Where are the jobs going to come from? Hopeful signs of an upturn in the world economy would normally suggest that we can now look forward to shrinking dole queues. If the macro picture is improving then it also possible to be optimistic from the bottom up, at least up to a point.

The engine of jobs growth in most modern economies is, typically, the small to medium-sized company. In Ireland we have a more nuanced position: our focus on inward investment often looks like (very) large overseas companies establishing relatively small operations here.

I think it is fair to say that we very good at this. It is often asserted that we are less successful at building a strong indigenous entrepreneurial culture; the SME sector is certainly challenged in various ways, not least by ongoing credit constraints.

Other countries envy our record in persuading multinationals to come to Ireland. I recently spent a decade sitting on a UK-based government advisory committee that would often ask, “just how does the IDA do it?”.

IDA Ireland’s overseas reputation is formidable. In its most recent annual report, I was struck by several things, one being a statement of the seemingly obvious. The IDA, it said, is like any other public-sector organisation in that it is expected “to do more with less”. Given the austere times we live in, this rather innocuous turn of phrase struck me as deeply disturbing. If the IDA really is as good as we think it is, why is it being treated as just another public-sector entity that falls victim to austerity? Is prioritisation beyond us even in an age of public-sector cuts?

The IDA, I suspect, would be the first to point out that it doesn’t just work with large multinationals. In recent years, it has expanded its activities to include a focus on “fast-growth companies” via its emerging business division.

Annual reports are often just PR documents that conceal as much as they reveal but it is hard not to come away with impression that the IDA is a very well-run business, and is indeed doing more with less.

“Joined-up thinking” is a cliche, and most commentators bemoan its absence in the public sector but it is clear, to me at least, that the IDA is making huge strides to work with all of the stakeholders in Government and elsewhere to further Ireland’s cause.

Medium-term strategy
Like most businesses, the IDA has a medium-term strategy. Horizon 2020 has, among its goals, a target of creating 62,000 direct jobs by 2014. While this is to be applauded, the question naturally arises, could they do more?

It may look odd to compare the IDA with a well-run hedge fund but bear with me. The hedge fund business is, in one sense, a simple creature, similar to most other firms in all sorts of sectors: it’s all about the efficient allocation of capital. Some hedge funds are very clinical about this. They take their capital and allocate it to their best traders. As those traders make or lose money, capital is reallocated from losers and given to winners. It is not a guaranteed method of success – it needs to be buttressed by deep analysis of why different groups are more or less successful; past performance, as is often said, is no guarantee of future success. But the system often works, sometimes fabulously well. The underlying principle is as sound as it is deceptively simple: allocate resources to what works, and vice-versa.

Back to the IDA. If it is obvious that this is an organisation that is successful, why would we shrink the resources we devote to it? Even given the constraints imposed on us by austerity, is it really beyond our abilities to fund something that is so important to job creation? Indeed, should we not challenge the IDA to take more resources; do more than they are doing?

Of course, they may not be comfortable with this: it is perfectly possible that there is a tipping point, beyond which returns start to diminish. Again, the best hedge funds know this and are very careful to nurture their star money managers, not give them too much money to invest, precisely because the law of diminishing returns is always lurking and has, indeed, impaired the performance of many businesses, not just hedge funds, that grow beyond their optimum size. But good businesses always try to grow to the point just before diminishing returns set in.

I don’t know anybody at the IDA. But I would love to ask them how much more successful they think they could be, if only they had the resources.