Developing an Evaluative Framework for Industrial Policy in Ireland: Fulfilling the Audit Trail or an Aid to Policy Development?

July 01, 2005

News

01/07/2005

 

Developing an Evaluative Framework for Industrial Policy in Ireland: Fulfilling the Audit Trail or an Aid to Policy Development?

Dr. Helena Lenihan (University of Limerick); Professor Mark Hart (Kingston University, UK); Professor Stephen Roper (Aston University, UK).

Embargo: Friday July 1st 2005 at 00.01a.m.



Article appearing in the forthcoming Quarterly Economic Commentary, Summer 2005

 

 

  • In common with some other small countries (most notably Israel), Ireland has a very weak culture of industrial policy evaluation.
  • This is despite the fact that it has been estimated that around €5.5 billion was spent on direct financial assistance to industry by the four main Irish development agencies (excluding administration and support to the higher education sector) over the period 1980-2003.
  • In Ireland, discussions about evaluating public sector industrial policy interventions rarely move beyond the need to ensure transparency and probity in the allocation of public funds.
  • Evaluation is important not only in terms of ensuring ‘accountability’ and ‘value for money’ but good evaluation should be seen as a way in which policymakers can improve the design and delivery of policies.
  • Evaluation is critical in determining the level of ‘additionality’ associated with industrial policy interventions.
  • There continues to be a poor evaluation culture in Ireland although some progress has been made in recent years. The establishment of the Irish Evaluation Network has the potential to contribute to a strengthening of policy evaluation in Ireland
  • There has been a poor culture of evaluation for a variety of reasons including:
    • the emphasis in the Irish economics research community on macro-economic analysis as opposed to applied micro-economic analysis-particularly industrial micro-economics;
    • inclusive negotiated agreements which may lead to compromise solutions;
    • a political tradition of ‘client focus’, which may bias against economic rationality.
  • Despite significant progress, the paper argues that important methodological lessons for future evaluation can be obtained from international ‘best practice’. The imperative to control for ‘selection bias’ and the need to assess the extent of ‘behavioural additionality’ in public sector support to individual firms are two important dimensions of an evaluative framework.