The origins of the IWA lie in the industrial and political crisis that Wales faced in the 1980s, following the rejection of democratic devolution in the 1979 referendum and the miners' strike of 1984-85.
1985 saw the beginnings of some intellectual and political revival in Wales, with the popularity of two series on the history of Wales - Wales! Wales? presented by Dai Smith for BBC Wales, and The Dragon has Two Tongues made by HTV Wales for Channel 4, and presented by Wynford Vaughan Thomas, and Gwyn Alf Williams. Williams also published his influential book, When was Wales? In the same year a seminal book of essays appeared - Wales, the national question again - edited by John Osmond.
In addition, in a speech to Cardiff Business Club, five days after the end of the miners' strike, the then Secretary of State for Wales, Nicholas Edwards, (now Lord Crickhowell) pointed to a number of underlying weaknesses in Wales's economic situation, emphasizing a suspicion of change, a gulf between education and business, a lack of entrepreneurship, an intellectual gulf between financial institutions and the industrial world and a physical gulf between the city of London and the manufacturing areas of Britain. He urged the professional community and the private sector to play a more active part in bringing about change.
These strands came together in February 1986 in a paper produced by Geraint Talfan Davies, a journalist and broadcaster, and Keith James, then the senior partner in the Cardiff law firm, Phillips and Buck (later Eversheds). This set out the case for "a body that can provide a regular intellectual challenge to current practice in all those spheres of Welsh life and administration that impact on our industrial and economic performance."
Some seed money was provided by the Welsh Development Agency, then headed by David Waterstone, and the Institute was incorporated on 22 July 1987. Its first Chairman, was Henry Kroch, President of AB Electronics, one of the largest private sector employers in the south Wales Valleys, with, as his Deputy Chairman, Sir Donald Walters, a prominent lawyer and businessman. It produced a steady stream of reports, despite operating on an entirely voluntary basis with no full-time staff. In 1992 Henry Kroch was succeeded as Chairman by Geraint Talfan Davies.
In the mid 1990s a combination of funding from the WDA, the Hyder group and Sir Julian Hodge facilitated the appointment in 1996 of the IWA's first full-time Director, John Osmond, a journalist, editor and television producer, and by then already one of Wales's leading public intellectuals.
Since its establishment in 1987, it has become a prominent voice in the Welsh policy community, with a track record of effective influence as evidenced by its work in: