Smart if Small Economies? Ireland’s Strategy in Comparative Frame

Abstract

In sections one to three of this paper, we interrogate the relatively new Irish policy concept of the ‘smart economy’ by relating and comparing it to recent theories engaging with the characteristics of the changing industrial economy. This summary review includes concepts such as New Economy, Knowledge Economy, Knowledge/Information Society and the recently crafted notion of Smart Economy.

Sections four to six will introduce the initial results of an empirical and comparative study, which applies our framework in an attempt to map the changing industrial structure and performance of the Irish economy and compare it with other small, European open economies (Austria, Denmark, Finland, Ireland, Netherlands and Sweden) but also with large economies such as Japan and the United States. We seek to indicate why and how such comparative institutional studies may be fruitful and beneficial, as indicated in prior work such as Mjoset’s (1992) seminal study. To this end, we develop and apply an evolutionary and institutional analysis of the changing knowledge-intensive sectors of the economy, building on categorisations developed by Machlup and refined by Preston (2001), taking explicit care to avoid an overly techno-centric approach. In this frame, we move on to examine and compare the evolution of output, employment, and trade performance trends as well other relevant indicators, distinguishing between ‘core’ and ‘supporting’ knowledge-intensive service industries in the selected countries.

Section seven moves on to identify some implications and conclusions emerging from this exercise. We highlight some flaws in what passes as mainstream economic thinking and policy practices influenced by certain conceptualisations of a unfolding ‘New Economy’ and the Irish economy’s comparative performance therein [e.g. excessive emphasis on the direct contributions to economic growth of the supporting ICT (PIS’) industries]. We conclude by highlighting potential shortcomings in the orientation of the Irish Smart Economy policy strategy and related policy discourse and frames.

Keywords: Austria, Denmark, Finland, Ireland, Japan, Netherlands, Sweden, United States, Information Economy, Information Society, Knowledge Economy, New Economy, Smart Economy, Primary Information Sector, Innovation, Creative Industries

JEL Classification: E10, E31, E61, F14, L16, L86, O33, O57