The case of the software industry in Ireland is particularly interesting as it is a unique example of a government led innovation in attracting and fostering the development of a knowledge based industry. Using a previous work of Eileen Drew (1994) as a starting point it tracks the growth of the industry in the 1990’s and into the 21st century during a boom period in the Irish economy known as the Celtic Tiger. Growth is measured by macro-economic factors such as employment and exports. In this 15 year period Ireland increased employment in the software industry from 8,000 to over 30,000 people and its software exports from 1 to 15 billion euro. The government’s influence is examined through the National Development Plans, The Strategy for Science Technology and Innovation 2006-2013 and by investigating the roles of the state sponsored bodies. Combining various secondary sources it gives a breakdown of the modern software industry in the areas of export, specialization, firm size and type. Ireland’s competitiveness and productivity environment is inspected. The thesis highlights industry problems including: 1. Lack of software graduates, 2. Over dependence upon foreign investment, 3. Inability of indigenous software companies to grow, 4. Loss of competitive advantage. While influencing factors such as geography and demographics, which contributed to the software industry’s success story are impossible to replicate, there are lessons to be learned of how a government led, innovative, consistent and educational based policies combined, with a business friendly environment, can be used to transform a struggling economy into a modern knowledge based one. / cjm1020s@gmail.com