State Enterprise

In 1957 over 5 percent of Irish workers were employed by state-owned companies, a situation which was common in western Europe. Elsewhere in Europe the growth in the number of state-owned companies was primarily due to the nationalization of declining heavy industries, such as coal and steel, and to the ideological wishes of socialist governments. In Ireland such companies emerged as a pragmatic response to economic and political circumstances. During the 1920s, former Sinn Féin members formed the Cumann na nGaedheal government, which espoused a noninterventionist economic philosophy and created the Electricity Supply Board, and an investment bank, the Agricultural Credit Company, to provide long-term capital for farmers. After 1932 when Fianna Fáil, the new party of Eamon de Valera, came to power, state enterprises played a critical role in the drive for economic self-sufficiency: producing sugar from Irish-grown sugar beet; providing capital for newly established industries; developing Ireland's peat bogs as an alternative to imported coal and oil, and making Irish steel. Irish Shipping was founded in 1941 to keep neutral Ireland supplied with essential imports during World War II.

The postwar years saw the formation of a state tourism board, Bord Fáilte; an export board, Córas Tráchtála; the Industrial Development Authority to encourage foreign investors; and companies to promote development at Shannon Airport and in Irish-speaking areas. State enterprises helped to transform the Irish economy in the 1960s: they were more dynamic and more flexible than the civil service; state investment was a means of overcoming the lack of private investment within Ireland; and these companies encouraged a new, meritocratic class of businessmen at a time when most private businesses were conservative and family controlled. But in time the benefits of state ownership were increasingly offset by the drawbacks: decisions on employment and investment were often determined more by political than economic considerations, and the security of state ownership encouraged militant demands from workers and a resistance to change. By the 1980s losses in state companies were a major drain on state finances, and, spurred on by the example of Thatcher's Britain, the Irish government began a gradual process of privatization, disposing of the Irish Sugar Company, Irish Steel, two investment banks, and the state telephone service. The privatization of others is under consideration. Irish state enterprises may well be entering the twilight years; early-twenty-first-century thinking favors either private enterprise or partnership between government and private business (public-private partnerships).

State Enterprise

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