Government Financial Assistance and Manufacturing Investment in Northern Ireland

This paper analyses the influence of government grants on the investment decision making process in the Northern Ireland manufacturing sector. The paper is based on detailed interviews with Northern Ireland manufacturing firms and focuses on two time periods: 1985–88 and 1989–92. Findings are presented on the impact of grant schemes on the level, timing and quality of investment expenditure. During the period 1985–88 two types of grant schemes were available for capital investment in Northern Ireland: Standard Capital Grants (SCGs) which were automatic grants and Selective Financial Assistance (SFA). The Standard Capital Grant scheme was eliminated in 1988. The findings indicate that SCGs had more effect on companies' investment programmes than SFA due to the certainty of payment. Since 1988, SFA has become more important to companies and appears to be offsetting, to a certain extent, the impact of the UK recession by assisting companies to maintain investment levels. The findings also indicate that grants help to offset some of the problems that companies experience due to Northern Ireland's peripheral location