Ireland Challenged To Build On Success

Anthony O'Reilly, the former chief executive of Heinz, is not only one of Ireland's richest citizens, but also one of its best raconteurs. Last week, he regaled me with the story of his butler, Martin, who, after pouring him a cup of tea one recent afternoon, asked his famous boss for his view on "Bulgarian property." Turns out Martin had invested in not one, but three condominium apartments with a view of the Black Sea, after taking a holiday at a new Bulgarian resort.

And Martin wasn't alone. According to data compiled by the Dublin real estate firm of Hamilton Osborne King, Irish investors poured somewhere between $6.5 billion and $8 billion into foreign property last year, with $10 billion more likely this year. One can only imagine what kind of economic growth could have been generated if even half that money had been invested in innovative and productive Irish firms.

Starting, financing and growing such firms is now the top priority of the Irish government's formidable economic development apparatus. While officials will continue to use modest subsidies and tax breaks to continue to attract foreign investment from giant multinationals, particularly in the area of research and development, officials realize that part of the European disease has been an over-reliance on giant multinationals in generating jobs and economic growth. Ireland's next big challenge is to build an entrepreneurial economy, more like that of Israel or Finland, that is capable of starting its own globally competitive firms.

Even a decade ago, that would have been unthinkable. Not only did Ireland lack the necessary capital, technology and management talent, it suffered even more profoundly from a national lack of confidence that manifested itself in a disinclination toward risk-taking and a resentment of anyone who achieved economic success.

But now, thanks to the decade-long economic boom, that curse has been lifted. The best and brightest of Irish youth no longer "strike for something permanent and pensionable," as O'Reilly's father used to put it.

"The biggest change I see is the sense of confidence," reports John Hegarty, who, like many of his generation, sought his fortune in the United States -- at Bell Labs and the University of Wisconsin -- before returning home to become provost of Trinity College in Dublin. "The world is now there for them, they can do whatever they want, and they don't have to leave Ireland to do it."

Steven Pearlstein can be reached atpearlsteins@washpost.com.