Building Export Capabilities by promoting Inter-Firm Linkages: Ireland’s Industrial Policy Revisited.

For the period 1972-2003 in Ireland we document a persistent decline in traditional import competing and an expansion in exporting plants, within each sector. Yet, the focus of this paper is to explore the vertical linkages between exporting plants and the increasing presence of de novo non-exporting plants within industries during this period. Based the capabilities approach of Sutton (2007) and the creative destruction model of Aghion and Howitt (1992) we find evidence that forward dominated backward vertical linkages, in that innovation in de novo non-exporting plants was a key determinant of export entry, growth and survival within all sectors, while evidence of backward linkages are harder to find.