Helena Lenihan

Evaluating Irish industrial policy in terms of deadweight and displacement: a quantitative methodological approach

Evaluation should consider what would have happened in the absence of assistance. To produce an assessment of this counter-factual scenario involves considering the twin concepts of deadweight and displacement. An evaluative framework is developed for measuring the impact of grant assistance to individual firms. Logit regression analysis is used to estimate predictive models for deadweight and displacement. The data were gathered during face-to-face interviews with the managing directors of firms that received grants from Shannon Development in the Shannon region of Ireland (self-assessment approach). The objective was to establish whether certain characteristics of grant-assisted firms can predict probable deadweight and displacement effects. In the case of deadweight, it was found that grant type, size of firm, whether investment appraisal carried out by firm included grant received and whether firm was a first-time or repeat grant recipient all impact on the level of deadweight. Regarding displacement, it was found that size of firm and type of ownership impact on displacement. While the evaluative framework has been ‘tested’ in an Irish regional context, the logic of the approach is clear and has a much wider international applicability regarding the evaluation of industrial policy interventions.

The use of counterfactual scenarios as a means to assess policy deadweight: an Irish case study

The evaluation of industrial policy interventions has attracted increasing policy and academic attention in recent years. Despite the widespread consensus regarding the need for evaluation, the issue of how to evaluate, and the associated methodological considerations, continue to be issues of considerable debate. The authors develop an approach to estimate the net additionally of financial assistance from Enterprise Ireland to indigenously owned firms in Ireland for the period 2000 to 2002. With a sample of Enterprise Ireland assisted firms, an innovative, self-assessment, in-depth, face-to-face, interview methodology was adopted. The authors also explore a way of incorporating the indirect benefits of assistance into derived deadweight estimates—an issue which is seldom discussed in the context of deadweight estimates. They conclude by reflecting on the key methodological lessons learned from the evaluation process, and highlight some pertinent evaluation issues which should form the focus of much future discussion in this field of research.

An Evaluation of a Regional Development Agency's Grants in Terms of Deadweight and Displacement

For a number of decades considerable resources have been devoted to supporting Irish industrial policies. There has, however, been a distinct lack of evaluation of these policies. This is particularly pertinent to the Irish small and medium-sized enterprise (SME) sector given its employment potential and importance to the domestic economy. The Small Business Task Force reports that 98% of businesses in Ireland employ fewer than 50 persons and that these provide around half of the total employment in the private sector. There has, however, been a distinct lack of research into the additional impact of SME policy, and particularly the measurement of the twin concepts of deadweight and displacement. To help bridge this gap in Irish SME policy research, the author evaluates grants awarded to indigenous firms (91% of which are SMEs) by a regional development agency in the Shannon region of Ireland. Two components of additionality—deadweight and displacement—are used to aid this evaluation process. The prime methodological approach is that of the self-assessment approach, involving in-depth face-to-face interviews with the managing directors of 77 firms that received grants from the regional development agency in 1995. Data emanating from interviews are then used to obtain estimates of deadweight and displacement in the Shannon region of Ireland.

Accountability and effectiveness of NGOs: adapting business tools successfully

The central argument of this article is that many of the tools developed to strengthen for-profit businesses can be applied to NGOs to make them more effective and accountable. The authors address a gap in the development literature by defining and describing how business tools can be effectively transferred to NGOs. They examine the implementation of ISO 9000 Quality Standard by one NGO, the Cambodia Trust. The experiences of the Cambodia Trust demonstrate that business tools have a place in NGO management. The article also questions the extent to which the Cambodian experience can be seen as best practice for NGOs.

Networking: a question of firm characteristics? The case of the Shannon region in Ireland

A large body of the literature on networking has brought to the fore the advantages of proximity between actors in spatially confined enclaves such as industrial districts and local systems of innovation. Through transaction cost minimisation and knowledge exchange advantages, networking in these special enclaves leads to higher firm performance. Seen therefore as a core dynamic of the regional economic process, networking is an important tool of regional and industrial policy at both the EU and Irish levels. Globalisation, which reaches its paroxysm in the case of a small and open economy such as Ireland, raises the relevance of geographical proximity as an important element in networking. This article addresses this topical issue by using a descriptive analysis drawn from a survey of 126 firms from three industries carried out in 2005 in the Shannon region of Ireland. One key finding is that networking, defined as material linkages, is more likely to involve firms in the international market than firms at lower geographical levels. Also, networking is influenced by certain firm characteristics such as ownership, size and age.

Industrial policy evaluation:theoretical foundations and empirical innovations: new wine in new bottles

The evaluation of public policies to improve the performance of industrial and regional development instruments has provoked a great deal of debate and research activity in recent years (see, for example, Lenihan et al., 2005; Hart et al., 2005; Bachtler & Wren, 2006). Too often, however, evaluation studies do not get beyond first base focussing on resource inputs and monitoring impacts (e.g. the number of client firms) of particular programmes, schemes and initiatives with little reference either to context or longer-term outcomes. Moreover, only rarely, do we see the application of evaluation methodologies which address the effects of selection bias and incorporate appropriate counterfactual scenarios (see, for example, the review by Storey, 2000 in the context of evaluation studies of the effects of small business policy). In moving forward the evaluation debate it is therefore imperative to look to good-practice international studies in terms of developing appropriate methodologies for any given policy intervention. Nobody could argue against the fact that engaging in such best practice evaluation is methodologically an extremely challenging task. There is, however, an obvious need for, and inherent benefits to engaging in policy evaluation. The real difficulty for evaluators is ‘how’ to evaluate. The aim of this special issue is to present a collection of papers on evaluation ‘best practice’ from leading specialists in the field of industrial and regional economics in order to examine the range of theoretical, conceptual and empirical priorities which lie at the heart of ‘good evaluation’ within the domains of regional and industrial development policy interventions. The papers were presented at the European Network on Industrial Policy (EUNIP) 9th International Conference which was held at the University of Limerick, Ireland in June 2006.

Is Ireland a Role Model for SME Development in the New EU Member States

Abstract Beyond their many differences, the similarity of economic situations between Ireland in the early 1970s and the small new member states today invites research as to whether Ireland is a useful case study with regard to small and medium–size enterprise development. Positioned in the wider current debate on the factors that cause growth, as epitomised for example by the Sapir Report, this work is timely given that in less than three decades, the Irish economic outlook has improved from that of one of the four cohesion countries of the EU to earning the accolade of ‘celtic tiger’ during the 1990s. This article explores the following questions: are all the ingredients of the Irish experience for SME development present in the NMS? What lessons can be learned? What are the similarities and contrasts between SMEs in Ireland and in the NMS? As well as highlighting the existence of similarities, it is argued that advantages exist in the NMS which were absent when Ireland joined the then Common Market in 1973.

Developing a framework to evaluate business networks: the case of Ireland's industry-led network initiative

Business networks have been described as cooperative arrangements between independent business organisations that vary from contractual joint ventures to informal exchanges of information. This collaboration has become recognised as an innovative and efficient tool for organising interdependent activities, with benefits accruing to both firms and the local economy. For a number of years, resources have been devoted to supporting Irish networking policies. One recent example of such support is the Irish governments target of €20 million per annum for five years to support the creation of enterprise-led networks. It is imperative that a clear rationale for such interventions is established, as the opportunity cost of public funds is high. This article, therefore, develops an evaluation framework for such networking interventions. This framework will facilitate effective programme planning, implementation and evaluation. It will potentially show how a chain of cause-and-effect at both micro and macro-levels for networking interventions can be established.

Responding to the crisis: are policies aimed at a strong indigenous industrial base a necessary condition for sustainable economic growth?

We examine whether a strong indigenous manufacturing base is a necessary condition for sustainable economic growth in the case of two small, open economies, Ireland and Sweden. Sweden has been impacted by the economic crisis to a lesser degree than Ireland; we explore (through a manufacturing activity lens) the reasons for the asymmetric impacts and ask if the nature of the shock is related to ‘Economic Sovereignty’ and to the type of industrial policy. We argue Sweden was less affected given that its indigenous firms control the highly export-focused and technology-based engineering sector whereas in Ireland high-technology sectors are controlled by foreign firms. In terms of policy implications, we suggest that industrial policy should aim for sustainable economic activity and growth such that industrial activity within the economy should be able to minimise the impact of asymmetric shocks such as the current global economic recession.

EVALUATING THE ADDITIONALITY OF PUBLIC SECTOR ASSISTANCE TO IRISH FIRMS:: A question of ownership?

This article presents an innovative approach to estimating the additionality of financial assistance awarded to firms by an Irish regional development agency. The ‘self assessment approach’ is used to derive estimates of deadweight and displacement for firms in the Shannon region of Ireland. Irish studies have derived high estimates of deadweight by international standards. In light of this, and the fact that successive Irish governments have placed emphasis on Foreign Direct Investment as an engine for growth, the primary objective here is to address the question of whether the type of firm ownership matters with respect to resulting deadweight and/or displacement estimates. The latter question is addressed using logistic regression analysis to test whether, ceteris paribus, firm ownership is a key-determining factor for estimates of deadweight and/or displacement. The results show that ownership does not matter in the case of deadweight, but regarding displacement there are differences between indigenous and foreign-owned firms albeit at very low levels. More precisely, as expected, indigenously owned firms are more likely to lead to higher estimates of displacement.