High-tech industry `clusters' hard to generate in the regions

What should we do to spread the current economic prosperity to the regions? That is the question which underpins the ESRI review's attitude to regional development.

While every parish council and community enterprise group would encourage an Intel or a Hewlett Pacard to set up in its back yard, an article in the ESRI's Medium-Term Review notes that for a variety of reasons, similar industries tend to set up in clusters, and tempting them away from each other may actually be harmful to the State's interest.

In a special article by economists Mr John Bradley and Mr Edgar Morgenroth, which is appended to the review, it is noted that "clusters" of high-tech industries have developed in Baden-Wurtenburg in Germany, Silicone Valley and Route 128 in the US and the M4 Corridor in the UK.

Recently, Ireland has succeeded in attracting sufficient firms in the more modern sectors such as computer, instrument engineering, pharmaceutical and chemical sectors to note a discernible "clustering". And while the authors acknowledge that this is not on the same scale as the US, UK or German experience, they point out that "the levels of skills involved are constantly being upgraded and Ireland has become an attractive location for certain high technology industries simply because of the presence of other similar hightech industries".

In short, a company involved in the computer field in Kildare will need to know that when it loses staff through "natural wastage", there is a ready supply in the area, possibly working for another computer company, from which it can recruit. Being the only computer company in the region does not offer "synergies" such as this, the article suggests.

The article notes that in the strategic planning of a foreign multi-national, the Republic is only relevant as long as there is an educated labour force and infrastructure.

For this reason, the high technology industry is likely to continue to cluster about the larger centres of population but the authors maintain that "the aim of policy over the period 2000-2006 must be to ensure that the more remote geographic regions continue to be facilitated in their efforts to link into these urban growth poles through the development of physical infrastructure and the identification of sectors which can thrive in non-urban environments.