The failure of the IDA over many years to attract investment into the western region has been highlighted in an economic plan published yesterday by the Western Development Commission. It calls for a radical change in policy to encourage companies to set up in small towns rather than cities.
The WDC, a statutory body charged with spearheading development in the seven western counties from Donegal to Clare, has said its £3.7 billion plan, if implemented, would turn around the economic fortunes of the region.
In highlighting the uneven spread of economic success in the past, the report found that in the two years 1997-1998, only 12 of a total of 102 IDA-backed projects were located in the seven counties of Donegal, Leitrim, Sligo, Roscommon, Mayo, Galway and Clare. Of a total of some 24,000 jobs created, only 6.6 per cent were in the 12 western projects, five of which were in Galway.
In 1997 the combined efforts of all the State agencies produced a net gain of only 88 jobs in the six western counties apart from Galway. More than half of all State agency-backed jobs created in the seven-county region between 1993 and 1997 were in Galway city.
Galway's impressive performance, which matches that of the east coast, is proportional to grants it received. The proportion of foreign investment grants in the seven western counties going to Galway grew from 28 per cent in 1993 to 85 per cent in 1997.
In this same period, the west accounted for only 5,138 of the 42,453 net new jobs created, and when Galway city is excluded, a net gain of only 1,636 was recorded in the five-year period. The west's share of national output fell from 14.6 per cent in 1991 to 9.6 per cent in 1996.
The WDC chief executive officer, Mr Liam Scollan, said that with 600,000 people or 95 per cent of the western population living outside Galway city, balanced regional growth was needed. This could be achieved by cutting the level of grant aid available in cities with over 40,000 people in favour of smaller towns.
Mr Scollan said, however, that he was not implying that the Government should actively discourage foreign companies from setting up in cities. He accepted that very large projects would still go to cities and that these should be supported and directed towards economic black spots.
However, the Government should be more selective about giving grant aid to these foreign companies, on the basis that public money should only be spent when the company would not set up without the grants. More resources should be focused on small to medium-size investors.
Mr Scollan said he was heartened by recent indications from the IDA that it accepted the need for more balanced industrial development across the regions.
"There is an onus on us, as a State agency, to do something real about dispersing growth, and one of the top proposals is that not only should there be differentiated assistance for companies in the Objective 1 region, but even within the Objective 1 region and within the west of Ireland, towns with a population of over 40,000 shouldn't have the same degree of grant support as towns of less than 40,000," Mr Scollan said.
The WDC report, which was drawn up by Mr Alan Gray of Indecon Consultants, also calls for the introduction of regional targets for job creation and investment.
The IDA has set only national targets in the past.
Mr Scollan said a targeted approach to developing the west could result in "the creation of 19,000 jobs, an extra 1.5 million tourists and the creation of a backbone of a major £1 billion infrastructure programme by 2006".
He said it was pointless to call for increased spending on infrastructure without defining the economic strategy served by that investment. The report spelled out specific projects to be targeted together with their itemised cost.