Comment The pattern of economic development across the world and over the centuries never changes.

As economies evolve, agriculture is gradually replaced by manufacturing as the mainstay of wealth creation, before it, too, slowly declines in importance as services come to dominate.

In rich countries today, things grown and made account for around one-third of the value of all output. Providing services - from health to entertainment - generates the rest.

And as industrial and agricultural jobs become fewer, owing to technological advance and competition from better value imports, the importance of services grows. For an economy like Ireland's, services are the future.

It is just as well then that, despite being crowded by an unusually large manufacturing sector, the internationally-traded services industry in Ireland has experienced stratospheric growth. The facts are staggering. In just five years there has been a threefold increase in services exports.

Last year alone, companies based in Ireland sold 30 billion worth of services to foreigners. Continued rapid growth last year, despite global slump, made Ireland the planet's biggest per capita exporter for the first time, according to the World Trade Organisation (WTO).

And what makes this boom even more extraordinary is that it has taken place despite the failure of successive governments to support the industry, the latest example of which is the administration's position at trade negotiations now taking place in Mexico.

As noted in this newspaper on Monday, the ranking minister is Agriculture's Joe Walsh, there to do the bidding of the small and shrinking farming sector even when this means sacrificing the interests of the rest of the economy, including services.

So how, in the face of persistent official unwillingness to pursue the State's real economic interests, has the services sector done so well?

One reason is the fall in corporation tax to 12.5 per cent (a measure, it should be added, that was forced on the government by the EU). The cut in tax has been a competitive boon for service providers who were handing over as much as a third of their profits to the State as recently as 1998.

Another reason for the success is the changing profile of foreign-owned firms in Ireland, which accounted for three-quarters of services exports in 2001 (the latest figures). When foreign direct investment into Ireland was once associated almost exclusively with manufacturing, inflows are now more likely to be for the setting up of software houses or financial institutions. According to the US commerce department, almost a third of US investment in Ireland is now in the services industry, from next to nothing just a few years ago.

And it would seem that even foreign firms involved primarily in manufacturing are increasingly getting in on the services act. When once Irish affiliates bought in almost all their services requirements from their parent companies, they now seem to be doing things for themselves, and, when they operate as regional headquarters, for their sister companies on the continent and beyond. This suggests that headway is being made in moving away from screwdriver operations towards higher value-added functions.

The services boom also looks like the coming of Ireland's entrepreneurial age. Home-owned services businesses are growing exports even faster than the foreign-owned sector (in stark contrast to most of their counterparts in the ailing indigenous manufacturing sector).

The unleashing of this dynamism is mostly because the traditional handicaps of Irish business - peripherality and small market size - apply hardly at all when it comes to service provision. Nowhere has the "death of distance" caused by the IT revolution been more keenly felt than in the services industry.

Plenty of credit for the sprouting of home-grown firms must also go to the multinationals, observes Colum MacDonnell of the Irish Coalition of Service Industries. Would-be Irish entrepreneurs employed in these companies learn the industry ropes, make valuable contacts and soak up know- how before branching out on their own, he says.

Considering the services phenomenon from an industry viewpoint also helps to understand what is going on. The biggest exporter by far is the computer services sector, which had foreign sales receipts last year of €11 billion - over a third of total. It has been the engine of services growth, and despite the industry's global woes in recent years, it continues to grow. Though a considerable chunk of this growth has been the result of changing delivery methods, there is little doubt that real growth has also occurred, not least by 600 indigenously owned companies.

Illustrative of the magnitude of the changes in the industry is the rise, almost from nowhere, of the internationally-traded insurance sector. Its foreign earnings last year, at 3.8 billion, were second only to computer services. Though a good proportion of the insurance sector's huge increase in earnings in 2002 was accounted for by the post-September 11th hike in premia, this does not explain what is going on. That it is difficult to understand exactly what is going on is indicative in many respects of the wider industry.

Despite being far bigger than manufacturing, it has received much less attention in the literature. The statistical data are limited. Policymakers often fly blind. It would be worth knowing much more, if only to appreciate just how successful the country has been. This writer would welcome insights or views on the subject from readers at danobrien@eiu.com.

Dan O'Brien is a senior editor at the Economist Intelligence Unit. He also writes the Unit's reports on Ireland.