Ireland's Emerging Information Economy: Recent Trends and Future Prospects

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<ul><li><p>This article was downloaded by: [University of Colorado - Health Science Library]On: 26 September 2014, At: 12:00Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: MortimerHouse, 37-41 Mortimer Street, London W1T 3JH, UK</p><p>Regional StudiesPublication details, including instructions for authors and subscription information:</p><p>Ireland's Emerging Information Economy: RecentTrends and Future ProspectsSeamus Grimes aa Department of Geography/Centre for Innovation and Structural Change , NationalUniversity of Ireland , Galway, Eire E-mail:Published online: 18 Aug 2010.</p><p>To cite this article: Seamus Grimes (2003) Ireland's Emerging Information Economy: Recent Trends and Future Prospects,Regional Studies, 37:1, 3-14, DOI: 10.1080/0034340022000033367</p><p>To link to this article:</p><p>PLEASE SCROLL DOWN FOR ARTICLE</p><p>Taylor &amp; Francis makes every effort to ensure the accuracy of all the information (the Content) containedin the publications on our platform. 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Any substantial or systematicreproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in anyform to anyone is expressly forbidden. Terms &amp; Conditions of access and use can be found at</p><p></p></li><li><p>Regional Studies, Vol. 37.1, pp. 314, 2003</p><p>Irelands Emerging Information Economy:Recent Trends and Future Prospects</p><p>SEAMUS GRIMESDepartment of Geography/Centre for Innovation and Structural Change, National University of Ireland, Galway, Eire.</p><p>Email:</p><p>(Received June 2001; in revised form March and July 2002)</p><p>GRIMES S. (2003) Irelands emerging information economy: recent trends and future prospects, Reg. Studies 37, 314. Thispaper examines the emergence of information economy related activity through inward investment and the indigenous sectorin one of Europes most peripheral regions. Irelands recent economic resurgence has benefited considerably from internationalcorporate restructuring as US multinationals in particular reconfigured their operations within Europes single market. Despitethe on-going concern about over-dependence on FDI, policy makers in Ireland seek to ensure that both skills and infrastructuralrequirements are adequately provided in order to solidify Irelands attractiveness for investment while, at the same time,encouraging the growth of indigenous high technology companies. Although internationally traded services sectors such assoftware, financial services, telemarketing and shared services have expanded considerably in recent years, the overall level ofregionalization of these activities within the country has been disappointing to date.</p><p>Foreign direct investment Internationally traded services Software Regionalization</p><p>GRIMES S. (2003) Leconomie de linformation naissante en GRIMES S. (2003) Irlands aufkommende Informationswirt-Irlande: tendances recentes et perspectives davenir, Reg. schaft: kurzlich aufgetretene Tendenzen und Zukunftsaus-Studies 37, 314. Par moyen de linvestissement direct sichten, Reg. Studies 37, 314. Dieser Aufsatz untersucht dasetranger et par lindustrie autochtone dans une des regions les Aufkommen Informationswirtschaft bezogener Unterneh-plus peripheriques dEurope, cet article cherche a examiner la men durch Investitionen aus dem Ausland und dem einhei-naissance de lactivite liee a leconomie de linformation. La mischen Sektor in einer der abgelegensten Regionenreprise economique recente en Irlande a profite consider- Europas. Irlands jungstes wirtschaftliches Wiederaufleben hatablement de la restructuration des societes internationales au betrachtlich von internationaler korporativer Umstruktur-fur et a mesure que, notamment les societes americaines, ont ierung profitiert, besonders als multinationale Firmen derredefini leurs activites au sein du marche unique europeen. USA sich auf Durchfuhrung ihrer Geschafte im gemein-En depit des soucis continuels quant a la dependance exces- samen Markt Europas umstellten. Trotz aktueller Besorgnissive vis a vis de lIDE, les decideurs irlandais cherchent a uber all zu grosse Abhangigkeit von Investierungen imfaire en sorte que les habilites requises et linfrastructure Ausland, suchen die fur Politik Verantwortlichen in Irlandnecessaire soient suffisamment assurees afin de consolider sicherzustellen, da sowohl Fertigkeiten als auch infra-lattrait de lIrlande pour linvestissement, tout en encour- strukturelle Anspruche angemessen erfullt werden, damitageant le developpement des entreprises autotochtones a la Irlands Anziehungskraft fur Investoren erhalten bleibt, gleich-pointe de la technologie. Bien que les services echanges sur zeitig aber auch das Wachstum einheimischer Hochtechnol-le plan international, tels le logiciel, les services financiers, le ogiefirmen ermutigt wird. Obschon international gehandeltetelemarketing, et les services communs, se soient developpes Dienstleistungssektoren wie Software, finanzielle Dienstleis-dans les dernieres annees, Le niveau general de la regionalis- tungen, Telemarketing und gemeinsame Dienstleistungen ination de ces activites au sein du pays laisse toujours a desirer. den letzten Jahren betrachtlich zugenommen haben, ist die</p><p>Gesamthohe der Regionalisierung dieser geschaftlichenInvestissement direct etranger Unternehmungen im Lande bisher enttauschend geringServices echanges sur le plan international geblieben.Logiciel Regionalisation</p><p>Auslandische DirektinvestierungInternational gehandelte DienstleistungenSoftware Regionalisierung</p><p>0034-3404 print/1360-0591 online/03/010003-12 2003 Regional Studies Association DOI: 10.1080/0034340022000033367</p><p></p><p>Dow</p><p>nloa</p><p>ded </p><p>by [</p><p>Uni</p><p>vers</p><p>ity o</p><p>f C</p><p>olor</p><p>ado </p><p>- H</p><p>ealth</p><p> Sci</p><p>ence</p><p> Lib</p><p>rary</p><p>] at</p><p> 12:</p><p>00 2</p><p>6 Se</p><p>ptem</p><p>ber </p><p>2014</p></li><li><p>4 Seamus Grimes</p><p>INTRODUCTION of strong economic performance, noting its evolvingnature over time and the role of the state in seeking toupgrade this investment. The relative success of IrelandThis paper traces the emergence of information econ-</p><p>omy activities in Ireland in recent decades. It begins by in attracting this investment, despite its peripheral loca-tion within the European market, has not been matchedexamining how the new information and communi-</p><p>cation technologies are helping to transform the geo- by a similar success to date in regionalizing this invest-ment throughout the country.graphy of economic activity, as they enable companies</p><p>to remain competitive in an increasingly globalized The paper also looks at indigenous internationallytraded services, particularly in the software sector,economy. Among the consequences of the restructur-</p><p>ing of transnational corporations has been the which currently is almost as significant as the overseas-owned activity in terms of employment, despite havingdecentralization of activities such as back office and</p><p>software localization as they seek more competitive only one-tenth of its export revenues. The changingpattern of teleservice activity from back offices initially,locations for outsourcing non-core transaction pro-</p><p>cessing. This restructuring has presented peripheral to call centres and shared services centres1 more recentlyis analysed, while Irelands most significant cluster ofcountries like Ireland with new opportunities to attract</p><p>increasingly sophisticated foreign investment in the back offices, located in the International FinancialServices Centre in Dublin, is also examined.internationally traded services sector, helping this peri-</p><p>pheral region to reposition its industrial strategy awayfrom less competitive sectors towards those associated</p><p>THE INFORMATION ECONOMYwith the information economy.</p><p>An important aspect of Irelands improved economic One of the most critical developments of the 1990swas the organizational transformation of the productionperformance in recent years has been its relative success</p><p>in attracting significant levels of inward investment in process, which included the transformation of multi-national companies and resulted in global productioninternationally traded services, such as software, finan-</p><p>cial services, and a variety of teleservices including being carried out by transnational production networks(CASTELLS, 2000). The new production system reliesshared services. Although there are statistical problems</p><p>associated with delineating internationally traded ser- on a combination of strategic alliances and ad hoccooperation projects between decentralized units ofvices, particularly in sectors such as software, the focus</p><p>in this paper is primarily on foreign-owned and indig- major corporations and networks of SMEs connectingamong themselves. Increasingly multinationalsenous information economy service activities which</p><p>are traded internationally. Each of these sectors is developed decentralized internal networks, organizedin semi-autonomous units, according to countries,examined both in terms of their employment creation</p><p>and their spatial patterns and the main factors influen- markets, processes and products. As the process ofglobalization progresses, Castells argues that organiza-cing the relative attractiveness of Ireland for inter-</p><p>nationally traded services investment are identified. tional forms have evolved from multinational enter-prises to international networks, and thus the newWhile much of the employment growth has been</p><p>associated with foreign direct investment (FDI), the economy cannot be characterized as being any longercentred on MNCs alone, even if there is little doubtsustainability of a development model based on an</p><p>inordinate dependence on such investment is a con- that they continue to constitute the core of inter-nationalized production.tinued source of unease. In particular, OHEARN,</p><p>1998, has been a consistent critic of the overwhelming In a similar vein, COHEN et al., 2000, chart thedevelopment of highly flexible and adaptable Cross-dependence on foreign capital, and questions the</p><p>sustainability of a model which he argues has been National Production Systems as a response of compan-ies to competitive pressures. In an attempt to stimulatedominated by growth in corporate profits and profes-</p><p>sional incomes, but with little evidence of trickle- research that is both empirically and theoretically richerthan at present, HENDERSON et al., 2002, have putdown in other sectors. In a recent critique of Irelands</p><p>development model in which import-substituting forward the global production network as a moreinnovative framework which would probe the organ-industrialization has replaced export-subsidizing</p><p>industrialization, O GRADA, 2002, suggests that while izational dynamics of transnational subsidiaries as theyevolve over time. Cross-National Production Systemsbeing somewhat vulnerable to its distorted foreign trade</p><p>regime, so far Ireland has not been a loser, overtaking emerged as a result of the disintegration of industrialvalue chains, as producers discovered they could lowerthe UK in terms of output, if not quite in living</p><p>standards. This period of catching up with Europes their costs by concentrating on what they did best, andcontracting the rest from those with a firm-specific orcore regions, however, is unlikely to be sustained with</p><p>the exogenous effects of slower US economic growth nation-specific comparative advantage based on factorcost. Information and communication technologiesand greater competition for FDI from an enlarged</p><p>Europe. The paper will explore the contribution of (ICTs) enabled firms to implement outsourcing strat-egies, extending their division of labour across nations.information economy FDI to Irelands recent period</p><p>Dow</p><p>nloa</p><p>ded </p><p>by [</p><p>Uni</p><p>vers</p><p>ity o</p><p>f C</p><p>olor</p><p>ado </p><p>- H</p><p>ealth</p><p> Sci</p><p>ence</p><p> Lib</p><p>rary</p><p>] at</p><p> 12:</p><p>00 2</p><p>6 Se</p><p>ptem</p><p>ber </p><p>2014</p></li><li><p>Irelands Emerging Information Economy 5</p><p>Rather than being about lower wages or access to within the firm to be more cost-effective than usingoutsiders, such as licensees, import agents, distributorsmarkets, these strategies were more about the emer-</p><p>gence of locations which could deliver different mixes and so on (DUNNING, 2000). DUNNING, 1998, notedthat late twentieth century capitalism is knowledge-of technology and production at different cost-</p><p>performance points. Thus relatively peripheral regions based, regional or global in its scope and involves moreintra- and inter-institutional alliances than any of itssuch as Ireland, with the capacity to develop their skills</p><p>and competencies and to build connection to centres predecessors. With advances in telecommunicationsand the lowering of barriers to trade, the locationalof excellence, could become world class, with these</p><p>connections being based on virtual work teams and options open to firms to engage in both asset-augmenting and asset-exploiting activities haveorganizations, or on corporate organizational structures</p><p>(CASTELLS, 2000). widened considerably, while at the same time, theneed of countries to attract knowledge-related assets toCorporate reorganization is also a significant factor</p><p>in the redistribution of service employment opportuni- sustain and upgrade the competitiveness of their ownfirms is more acute. While Dunning argues that theties across space, with the concentration of corporate</p><p>functions into specialized offices from core regions eclectic paradigm is sufficiently robust to accommodatemost of the changes which have characterized FDI inproviding opportunities for peripheral regions</p><p>(RICHARDSON, 1996). As part of wider regulatory the 1990s, there is a need to incorporate more recentchanges in international business models in order toprocesses involved in creating a single market for fin-</p><p>ancial services, the European Commission imple- explain the rationale for investment strategies associatedwith the new technologies and exploiting relativelymented a number of directive...</p></li></ul>