Abstract

"Institutional Readiness in Post War Northern Ireland – US Multinationals and the Capital/Labor Ratio after World War Two"

Alison Hearne, South East Technological University (alison.hearne@setu.ie)

Institutional Readiness refers to the preparedness of an organization [or Government] to respond to changes and adapt to new ways of doing things (Agbabiaka and Ojo, 2014:186). After World War 2 Northern Ireland experienced the highest levels of unemployment in the United Kingdom (Scotland and Wales also suffered in this regard). Therefore, the regional Government of Northern Ireland, supported by the central UK Government, offered generous capital and employment grants to encourage new inward investment. This paper considers the 36 US Multinational Enterprises (DuPont, Monsanto, Berkshire Knitting Mills, Heinz, Ford inter alia) that located in the region with specific focus on employment levels, and capital versus labor intensity.
A company-level longitudinal analysis of employment numbers between 1945 to 1973 is provided. Thornhill’s measure (1989) of resource, skills and factor intensity is used to categorize each industrial sector, and company in terms of capital and labor intensity, allowing a micro-level investigation of labor and capital ratios of each US subsidiary. The type of incentives offered led to large capital investments, which resulted in unsustainable per-capita grants. The lack of investment in skilled labor undermined the region after the 1973. The outbreak of civil unrest in 1969 further decreased the bargaining power of the Northern Ireland institutions.
I argue that a lack of institutional readiness, combined with poorly conceived strategies, and a weak understanding of investment incentives culminated in policy instruments which were not ‘fit for purpose’ and greatly undermined long-term employment creation prospects in the region.
This paper has relevant today in the face of rapidly changing production methods and increasing geo-political tensions and offers insights into the historical challenges and coping strategies of both MNEs and regional institutions.