork workers moved to Ford’s new Dagenham plant in the UK during that period.
Henry’s grandfather John had purchased land in 1848 in Michigan from a Harry Maybury, a former neighbour in West Cork. On the night of the 1911 Census, a member of the extended Maybury family, 18-year old Harry Maybury, was staying on my great-grandfather’s farm near Dunmanway.
According to the National Archives, such was the stagnation in manufacturing that by the 1911 Census, the percentage of the workforce employed in that sector was down to 20% from 33% in 1841.
Thanks Michael,
My current big project, very close to completion, looks at pre-IDA FDI, in which Ford of course looms large.
The Ford family residence in Michigan, as I’m sure you know, was named Fair Lane, after their Cork origins. My father grew up in Fair Lane in Mallow and remembers the excitement when a member of the Ford family visited there in the 1920s. His understanding as a boy was that the family weren’t quite sure which Fair Lane their ancestors had come from and so paid a trip to Mallow just in case.
@ MH
Henry Ford seems to have been a reasonably decent skin but the people who ran the company in the 1980s were ruthless
http://www.youtube.com/watch?v=u6PaewtfWVY
If Cork had by some quirk of history turned into Motor City today it would be a wasteland, like so much of Detroit is .
That is the logic of unbridled capitalism.
@Michael Hennigan
There is a very good account of the history of the Ford Cork plant in a Phd thesis by Thomas Grimes, which examines the history of the plant in the context of the policy decisions which had an influence on its operations. http://eprints.nuim.ie/2277/
It’s a pity this site has such archaic software. It would be great to have a subfolder where discussions such as these could be continued rather than having them fall off the listings.
The paper is most informative. I see that the DoF was strongly opposed to the IDA since it wouldn’t have been run by civil servants. I presume the same went for oversight of the Tiger. And it was way beyond the ken of the DoF. Finally they met their Aughrim.