Global Competition, Europe and I r i s h

Peripherally

DENIS O'HEARN*
University of Wisconsin-Madison

Abstract: This paper challenges the assumption that European integration can reduce core-
periphery inequality within Europe. Global competition will force associated European firms and
states to pursue strategies that impede regional equalisation. Particular attention is given to
regional participation in "leading sectors" during future global expansions and how this will
affect Irish employment. Integration will not significantly increase employment in US sub­
sidiaries or indigenous firms, while it will decrease the probability of major investments in
Ireland from the European core. In addition, European transfers used for training, infrastructure
and technology programmes cannot be the basis for Ireland's transformation into a "core"
European economy.

I INTRODUCTION

I rish discussions of European integration usually assume that member­

ship of the European Community can be an advantage to peripheral
regions like Ireland i f only the right policies are pursued. Economic discus­
sions analyse the effects of the single market and structural transfers on the
Irish economy, concentrating on economic variables such as market size,

"This paper was originally prepared for the 1992 Annual Conference of the Sociological
Association of Ireland, Cork, May 1992.1 would like to thank participants in the conference for
their invaluable comments and suggestions. I am also thankful to the anonymous reviewers of
The Economic and Social Review for their helpful criticisms and comments. Funding for the
research was provided by the Graduate School of the University of Wisconsin-Madison. Office
and research facilities in Ireland were graciously provided by the Sociology Department, Univer­
sity College Dublin. The Industrial Development Authority of Ireland provided access to data
from their surveys of employment and components of sales of firms operating in Ireland. The
author invites comments and criticisms addressed to him at the Department of Sociology,
University of Wisconsin, Madison, WI 53706.
demand, economic structure, transactions costs and economies of scale. Even
studies which recognise the importance of Irish peripherality tend to pose
"periphery" merely as a geographical concept which increases economic costs
(e.g., Bradley, Fitz Gerald and Kearney, 1992). This paper introduces socio­
logical and political power variables to the analyses of European integration
and Irish economic change. I argue that the hierarchical structure of Europe
and the global economy is the major blockage to favourable economic change
i n Ireland.
There are two broad positions about European integration and regional
inequality. One holds that Europe is moving away from the historical colonial
model which promoted, or at least allowed, extreme inequalities between the
"developed" and "less-developed" countries. John Hume of the Social and
Democratic Labour Party, for example, insists that "the imperialists have
learned their lesson". Instead of exploitation, European unity will bring
prosperity to all of its regions, including all of Ireland, from the Bogside to
Ballyhaunis. From this point of view, a stable and prosperous Europe
requires prosperous regions, which will be achieved through the progressive
equalisation of levels of development throughout the community. The term
cohesion was coined to capture this concept. Rather than questioning or
testing the motives of powerful core European actors, this argument assumes
that "social and economic cohesion" really is a major European policy goal —
rather than just a stated goal — and that all European regions have a
"commonality of interests towards ... an external environment" (CEC, 1992,
pp. 10-11).
I explore a second view, which holds that the current transition is not
systemic. I t is another repetition of a form of global crisis and conflict that
has appeared with some regularity since the world capitalist system was
established. As Chase-Dunn (1989) puts i t , the "deep structure" of global
capitalism, whereby capitals from spatially restricted core regions strive to
maximise and dominate global accumulation, has not changed. Emerging
p
strategies i n the United States, Japan and'Eur6pe^are' attempts to compete
successfully within the system. This may require domination of the system,
but not its transformation. I n other words, the global hierarchy of core, semi-
peripheral, and peripheral zones, each with a clearly defined position i n a
global division of labour and a position of relative power or subordination i n
the interstate political economic regime, will remain i n place even while the
major core powers compete (for a review of arguments on the reproduction of
the core-periphery hierarchy, see Chase-Dunn, 1989, pp. 228-255). Only Italy
and Japan have achieved upward mobility into the core i n our time. What is
at stake for countries of the European periphery is whether their association
with the European core i n a political and economic union will hasten their
upward mobility from semi-periphery to core, or whether internal European
political and economic structures will reproduce or even solidify the European
core-periphery hierarchy.

I I THEORIES OF GLOBAL COMPETITION AND ECONOMIC CHANGE

Several approaches link the structural development of capitalism with a

process of economic and political competition, including regional competition,
which creates and reproduces uneven development. Historical political
economy, beginning with Marx but found also i n the conservative tradition of
Schumpeter and i n contemporary business history, explains why capitals
must compete over innovation and competitive advantages i n "leading
sectors" or face destruction. For Marx (1967), this involves an incessant
competition over sources of surplus profits, including new techniques or
production relations, new markets, and sources of raw materials. Schumpeter
(1939) analyses a similar process of innovation as a discontinuous process of
improvement i n productive technique or process ("innovative response"),
followed by competitive responses from other capitals ("adaptive response").
Economic evolution moves in "waves" during which the most innovative
capitals and regions dominate, while those who fail to respond adequately are
destroyed. Competition builds up during a period of recovery after each
innovative wave is played out and leads to a further wave of innovation
around new leading sectors. Chandler (1977, 1990) demonstrates the impor­
tance to competitive advantage of innovation i n the social organisation of
production, particularly aspects of the large capitalist firm that increase
"economies of speed" or "throughput" by reducing unit costs of production.
Landes (1968) argues that state support of innovation is a crucial determin­
ant of which regions dominate the world economy and which regions "fail".
States provide support for infrastructure, including skill-formation, but also
must protect and support firms during the early stages of competitive
innovation. All of these approaches are based on the central principles that
firms must engage i n the struggle to competitively dominate the sectors i n
which they operate, and that firms and regions "succeed" or "fail" according to
their ability to dominate leading core sectors of the global economy.
Such models of capitalist innovation and accumulation have been placed i n
a global context by theories of international regimes and hegemony. Studies
of international regimes, or interstate systems, examine the degree to which
core states i n the world-system attempt to create and maintain global order
by instituting supra-national regimes to regulate economic, political and
military affairs (Krasner, 1976). Many authors propose that global stability,
which is necessary for economic prosperity and global economic expansion,
requires the establishment of hegemony — the economic, political, and
military domination of the world-system by a single core state (Bornschier
and Suter, 1992; Keohane, 1984; Gilpin, 1987). Some theorists identify a
"hegemonic cycle", which is associated with the long economic cycle of global
production. Intra-core competition over competitive advantage i n the "leading
sectors", which drives waves of global economic expansion, they claim,
inevitably leads to a power conflict among coalitions of core capitals and
states. Each participant i n this "hegemonic conflict" attempts to assure its
global competitiveness by establishing a dominant position relative to other
core competitors (for the relevant literature, see Chase-Dunn, 1989, and
Bornschier, 1992).
The hegemonic cycle contains two central dynamic movements:^ pattern of
conflict and a pattern of economic dominance of the eventual hegemon.
Goldstein (1988) documents a pattern of hegemonic contention where, after a
period of economic competition, a challenger (B) makes war on the declining
hegemon (A). (A) makes an alliance with another contender (C), and together
they win the war. But (A) is unable to re-establish hegemony and (C) emerges
as the new hegemon. The Dutch, British, and US hegemonic regimes were all
established i n this pattern, through warfare, leading Goldstein to predict a
"window of vulnerability" to warfare early i n the twenty-first century. While
the perceived horrors of nuclear destruction may stop future contenders short
of global war, i t is hardly wise to bank on such common sense. Nor would the
absence of global war reduce the probability or viciousness of localised
conflicts over spheres of influence. \ *
During the cold war, the inability of Japan and Germany to build.global
political and military power excluded them from contending for hegemony.
Yet US economic decline also led some experts (e.g., Bergsten,' 1987) to pro­
pose a possible US/Japanese hegemonic alliance, or bigemony, welding
Japanese economic power with US political and military power. The fall of
Soviet power, the rise of nationalism, the initial steps of the Western
European Union (WEU) to play a regional role'of peacekeeper independent of
NATO, and the Franco-German creation of a "European Corps" may increase
Europe's ability to contend for hegemony and not just economic competitive­
ness. Some critical Irish writers, therefore, worry about the implications of
European integration for Irish neutrality and the country's future par­
ticipation i n regional wars (Maguire and Noonan, 1992). This, however, is
beyond the scope of the present paper, which concentrates on the implications
of European integration for change of the economic core-periphery hierarchy
within Europe.
With regard to the pattern of economic dominance, Wallerstein (1984)
shows that past hegemons have gone through three stages of ascent and
decline. They first gain a competitive advantage i n consumer goods, which
penetrate the markets of competing core regions. Then they dominate the
production and export of capital goods. Finally, they export financial services
and perform central functions for the world economy. This pattern is
associated with the Schumpeterian "leading sector" concept because the most
dynamic consumer and capital goods sectors i n the hegemonic economy are
also where technological innovation and market expansion are concentrated.
The emergence of service exports is an indicator of hegemonic decline or
crisis, because the hegemon no longer commands clear competitive advan­
tages i n key productive sectors. Historically, the United Provinces of The
Netherlands established competitive advantages in herring fisheries and then
shipbuilding (Maddison, 1982; Wallerstein, 1980); Britain i n cotton textiles
and then i n the production and export of machinery, railroads and steam­
ships; and the United States i n automobiles, electrical appliances, and then
electrical machinery. From this point of view, the next phase of global
economic expansion, and the next opportunity for hegemony, will be based on
the new technologies i n microelectronics, communications technologies,
robotics, and biotechnologies.

I l l WORLD SYSTEM COMPETITION AND EUROPEAN INTEGRATION

Global competition is unstable, sectorally and regionally, because each
competitor attempts to establish a clear advantage over the others. Success
(or avoidance of failure) can ultimately be assured only by establishing clear
competitive advantages, which must be continually re-established as inno­
vation proceeds. I f we accept models of hegemony, the very act of economic
competition i n the'world system forces associated states and capitals to
contend for hegemony because failure to do so may allow others to dominate
(Keohane, 1984; Gilpin, 1987; Bomschier and Suter, 1992).
The importance of political security, at home and abroad, necessitates the
creation of stable state and'interstate systems, not only because economic
actors (e.g., firms) require them but for other social and political goals.
Although state policies are not crudely determined by the requirements of
powerful economic elites, global competition requires an alliance of leading
state and economic elites and state policies that enable key firms to compete.
European political integration thus has important economic consequences for
the ability of major firms to compete globally.
Bornschier (1992, p. 4) refers to the "world market for protection" or social
order, which is a territorially-bounded public utility and an element of the
national economic production function. A state will be strongest, he argues,
when i t combines moderate taxing with favourable support for innovation and
investment. A capitalist firm will be more competitive when i t is situated i n a
national or transnational network of economic transactions that are effec­
tively protected at a low cost. The capitalist state that "reconciles the
capitalist profit logic with the claims for legitimacy from citizens" is most
favourable for economic success. States, then, are producers of economic goods
(security) and European political union is intended to increase European
efficiency i n "producing" security. As Sandholtz and Zysman (1989, p. 102)
point out, under the conditions of US hegemony and economic expansion,
national strategies for growth, development and employment within the
European Community sufficed. After US political and economic domination
declined i n the 1970s, the global context forced a regional "rethinking" of
political entrepreneurship.
Whether or not economic competition is inevitably associated with hegem­
onic competition, capitalist accumulation requires firms from a given region
to compete i n the innovative process or fall behind, as was feared i n the case
of "Eurosclerosis". I n this respect, i t is irrelevant whether integration is
designed to enable Europe to dominate the world economy, or simply to avoid
economic decline i n the face of Japanese and US competition. I n either case,
European core firms must fully engage i n global competition with Japanese
and US firms or fall further and further behind. The timing of the latest wave
of integration is explained by the combination of reaction to the Europessi-
mism of the 1970s and the opportunities and challenges presented by the
hegemonic decline of the US and economic ascent of Japan. Since the decline
of US hegemony i n the 1970s, the "new Europe" is no longer a USproject, but
a project of the European core within a fragmented world system. As was the
case i n the US i n the 1930s and 1940s, a number of influential people at the
core of Europe began to realise that its best hope of recovery from the
recession of the 1970s was to increase the coordination of regional trade and
production. Influential studies, such as Albert and Ball's (1983) European
Parliament working paper, specifically compared European performance to
the US and Japan, and set successful global competition as the primary goal
of European integration.
A key set of European business leaders and political entrepreneurs aspires
to "outcompete" the US and Japan, and possibly to become the next hegemon
of the world economy. As a top executive of Fiat declared, "the final goal of
the European 'dream' is to transform Europe into an integrated economic
continent with its specific role, weight and responsibility on the European
scenario vis-a-vis the US and Japan" (quoted i n Sandholtz and Zysman, 1989,
p. 95). German Chancellor Kohl asserts that Europe, not the US or Japan,
w i l l be the dominant global force of the coming decade, while the French
President of the European Bank for Reconstruction and Development foresees
that day when Europe will be the "heart of the world economy" (quoted i n
Bornschier, 1992, p. 7). Jacques Delors proposes that Europe must combine
its dynamic economic power with a "great political power" or become "mere
spectators of history" (Bornschier, 1992, p. 7). Influential economic observers
like Thurow (1992) assert that the European project is a "head to head" global
confrontation with the US and Japan. And, as Sandholtz and Zysman (1989)
persuasively argue, the project of economic and political unification is, at
least at its inception, a project of elites, or "a complex web of intergovern­
mental bargains and accommodations among the various national business
elites." The terms of this "complex web" of bargains is set predominantly by
core European governments and business elites.
This is not to say that the project is fully coherent. The history of European
social democracy has created powerful interests in the welfare state, and the
legitimacy of a new Europe would be challenged i f there were significant
erosion of social welfare programmes. Peripheral members increasingly view
"cohesion" as a strong basis for their participation in the project. This creates
a tension or contradiction between the requirements of competition through
"lean production" and the "lean state", on the one hand, and the demands of
non-business social forces on the other (Bornschier, 1992).
Given the association between economic integration and European com­
petitiveness, a key question is the consequences of intra-core competition on
regional uneven development within the European Community. W i l l the
struggle for economic competitiveness allow the equalisation of peripheral
incomes and standards of living relative to the core? Or, as I will argue here,
will the conditions of intra-core competition i n the global capitalist system
intensify and concretise regional inequalities, leaving Ireland i n an increas­
ingly peripheral situation relative to the European and North American
cores?
I f global competition is at the centre of the European core agenda, the
predominant concern of integration must be the competitiveness of firms from
the European core \ who must dominate emerging key productive sectors i f
Europe is to survive as a dynamic entity. Analysts like Albert and Ball were
particularly concerned that intra-European protection impeded the ability of
the European core to compete i n the new leading sectors such as information
technology, biotechnology, and energy. This central concern is repeated over
and over again i n EC documents, such as a series of EC Commission studies
of information technologies which cite the danger of Japanese domination
unless the European market is unified and product development and
production is concentrated in the European core (Freeman and Soete, 1991;
Gerstenberger, 1991; others cited in Bornschier, 1992, pp. 15-16). Increas­
ingly, the key nexus of core-periphery conflict within Europe is and will be
centred around whether the requirements of Euro-core accumulation (which
is necessary for European competitive success i n the global system) can
coexist with the aspirations of European peripheries to achieve upward
mobility i n the world-system (from semi-periphery to core). Unfortunately for
the periphery, the discourse around these aspirations has so far centred on
the diversionary subject of the size of core-periphery transfers under the
programme of "cohesion".

Eliminating the Alternatives

To analyse conflict within Europe, i t is necessary first to consider the
relative strengths of periphery and core. From the perspective of the core, I
would argue, the most important achievement of the period of US hegemony
after World War I I was the elimination of alternatives from peripheral
discourses about imperialism and global capitalism. In Ireland, for the first
time since its forcible incorporation under British colonialism i n the seven­
teenth century, a core crisis has not been accompanied by a serious attempt to
change the economic regime and disengage from the world-system. Core
crises encouraged the seventeenth century attempt by settler landowners to
industrialise i n wool, the late eighteenth century local parliament and cotton-
led industrialisation, late nineteenth century peasant struggles for land, and
the early twentieth century withdrawal from colonialism and erection of
import-substitution industrialisation in the Irish Free State. I n contrast, the
Irish reacted to the present conjunction of severe economic crisis and global
economic conflict by accepting the intensification of their incorporation under
European control. This requires explanation.
During the long crisis of 1914-1945 and the first decade of US hegemony,
many peripheral countries, including the Irish Free State, were able to
attempt strategies of import-substituting industrialisation (ISI). Unlike
previous periods, when the colonial powers forcibly ended protectionist
experiments i n their infancy, some of these experiments lasted for a con­
siderable time. Indeed, they lasted until they were beset by problems of
insufficient foreign exchange and lack of access to capital equipment and
technology. Ireland's experiment lasted some twenty years, despite regional
economic hardships and British sanctions. I t officially ended after i t was
blamed for the severe recession of the mid-1950s, although i t began to be
dismantled when Ireland joined the Marshall Plan i n 1947. Peripheral I S I
experiments were doomed to fail because of the core's monopoly of the most
advanced techniques and, therefore, its ability to dominate key markets. Yet,
in the time-honoured tradition of blaming the victim, the collapse of ISI was
usually blamed on the failure of peripheral people to "become modern", their
lack of respect for free market forces (especially, the "free" movement of core
commodities and investments) and their affinity to "outdated" ideas like
nationalism and protection.
Core institutions and states promoted the modernisationist ideology, that
peripheries could industrialise only by adopting "western" ideals of free
enterprise and free trade. Many peripheral people resisted, because they
recognised that free trade worked mainly i n the interests of the core and
brought little prosperity to peripheral regions. I n Ireland, modernisationism
was more successful because the state and its public relations agencies —
the Industrial Development Authority (IDA) and, to a smaller extent, the
northern Irish development agencies — were very adept at publicising each
new foreign investment, w i t h inflated promises of employment. Massive
failures i n indigenous industry were either ignored or blamed on the inherent
inability of Irish entrepreneurs to "become modern". Prospective southern
capitalists were said, i n Lee's (1990) words, to be wedded to a "possession
ethic" rather than a "performance ethic". Even worse, i t was quite respectable
to claim that the northern Irish were "bogged down i n tribal warfare".
More powerful than the modernisationist ideology was the creation of a
material reality where there was "no alternative" to subordinate participation
in the US-dominated world-system. Even i n the 1950s, the operative phrase
in southern departmental and ministerial discussions about European free
trade was not, "freer access to the European market w i l l bring jobs and
prosperity". Although such phrases appeared i n public propaganda of the
time, many experts privately agreed that free trade would decimate Irish
industry and create massive unemployment. Rather, the ultimate winning
argument was, " i f we fail to agree we will be forced to leave the European
organisation, European countries will probably refuse to trade with us, and
the US will isolate us" (on these discussions, see O'Hearn, 1989).
Forty years later, the state's most effective plea for acceptance of the single
European market is that "staying out could only be devastating, for us and for
future generations". The effectiveness of the "no alternative" scenario is
underscored by the inability of many on the left, including the Labour Party
and the Democratic Left, to generate a concrete position on integration. Even
the trade unions reluctantly call for Irish acceptance of European integration
on the grounds that refusal "could lead to economic isolation with a devas­
tating effect on the Irish economy". The major change from thel950s is that
Europe and the Irish state are confident enough of the threat of isolation that
they can risk subjecting European integration to public referenda.
The elimination of any real alternatives to global incorporation, which was
begun i n the 1950s and completed by the vilification of nationalism and
Republicanism i n the 1970s and 1980s, is a crucial historic change for
Ireland. By all accounts, the recession of 1955-1957 and the publication of
census returns i n 1957 "so rapidly reversed" public attitudes on protection
and free trade that "those who had an interest i n maintaining industrial
protection ... found i t impossible to resist this movement of opinion" (Fitz­
gerald, 1968, p. 55). The recession of 1981-87 was much deeper and more
prolonged — the volume of emigration was higher and the unemployment
rate doubled to twenty per cent in three years (three times the 1957 level).
Yet this recession brought no significant anti-systemic outcry, much less
systemic change. The years between 1957 and 1992 have also seen the income
gap between the European core and Ireland increase. I t may now be
considered that, regardless of the levels of economic stagnation, unemploy­
ment, and regional inequality experienced by Ireland, there w i l l be no
massive outcry against the failures of free trade, free enterprise, and
European integration to match the outcry in the 1950s against nationalism
and protection. The mobilisation of effective movement for change awaits the
successful elaboration and dissemination of an alternative programme to full
incorporation in the capitalist world-system.
Irish policymakers, weakened by the failure to elaborate alternatives, are
constrained by the rules of the present system. Their ability to use a series of
economic policy instruments has been progressively stripped away — not just
since accession to the EEC in 1972, or the consolidation of the liberal export-
led industrialisation model i n the late 1950s, but since the Free State's
participation i n the Marshall Plan and the Organisation for European
Economic Development i n the late 1940s. Within the liberalised rules of the
new Europe, there is little real possibility of inducing indigenous economic
growth, especially i n the high-tech "leading sectors" that are at the centre of
global economic expansion. The south of Ireland has little choice but to
pursue two main sources of economic change — foreign industrial invest­
ments and European transfers — although the efficacy of each of these
sources has been obviously lacking over the past twenty years (the north is
even more restricted to dependence on transfers from Britain). An analysis of
future Irish economic change, therefore, must consider the effects of Europe's
global economic competition on these sources of growth.

Industrial Investment
For thirty-five years, the attraction of foreign capital has been the central
strategy for Irish prosperity. Despite common agreement that indigenous
sectors should be the main basis of future industrial growth, and despite an
upgrading of policies aimed at indigenous industry following the Telesis and
Culliton Reports (NESC, 1982 and Review Group, 1992), the proportion of
state industrial grants to local industry has hardly risen and indigenous
manufacturing continues to stagnate. During the limited upsurge of
industrial activity between 1988 and 1991, for example, indigenous industry
accounted for only 2,405 of the 12,359 net jobs created in industry, or just
under one-fifth (IDA, 1992). The profitability of Irish firms remains
remarkably low. According to unpublished I D A data, indigenous firms
averaged a profit rate of just 2.99 per cent of total sales during 1983-90. Most
disturbingly, profit rates of indigenous firms i n the leading sectors —
chemicals, metals and miscellaneous manufactures — averaged 0.20 per cent
during the same period. The possibility of achieving a vibrant domestic
presence i n the leading economic sectors remains highly questionable so long
as core regions monopolise key technologies and European peripheral states
are subject to EC restrictions on trade and industrial policies that might
promote indigenous growth (such as Korean-style selective protection,
exchange-rate controls, and sanctions for poor performance).
How will the competitive conflict among the core powers of the global
economy affect the expansion of foreign firms into Ireland? Global crisis and
competition generate two important impulses to the outward expansion of
core investments. First, capitalist crisis is associated w i t h falling rates of
profit, or at least with increasing difficulties i n realising profits on the
expanded level of commodity output which follows a long expansionary phase.
I f firms hope to survive the crisis, they must intensively seek new markets,
cheaper ways of producing, and cheaper materials. Cyclical expansions of
foreign investment thus accompany crises, and are not necessarily indicators
of global prosperity (Gordon, 1988). The other major source of outward expan­
sion is the effort by the core firms and states to dominate the new tech­
nologies that will lead accumulation during the next upswing. Success
requires the domination of the newest technologies, of markets, and of
sources of raw materials. To the extent that new labour-saving technologies
are generalised throughout core industrial sectors, they may decrease the
attractiveness of cheap peripheral labour for the core. Ireland's attractiveness
may therefore continue to stem from its position as a point of entry into
European markets, and this will be confined to US and Asian rather than
European investments.
The attraction of foreign investments is often considered to be the success
story of the Irish export-led regime. Regardless of the island's overall
economic performance, experts lavished praise on the IDA's ability to attract
inward investment. As early as 1957, Irish experts noted the importance of
the island's position as a gateway for US capital attempting to gain access to
the European market (Carter, 1957). Ironically, Ireland's attractiveness to US
capital was postponed until i t joined the EEC in 1972. A t that time, i t was
under conditions of crisis, rather than expansion, that US capital arrived i n
large quantities.
 The pattern of US investments in Ireland appears to be consistent with
Wallerstein's findings about the rise and decline of hegemony — the first
firms to seek new markets under crisis should be i n the consumer goods
sectors that drove the first stage of economic ascent, followed by capital goods
sectors and, finally, services. After a decline of investments i n basic products,
the IDA targeted US electronics firms in the late seventies, and then intro­
duced the international services programme during the stagnant years of the
mid-1980s (IDA, 1978). The earliest US investments — concentrated i n basic
manufactures such as metal articles, consumer durables, food, textiles, and
wood — passed their peak by the mid-1970s (see Table 1). Annual new
employment generated i n these sectors between 1975 and 1985, averaged
only about 10 per cent of their 1975 employment level (net new employment
was considerably less, even negative in some sectors). Investments in capital
goods, however, increased into the 1980s. New employment i n US
TransNational Corporations (TNCs) i n machinery and leading high-tech
sectors continued at about 25 per cent of their 1975 employment levels
between 1975 and 1985, peaking i n about 1980-83. Finally, a wave of US
investments i n international services only became significant i n the mid-
1980s, after investments in the other sectors had severely stagnated. The
service sector was the largest source of new employment between 1988 and
1991, when 3,657 new jobs were created i n services compared to 2,542 i n
computers and office machinery. During that time, employment i n services
rose by 2,381 and computers by only 420.
Although other explanations are possible, I would suggest that the severe
investment crisis of the mid-1980s marked the end of a phase of outward
expansion by US TNCs that began during the 1960s, toward the end of the
post-war period of US domination of the global economy. This phase reached
its peak i n Ireland under the conditions of economic (and hegemonic) crisis,
which induced US firms to seek entry into European markets as an adaptive
response. By the mid-1980s, this crisis-induced migration of capital was
practically over and the Irish state could no longer depend on i t as a source of
employment. This helps explain the state's openness to changes proposed by
the Telesis and Culliton reports, which suggested a stronger role for
indigenous firms and a reduction of the programme of capital grants. I t also
explains why influential elites and observers embraced 1992, Maastricht, and
the concept of "cohesion" as Ireland's only hope for the future.
In the event, however, the new competitive forces that were embodied in
the programme for European union led to a revival of US investments in 1988
that was, I would argue, logically distinct from the earlier investments. The
rise i n US investments after 1988 were an innovative response to the per
ceived opportunities of the unified European market, but were also concen-
 Metal Cons Leading
Year Food Text. Wood Chem. Arts Mach. Durable Misc. Sectors Serv. Total
1976 213 336 114 196 392 270 331 488 1,230 185 3,758
1977 328 516 109 355 432 288 331 416 1,589 407 4,774 r
1978 186 648 77 214 312 275 330 177 1,934 210 4,379 /—\
1979 513 1,211 126 702 486 318 255 385 1,802 93 5,705 r
1980 55 601 226 302 51 192 264 247 2,226 120 4,299 o
o
1981
1982
1983
77
72
114
455
174
229
187
170
275
246
81
62
209
102
163
163
322
284
446
173
239
460
416
345
1,962
1,957
2,012
116
107
201
4,339
3,574
3,959
H
1984 69 173 247 495 257 338 162 365 1,695 204 4,010 o
1985 50 428 114 47 222 319 322 214 1,168 406 3,279
1986 72 290 79 151 148 175 373 246 1,336 472 3,341 H
1987 52 203 169 57 220 102 287 237 1,148 532 2,996 S
SO
1988 57 608 175 105 236 258 368 330 1,515 750 4,389 o
1989 29 608 214 213 230 349 230 296 1,475 805 4,454
1990 136 560 87 72 147 199 258 194 2,174 915 4,742 %
1991 82 46 73 205 121 163 229 303 2,101 790 4,203 S
1988-
1991 1,304 1,822 549 595 734 969 1,085 1,123 7,265 3,260 17,788 I
<%) 1.7 10.2 3.0 3.3 4.1 5.4 6.1 6.3 40.8 18.3 100.0 w
1976 Employment Levels:
1,764 2,476 1,315 1,133 2,106 1,126 2,667 1,133 7,598 402 21,790
I
*1976-1981 figures are from surveys taken in J a n u a r y of the following year, 1982-1991 surveys were taken i n November of the given year. 3
Source: Unpublished I D A Employment Surveys, 1992.
Note: "food" includes drink and tobacco; "text." is textiles and clothing; "wood" is wooden manufactures, paper and printing, and non-
metallic minerals; "chem." is chemicals; "metal arts" is miscellaneous basic metal manufactures; "mach." is machinery except
machine tools, computers and office machinery; "cons, durable" is automobiles, automobile parts, electrical appliances, a n d
shipbuilding; "misc." is miscellaneous products not i n other categories; "leading sectors" includes pharmaceuticals, machine tools, ^
computers a n d office machinery, electrical engineering, telecommunications equipment, aerospace equipment, instrument 00
1 - 1
engineering, healthcare products, diagnostic medical apparatus, and T V and radio equipment; "serv." is services.
concentrated among firms i n the innovative "leading sectors" that hope to
lead the next expansion of the global economy. These leading sectors —
biotechnologies, robotics, microelectronics and information technologies — are
contained i n the following NACE product groups: pharmaceuticals, machine
tools, computers and office machinery, electronic engineering, telecommuni­
cations equipment, television and radio, aerospace equipment, instrument
engineering, healthcare products, and diagnostic medical apparatus. These
product groups also contain "non-leading" products, including some that led
the post-WWII expansion, yet they correspond roughly to what Schumpeter
had i n mind when he spoke of the leading sector and its closely-linked
products which are at the centre of the long expansion. While the "leading
sectors" and services made up only about one-third of new employment i n US
subsidiaries i n the 1970s, they were responsible for six of every ten new jobs
in the US-owned sector during 1988-91 (two-thirds i n 1990-91). The sectoral
dispersion of US investments has thus decreased significantly over time, and
Ireland is increasingly dependent on a few leading sectors as a source of new
foreign investments.
There are several crucial implications of the intensified Irish dependence
on US investments in the leading sectors. First, US subsidiaries i n Ireland
will not necessarily expand further i n response to the unified market. Chemi­
cal and electronics subsidiaries i n Ireland, for instance, are significantly
smaller on average than comparable establishments i n core EC countries.
O'Malley (1992, p. 240) interprets this to mean that these subsidiaries do not
need to be as large as EC firms i n order to be competitive i n the unified
market. While this is true, i t is because the stages of production that will
most likely expand as a result of EC liberalisation are located outside of
Ireland. US TNCs do not have to substantially increase their scale of oper­
ations i n Ireland i n order to increase the flow of their products into Europe. A
rough indicator of the degree to which firms can increase exports without
substantially increasing their scale of operations is sales per employee.
Unpublished I D A data reveal that US subsidiaries i n the leading sectors
produce about 165,000 dollars of commodities per employee, while other
TNCs produce about 95,000 dollars and Irish firms about 90,000 dollars per
employee. The wave of investments associated with 1992 already appears to
have been a short "bubble", which played itself out much more quickly than
earlier cycles. Employment i n US-owned subsidiaries began to recover i n
1988 and was already falling seriously i n 1991 and 1992 (the net employment
rise fell below 1,000 i n 1991).
Second, even i f TNC subsidiaries i n Ireland expand in order to increase
their supply of commodities to European markets, they are not likely to
increase their use of labour to the same extent, i f at all. US investments are
increasingly i n capital-intensive sectors which provide limited relief to the
island's employment crisis. Although the value of US investments reportedly
reached record levels during 1988-90, the employment generated by these
investments was no higher than levels achieved during the late 1970s and
early 1980s (see Table 1). Capital intensity in these sectors may be expected
to rise even further with the introduction of new production techniques
related to robotics and microprocessing.
Third, i t remains sadly true that the market-oriented investments of US
TNCs create the fewest linkages of any source of investments, and the levels
of linkage are falling as leading sectors such as computers and electronics
increase their share of US investments. As Table 2 shows, during 1983-1990
backward linkages i n US-owned subsidiaries i n the leading sectors (here
defined as pharmaceuticals, computers, and electrical engineering) averaged
about 15 per cent of sales, only half of the average linkages in other TNCs
(about 32 per cent) and a quarter of backward linkages i n indigenous firms
(about 55 per cent). Wages accounted for less than 10 per cent of sales i n the
US subsidiaries, compared to 18 per cent i n other TNCs and 17 per cent i n
Irish firms. US subsidiaries i n the leading sectors created practically no
forward linkages because they exported all of their product, while other TNCs
had average forward linkage rates of about 30 per cent and Irish firms 60 per
cent (of course, the TNC-based model assumes that the compensating advan­
tages of exports offset the losses from the absence of forward linkages).

Table 2: Linkages and Profit Rates in US-owned "Leading Sectors", Other TNCs, and
Irish Indigenous Manufacturers, 1983-90 (as % of Sales).

Backward Linkages Forward Linkages Profit Rate

US Other US Other US Other

Year Leading TNC Irish Leading TNC Irish Leading TNC Irish

1983 17.24 31.52 60.91 0.95 34.75 61.02 27.85 10.53 0.20
1984 15.86 31.55 56.36 1.36 30.96 59.15 34.73 12.35 2.07
1985 14.55 30.72 56.73 1.14 29.67 62.51 32.43 11.58 1.91
1986 15.13 30.84 56.05 1.33 29.27 59.63 32.32 12.65 2.53
1987 15.44 32.64 56.45 1.29 29.08 62.65 31.81 16.31 3.10
1988 14.00 34.10 54.16 1.58 28.73 62.18 32.58 15.79 4.57
1989 16.80 31.67 54.68 1.51 25.15 62.41 31.14 16.15 4.43
1990 17.74 33.05 54.62 4.37 30.75 64.42 36.82 14.72 3.89

Source: Unpublished I D A "components of sales" surveys, 1983-1990.

Notes: "Leading sectors" include pharmaceuticals, computers a n d office machinery, and
electrical engineering.
"Backward linkages" refer to I r i s h materials and service purchases as percentage of
total sales.
"Forward linkages" refer to non-exported sales as percentage of total sales.
"Profit rate" refers to profits as a percentage of sales.
Finally, because TNCs pay little tax and generally repatriate their profits
into the infamous "black hole", they create few fiscal linkages (given the cost
of attracting foreign investments, fiscal linkages may be negative). In short,
even i f the flow of US investments expands, the experience of more than
two decades demonstrates that these investments will do little to promote
generalised prosperity i n Ireland. They may moderately improve the coun­
try's export and GDP-growth performance, but will have far less effect on the
growth of GNP, the growth of other sectors, or the creation of employment.
Finally, i f there is a connection between economic and political integration,
on the one hand, and European competitiveness on the other, liberalisation
w i l l be primarily aimed at improving the opportunities of European core
capitals to dominate leading sectors i n the competitive struggle with Japan
and the US. For this reason, the expansion of US investment i n Europe's
periphery may be increasingly viewed as a threat by the European core. I f US
(or Japanese) capital continues to succeed at penetrating European core
markets, there w i l l be increasing pressure to modify European trade
regulations to close the door to firms from competing core regions. This could
take the form of a response to US protectionism, which already seems more
likely after new tariffs on steel and other products i n the first days of the
Clinton administration.
This leaves the question of whether European integration will induce more
indigenous growth or European investments i n the future. The most impor­
tant developments i n this regard will be new forms of economic integration,
aimed at heightening European-core competitiveness i n the leading sectors.
The reduction of non-tariff barriers to intra-European trade and economic
and monetary union are clearly intended to produce a leaner and meaner
European capitalism which is better able to compete globally. This will
involve the rationalisation of current European production and trade, as well
as the creation of new productive capacities i n leading core sectors. Less com­
petitive firms w i l l be shaken out, while remaining firms increase their
competitiveness. The opening up of state procurements, for example, is
intended to shake out "inefficient" producers who cannot survive without the
protection of guaranteed state purchases, while opening new markets for
more efficient capitals. These "most efficient" capitals, of course, are from the
core of Europe. Rationalisation w i l l be particularly important i n the
European struggle to compete in the leading sectors, and characteristics of
these sectors will affect the availability of core capital for peripheral invest­
ments. The future shape of European economic expansion is therefore related
to two questions: (1) which capitals are best positioned to take advantage of
economic liberalisation i n Europe, and (2) which sectors are most likely to
expand and to the benefit of which regions.
 The sectors that will be most affected by trade liberalisation are those that
presently have non-tariff barriers to trade. When these barriers are removed,
economies of scale and technological barriers to entry w i l l form the most
important bases for dominating effected sectors. Some authors (O'Donnell,
1989) see innovation and economies of scale as contradictory, on the basis
that innovation is encouraged by competition, while economies of scale
encourage oligopoly. This contradiction is only apparent i f one accepts the
neo-classical definition of competition, which requires many firms each with
limited market power. I f we accept a more realistic definition, however, there
is no necessary conflict between oligopoly and competition (Semmler 1982).
Competition, leading to innovation, is more likely to take place i n large firms
that can benefit from economies of speed and scale than i n a neo-classical
sector with infinite small firms. I n fact, competition among a few massive
core firms, each taking advantage of economies of scale while attempting to
monopolise innovative technologies, is a characteristic organisational form of
modern capitalism (Lazonick, 1991, Jenkins, 1989). I n the liberalised new
Europe, success i n competition will be primarily restricted to the strongest
existing firms, which are mainly core TNCs from Europe, the US and Japan.
Smith and Venables (1988), for example, find that EC market integration will
tend to benefit firms with initial economies of scale, which means that core-
based firms will expand at the expense of peripheral firms (or prospective
peripheral entrants). This may be good news for US TNCs i n Ireland, but
hardly for indigenous firms.
O'Malley (1992) ultimately indicates a similar result. Although he con­
cludes that Irish industry looks to be in a "relatively favourable position" to
face freer European trade, he actually demonstrates that indigenous Irish
industry has very little prospect of expanding. Very few indigenous firms (less
than 10 per cent) produce commodities that are easily transportable, have
substantial economies of scale, and are sensitive to further trade liberal­
isation. I n other words, hardly any indigenous firms are i n what I have
described as "leading" or "core" sectors. The few Irish firms that are i n these
sectors are actually small producers i n narrow "niche" markets that have
little prospect to expand. Thus, Irish firms "do not stand to gain much" from
economies of scale i n the enlarged EC market and "are likely to miss out on
one of the major expected benefits of market integration for the EC as a
whole" (1992, p. 234). I n the long run, economies of scale will create barriers
to entry i n the key sectors, which will make i t especially difficult for Irish
firms to gain entry. I t is hardly comforting to note that, since the largest
sections of indigenous industry were already destroyed by free trade i n the
1970s, the remaining firms are not i n strong danger from further liberal­
isation. The same findings would hold for the North, whose few indigenous
firms i n the leading sectors are only kept alive by massive British subven­
tions.
The only firms already located in Ireland that are poised to take advantage
of the new opportunities presented by liberalisation are the subsidiaries of
US-based TNCs in what I have defined here as the "leading sectors". Some of
the limitations of US investments as an engine of generalised economic
change have been discussed above. Even with the recent spurt of US invest­
ments i n preparation for the unified market, employment generated in US
subsidiaries has been insufficient to make much of an impact on Irish
unemployment. But how will Europe's participation i n global competition i n
the leading sectors affect the flow of European capital and technologies to
peripheral regions?
On the demand side, the periphery of the "new Europe" is many times
larger than the periphery of the Europe which Ireland joined in 1972. As each
peripheral state becomes more dependent on capital transfers from the core,
the level of competition for external investments will increase. On the supply
side, although new technologies allow for arm's length control of decentralised
structures of production, there are stronger forces for the centralisation of
production i n core areas. The capital-intensity of production involving the
new technologies will reduce the advantages of peripheral labour. A t the
same time, the new technologies will require highly-educated flexible labour,
which tends to agglomerate around core centres. There will be advantages to
the concentration of research and development facilities i n centres. And, most
importantly, the fact that non-labour costs will be decisive for competitive­
ness reduces the attractiveness of peripheral regions. Tulder and Junne
(1988), for example, find that the high cost of inventories has led TNCs to rely
on new flexible logistics that allow just-in-time production and delivery of
components. These logistics are enhanced i f subcontractors or in-house
suppliers are located nearby. This trend is already seen in the expansion of
third-world-type subcontracting in emigrant communities of core cities such
as Los Angeles. TNCs may spread their activities over a number of regions
worldwide, but within each region research and production will become more
spatially concentrated.
These logistics are particularly crucial to the question of diffusion of
European investments and technologies to the European periphery. With
regard to information and communication technologies (ICT), the rationale of
European economic union is to provide a market that is large enough to
improve the competitiveness of a few large producers. According to one EC
Commission report, modern digital communication systems are so complex
that a company must capture 8 per cent of the world market to cover its
development costs, while no single state within Europe represents even 7 per
cent of the world market. Even with a unified market, the minimum efficient
scale i n these sectors w i l l not allow diffusion among many competitors
(Bornschier, 1992, p. 15). In a logic that has worrying consequences for the
periphery, Gerstenberger (1991), emphasising the lack of European com­
panies big enough to compete i n global ICT markets, concludes that "mainly
the jobs i n Japan and East Asia would profit from a strategy of enforced ICT
diffusion i n Europe".
The result for peripheral regions like Ireland has already been felt. While
US-owned high-technology investments recovered at the end of the 1980s,
European-owned TNCs showed no signs of expanding to the periphery. As
Table 3 shows, annual levels of new employment created i n subsidiaries of
companies from the European core (here defined as Germany, France, The
Netherlands and Italy), which were already low i n the mid-1970s, never rose
above 2,000 since 1978. New employment i n Euro-core firms i n the leading
sectors never reached 300 after 1980. European investments i n Ireland have
fallen rapidly over the past fifteen years, but investments by European firms

Table 3: New Employment and Net Employment Change in Subsidiaries of

Corporations from the European Core, End-1976 to End-1991*

New Employment Net Employment Change

Year Leading Sectors Total Leading Sectors Total

1976 358 2,701 295 1,350

1977 288 2,014 122 -808
1978 497 2,201 482 1,229
1979 188 1,673 -29 152
1980 368 1,558 162 -263
1981 122 1,281 -108 -860
1982 250 1,151 67 -898
1983 129 917 -141 -1,792
1884 172 1,367 -141 -733
1985 260 1,502 235 -194
1986 146 1,234 63 -111
1987 113 950 19 -72
1988 284 1,255 201 412
1989 170 1,672 36 1,044
1990 257 1,782 -207 547
1991 236 1,340 185 237

Source: Same as Table 1.

Note: * "European Core" is Germany, France, The Netherlands and Italy. "Leading
sectors" include pharmaceuticals, machine tools, computers a n d office
machinery, electrical engineering, telecommunications equipment, aerospace
equipment, instrument engineering, healthcare products, diagnostic medical
apparatus, and T V and radio equipment.
in the leading sectors have fallen particularly rapidly, indicating a trend
toward concentration of leading European firms in the European core. The
figures with regard to net employment are even worse. Since 1980, Euro-core
firms i n the leading sectors have created net employment averaging only 19
jobs per year. During the same period, 2,683 net jobs were lost in Euro-core
investments i n all sectors. I f global competition leads European capitals
to concentrate more i n the European core — as experts and EC studies
cited above predict and recent Euro-core investment patterns indicate — and
especially i f European core capitals compete more avidly against non-
European capitals perhaps using barriers to non-European competitors, the
prospects for new foreign investments may become even less promising.
The decline of outward investments from the European core to the
periphery has important implications. Ireland is being more closely incor­
porated into a Europe that is industrially dominated by its own core. I n the
long run, especially i f US investments fail to materialise i n much greater
numbers than they have already, Ireland will require new European invest­
ments. Recent trends are discouraging.
Thus, Ireland has i n the "new Europe" the worst of possible worlds:
dependency without significant foreign investment. Its indigenous productive
capabilities were dominated i n the 1970s by the liberal regime that was
necessary to attract foreign capital, but too little foreign capital has been
forthcoming to maintain acceptable employment levels. In Bornschier's (1980)
terminology, Ireland is suffering the negative results of a historically bloated
stock of past foreign investment, while receiving little of the offsetting
benefits of a continuing flow of incoming foreign investment. I t is testimony to
the strength of the capitalist world system that i t has created an alternative
scenario — Cuban-style economic stagnation and political isolation — that is
even worse than the present European regime of uneven development.

Economic Transfers
Because there is little hope that industrial expansion will reduce regional
inequality, the prevailing core ideology to promote peripheral incorporation is
"cohesion". Cohesion proposes that regional uneven development can be over­
come through fiscal transfers from the European core to the periphery. While
positive arguments for Irish accession to the EEC in the 1970s emphasised
the attractiveness of European market access to foreign investors, the
prevailing argument for integration in the 1990s is that i t will bring economic
transfers to Ireland. Even this is often put i n a negative context: that failure
to agree to incorporation will provoke the loss of transfers. The current
argument for peripheral incorporation boils down to the fact that a semi-
peripheral global position — even in permanent dependence on welfare from
the centre of Europe — is better than the poverty and isolation of a peripheral
global position. One cannot help but be struck by the comparison with past
liberal arguments for partition, which claimed that dependence on welfare
from Britain was preferable to the poverty and isolation of an Irish Republic.
How does the recognition of global competition affect our understanding of
the levels and efficacy of transfers? Three principles are paramount here.
First, the levels of transfers will not be allowed to threaten European core
accumulation. Second, certain "core functions" will be kept under core control
and will not be transferred to the European peripheries. Third, there will be
constant core pressures to reformulate the programmes funded by transfers
in ways that will benefit European core accumulation.
Heretofore, core-periphery transfers under the Community Support Frame­
work (CSF) have been quite small. The entire community budget amounts
to about 1 per cent of Europe's combined GNP and, even after the planned
rise of CSF funds is completed i n 1993, they will comprise only a quarter of
the EC budget, or one-quarter of 1 per cent of Europe's combined GNP.
Structural and cohesion funds are not likely to rise much further. Germany
and Britain have stated their unwillingness to expand their cohesion contri­
butions i f the Maastricht Treaty is approved, suggesting that the core has
effectively h i t a ceiling i n its transfers to the periphery. To complicate
matters, the European periphery is becoming much larger, and no one can
predict the long-term effects of the fall of the Soviet bloc on the shape of
Europe. To the extent that Eastern Europe is incorporated i n the European
sphere of influence, the level of peripheral demands for transfers w i l l
increase, adding further pressure on structural funds. These pressures would
increase i f the European core, i n a drive for global hegemony, adds new
regions of the third world to its zone of influence. A l l of these factors combine
to make peripheral hopes regarding substantial rises in the levels of transfers
seem unrealistic.
I t is one thing to say that core-periphery transfers will remain small. A
more important issue is what effect transfers will have on the core-periphery
hierarchy. The question arises whether transfers, at any level, could sig­
nificantly affect core-periphery inequality. This goes to the heart of a dispute
that has exercised critical development theory for some decades: can
exchange-related reforms possibly challenge present patterns of uneven
development without more fundamental changes i n relations of production
and the ownership or control of "core" technologies i n leading sectors? This
question can be answered only by analysing the uses to which transfers will
be put.
According to Bradley, Fitz Gerald and Kearney (1992, p. 56) CSF expen­
ditures are distributed i n the following proportions. Forty-two per cent of
expenditures go to human resources, or education and training programmes.
These include specific training programmes for industry and marketing
services, second-level vocational training and apprenticeship schemes, and
various other training schemes. Twenty-seven per cent is spent on improve­
ments to physical infrastructure (mainly ports, roads, water and sewerage).
Eighteen per cent goes to farm income supports and agricultural investment
schemes. Fourteen per cent goes to other uses, including grants to industry
(about half) and marketing and R&D.
By far the largest component of CSF (nearly half) funds educational
programmes to enhance the skills of Irish labour. Partly because of a lack of
any other plausible strategies for growth, programmes to "improve human
capital" will probably become even more central to future Irish state policies
(see Review Group, 1992). Such programmes are also important because they
take thousands of workers out of the labour market at any given time,
reducing the official unemployment rate. I t is claimed that training and
educational programmes, by improving the potential productivity of Irish
labour, will change the structure of the economy, making i t more competitive
internationally.
A recent report by the ESRI, for instance, uses the European-designed
HERMES econometric programme to generate a model of the likely effects of
EC-funded "human capital" programmes (Bradley, Fitz Gerald and Kearney,
1992). As with any econometric model, the results are highly dependent on its
assumptions, which can be highly unrealistic. I n this case, the use of struc­
tural funds for educational purposes (the enhancement of "human capital") is
assumed to have a 7.5 per cent long-run rate of return, on the basis of one
study of "human capital" programmes i n the United States. The 7.5 per cent
rate of return is also convenient because i t provides a "reasonable margin of
risk over and above the expected medium-term real rate of interest" (p. 82).
Yet there is no realistic basis, apart from wishful thinking, for assuming this
rate of return. The experience of a core economy which participates fully in
the industrial processes of the global economy and, furthermore, has no
problem of emigration of educated labour, cannot be assumed i n a peripheral
region like Ireland.
Indeed, research indicates that Irish "human capital" programmes have
been highly ineffective, particularly with respect to the prospect of finding
jobs for trainees (without which there will be no return to expenditures).
Breen (1991) finds that participation in state programmes by school-leavers
does not affect their probability of being employed one year after they leave
the programme. There is no empirical or logical reason to expect any new
programmes to fare better and, indeed, the likelihood is that such "human
capital" programmes w i l l primarily serve the function of providing excess
skilled labour for the core economies of Europe, as previous Irish emigration
provided vital labour supplies for US and British industrialisation. Clearly,
programmes that increase the skills and education of a population are "good",
and I am not arguing against them, but only against assumptions that
simplify the relationship between skill-formation and economic growth. The
main structural blockage to Irish participation in high-tech production is i n
the control of technologies and markets by core states and firms, and not the
lack of skilled Irish labour.
The second largest component of CSF is designated by the EC as
"measures to offset the effects of peripherality". These funds are spent on
improvements to physical infrastructure, particularly transport and com­
munications. This concept of "peripherality" — which is completely defined by
spatial remoteness — is deliberately deceptive. Peripherality is a logical, not
just a spatial, characteristic, which refers to the concentration in certain
regions of particular kinds of production, such as the export-platform, which
ultimately benefit accumulation i n core regions. "Core" economic activities
employ more advanced technologies, are more capital intensive, pay higher
wages, expand more rapidly, and ultimately receive higher returns to labour
expended i n production. Cores have always attempted to improve the
infrastructure of peripheries — bringing them spatially "closer" to the
productive centres — by investing i n roads, ports, railroads, and so on. Rather
than decreasing peripherality, however, these expenditures enable the core to
operate more profitably i n the periphery. Infrastructural expenditures
peripheralise regions i n the world-system, rather than decreasing their
peripherality. Likewise, infrastructural improvements i n Ireland, while
bringing obvious (though mixed) benefits to the local populations, are most
notable for their impact on facilitating the operations of foreign producers on
the island.
One transfer programme, on the surface, might appear to have more
promise of affecting the core-periphery hierarchy. A small proportion of
transfers finances programmes for research and technical development i n the
peripheries. I f a major cause of uneven development is the core monopoly of
profitable technologies, i t would seem that programmes to increase the
technological capabilities of the periphery would reduce long-term regional
inequality. Instead, EC technology programmes are designed to concretise
uneven regional access to technology. First, technological programmes for the
peripheries are puny relative to those i n the core. Second, they are defined i n
such a way as to improve the technological infrastructures necessary to
encourage new external investments, rather than actually enhancing the
abilities of peripheral regions to compete i n core industries. Third, the
European core insists on retaining the largest and most important techno-
logical programmes, while allowing the periphery to participate only i n less
crucial technologies. A n d fourth, the most important technologies which
enable capitalist firms to achieve competitive advantage are privately owned
or controlled, not part of public technology programmes. A t the very least, the
technologies being advanced by EC programmes will require complementary
private capabilities that will remain beyond peripheral firms.
There is a hierarchy of access to technologies, with the core regions and
firms having complete access to the most profitable technologies while
peripheries participate i n smaller and less crucial programmes. A recent
evaluation of the EC Framework Programme, while attempting to paint the
best possible picture on the role of core-periphery transfers of technology,
admits that "some projects ... can only be created once for the whole
Community" and i n these cases "the Less Favoured Regions may not be the
best location for such installations." Peripheral regions, according to the
report, are only satisfactory for inclusion i n "small-scale" technology
programmes where a large number of research facilities can be established
"and thus be located i n a number of regions, including Less Favoured
Regions." The requirements of European global competitiveness clearly
predominates i n the selection process for EC technological projects. Thus,
"there are, of course, other limits to the allocation of substantial resources to
Less Favoured Regions", specifically "the need for resources to be allocated to
the most dynamic partners who are pushing forward the industrial competi­
tiveness of Europe" (CEC, 1992, pp. 8-9). I t is clear that the requirements of
global competition will reinforce, rather than reduce, uneven development
among regions of Europe. Peripheral regions like Ireland stand to become
further peripheralised i n technological and economic terms.

IV CONCLUSIONS
Models that assume convergence between European core and peripheral
zones ignore the aspirations of core firms and states to attain or maintain
economic power and the importance of regional inequalities to the acquisition
and retention of power. They especially fail to consider the contradictions
between social goals, such as core-periphery equality and enhanced social
welfare, and economic goals such as the maximisation of the European core's
ability to compete i n the global system.
I have painted a bleak picture for peripheral regions in Europe. Yet, i f the
deep structure of global capitalism has not changed, peripheral and semi-
peripheral regions i n Europe and elsewhere must recognise the implications
of their participation i n a hierarchical structure that provides limited
possibilities for upward mobility. Far from providing an impetus to regional
equalisation, European integration may be expected to reinforce regional
inequalities.
Supposed within-system alternatives like niche-development or "endow­
ment based" industrialisation cannot provide solutions, because they
reinforce the-existing productive hierarchy where the core dominates the
most profitable sectors while the periphery is relegated to the "leftovers". This
is the basis of uneven development today. Far from being new, such
"alternatives" were the basis of Irish agrarian-based development since the
seventeenth century. They later became the basis of theories of comparative
advantage, which are among the most important ideological justifications of
the core-periphery hierarchy.
Some people hope that European integration will gain a momentum that
will turn monetary union into fiscal union. This, they argue, would provide
peripheral European citizens with the full range of social welfare benefits
enjoyed i n the core and, thereby, reduce the level of regional income
inequality. While this momentum may exist, one must consider whether the
extension of equal social benefits to the periphery would be such an economic
burden on core resources as to effectively ensure their defeat i n global
economic competition. Furthermore, core-periphery inequality is not pri­
marily a continuous stratification of regional income levels, but a productive
hierarchy. While the extension of social welfare to the periphery is a good
thing i f i t reduces poverty and deprivation, i t will not touch the essential
hierarchy of regional uneven development. This can only be effected by
systemic change which allows peripheral regions to fully participate in all
aspects of global production and innovation.
Debate about alternatives must have two components: a strategic debate
and a debate about substance. The strategic debate asks whether the
interstate structures of Europe can be utilised as an arena of struggle for
peripheral interests. Europe, unlike the US, has an immediacy for its
peripheries because many of them participate as member states and
European "citizens". The concept of a "community project", however sham i t
may ultimately be, gives peripheral citizens and states a moral authority to
pursue issues of social justice. But these issues go beyond the European
periphery because the European project also affects peripheral and semi-
peripheral regions throughout the world. I t is, therefore, not enough for semi-
peripheral regions to strive for core status or upward mobility within Europe,
because that would simply turn them into part of the problem — they would
participate i n the subordination of other non-European regions that remain
peripheral.
Beyond the strategic question, however, is the question of structural
alternatives to the present system. While this is not the place to attempt to
articulate such alternatives, they will surely require the removal of the bases
of structural inequality. I have argued that firms and states in the European
core and other cores maintain their position by controlling the technologies
and related markets which are the bases of rapid accumulation. They main­
tain these properties because the rules of capitalism confer ownership, and
because the core inter-state system has power to enforce those rules. I n short,
global capitalism is a class-like system, where "class" is based on the
monopoly ownership or non-ownership of specific kinds of property: the most
profitable production processes and technologies. Changing the hierarchy
requires changing the rules of property ownership on which the hierarchy is
based.
Worthwhile alternatives w i l l require new forms of economic decision
making, based on the needs of people and the usefulness of products and
services and not their profitability; the destruction of irrational economic
calculuses that devalue ecological processes such as the reproduction of the
earth's resources; the revaluation of devalued work i n the home, voluntary
work, and "informal" work. Some of these issues require coalition with other
peripheral regions, on the basis of a similarity of their location i n the global
hierarchies of uneven development. Others require solidarity across world-
system hierarchies, because they affect subordinate classes and groups of
people i n all zones of the system.
I f peripheral countries can play a progressive role by being in Europe, and
the efficacy of European membership is still an open question, i t will be
through an adversarial relationship which continually raises issues of uneven
development and irrationality, including the need for all people to participate
in useful labour. Membership would be used to undermine the hierarchical
structures that give rise to these things and to encourage more equal and
rational structures. This, of course, is the opposite of Irish government
strategies i n Europe to date. Semi-peripheral regions like Ireland, which are
in the core but not of the core, have a strategic intermediate position i n the
world system which can make a bridge between peripheral nations and
change-oriented movements i n the core. The first requirement to be effective
in this regard is to t u r n the different peripheral regions' similarities of
economic situation into real political solidarity, on the island of Ireland, i n
the European peripheries, and throughout the peripheral regions of the globe.
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