Since the establishment of the Irish Free State, successive governments encouraged industrialization by granting tariff protection and promoting diversification. Following the launching of the First Program for Economic Expansion by the government in 1958, considerable progress was made in developing this sector of the economy, in which foreign industrialists played a significant role. The Industrial Development Authority (IDA) administers a scheme of incentives to attract foreign investment. In addition, several government agencies offer facilities for consulting on research and development, marketing, exporting, and other management matters.
Official policy favors private enterprises. Where private capital and interest were lacking, the state created firms to operate essential services and to stimulate further industrial development, notably in the fields of sugar, peat, electricity, steel, fertilizers, industrial alcohol, and transportation. Although efforts have been made to encourage decentralization, about half of all industrial establishments and personnel are concentrated in Dublin and Cork.
Industry grew by an average annual rate of more than 5% from 1968 to 1981, and peaked at 12% in 1984 before subsiding to an annual rate of about 4%. The greatest growth was in high technology industries, like electronics and pharmaceuticals, where labor productivity also was growing substantially, thus limiting increases in the number of jobs. The most important products of manufacturing, by gross output, are food, metal, and engineering goods, chemicals and chemical products, beverages and tobacco, nonmetallic minerals, and paper and printing. The making of glass and crystal are also important industries. Industrial production continued to grow into the late 1990s, the "Celtic Tiger" years, posting a 15.8% growth in 1998.
Industry employed 28% of the labor force in 2000, and accounted for 36% of GDP in 2001. The value of industry output in 2000 was 12.3% higher than in 1999. Computer and pharmaceutical enterprises, largely owned by foreign companies, were responsible for high manufacturing output in 2000. Although there is no formal governmental privatization plan, the government planned to privatize the state-owned natural gas distributor (Bord Gas), the state-owned airline (Aer Lingus), and the state-owned electricity distributor (ESB) as of 2002.