The Post-War World and Dual-Track Reform

Abstract

Abstract That export-oriented foreign investment was targeted before significant trade liberalization began identifies the Irish outward-reorientation process as an early example of ‘dual-track reform’. Post-war balance-of-payments difficulties were intensified by the exhaustion of the ‘easy’ first phase of the import-substitution strategy. Outward reorientation was politically difficult however because of the large number of jobs that remained dependent on protection for their survival. The Department of Industry and Commerce and the recently established Industrial Development Authority advocated export incentives. By creating a new source of industrial employment without threatening import-substituting interests, this would help to establish the preconditions for the later abandonment of protectionism. That the export profits tax relief announced by the second Inter-Party government in 1956 had been opposed by the Department of Finance distinguishes it clearly from the policy innovations associated with the later partnership of Whitaker and Lemass. The strategy of ‘industrialisation by invitation’ was particularly suited to Irish circumstances. The response of the US authorities and US consultants casts doubt on the hypothesis that the process was largely scripted in Washington. Other industrial developments over the period included the product diversification of the more innovative creameries and the emergence of new export-oriented indigenous industries producing income-elastic items such as carpets, crystal glass, processed beef, and whiskey liqueur. The Shannon industrial zone might be characterized as Lemass’s response to the Inter-Party initiative. The chapter identifies the largest manufacturing employers and the major ‘new foreign industry’ employers of the early 1960s.