By the late 1950s it was clear that protectionism had long outlived its usefulness and that few of the so-called infant industries had matured and become sufficiently competitive to generate much in the way of exports.
The changes forced on Irish policy-makers by economic collapse in the late 1950s were fundamental and far-reaching. The Control of Manufactures Act, which prohibited foreign ownership in Ireland, was abolished and replaced by a policy that systematically cultivated FDI through a zero corporate profits tax on manufactured exports (replaced over the course of the 1980s by a flat rate of 10 per cent on all manufacturing), attractive investment grants and a dismantling of most tariff barriers.
Much of the history of the Irish economy during the following three decades can be explained in terms of the quite phenomenal growth of export-oriented FDI in manufacturing, from a zero base in the late 1950s to a situation where almost 65 per cent of gross output and over 45 per cent of employment in manufacturing is in foreign-owned export-oriented firms. Over the last decade the decline in indigenous manufacturing employment has been halted and strong growth in indigenous exports achieved.
In the long run Irish policies to promote FDI have benefited its economy.