The long term prosperity of the Irish economy probably needs new engines of growth to supplement the Celtic Tiger economic drivers,ie US multinational investment,real estate development and speculation and Dublin's IFSC, any or all of which could experience a sharp downturn. It is interesting to speculate what those new engines might be.
For example,contacts developed in IFSC services could boost growth of related financial services in investment management, investment banking and venture capital. While most of this business is the preserve of major financial centres like London and New York with their massive specialist departments,even the business left over for the small fry in smaller financial centres is lucrative.
The knowledge economy is the government's official favourite for generating future prosperity,yet the government refuses to fund first class science facilites necessary to make that a reality. Worse,it prevents universities from doing so with the ban on third level fees. Promises of third level education funding under the National Development Plan ring hollow: if government funding will be so great in the future,why is it so inadequate today that universities give most places in medicine to foreign students who pay high fees?
A likely engine of growth could be Irish start-up entrepreneurs.If the easy pickings in property were to disappear in a property price decline,many Irish entrepreneurs would be forced to give their attention to other industries and services and the banks would then be more willing to extend finance to businesses besides property.
Governments can play an important role in supporting start-ups. According to the August 22nd Financial Times article on venture capital "Public sector urged to nurture newcomers":
"Instead of...investing in companies that are established,they should make more funds available to companies at the earliest stages of their lives...
"Rather than trying to fill a perceived "funding gap" for companies of a certain size,public sector funds should be spent on encouraging entrepreneurs to make their first steps in business.
"...It should be about investing at a much more early stage in proof of concept grant funding...
"...the US Small Business Innovation Research Programme forces US government agencies to invest 2.5 per cent of their research and development budgets on contracts or grants to small companies.
"Helped by public sector funds such as Scottish Enterprise, Scotland has 3.6 venture-capital-backed companies per 100 people,against just 2.8 for England."