In the following paper, we’ll briefly review the economic landscape of Ireland at the beginning of the global financial crisis and the efforts Ireland continues to make to rebound from the crisis (and how they’re succeeding) by investing in foreign investment, start-up entrepreneurs, and emerging technology. We’ll continue our discussion by looking at the industries with the strongest presence and growth in Ireland. And we’ll conclude by discussing some of the compelling reasons that businesses have chosen to establish their EU-bases in Ireland.
Ireland Then and Now…a Brief Retrospective
If the global financial crisis, which came into sharp relief in 2007, had an apogee, it could well have been Ireland. The global fiscal crisis, which shook and continues to shake the EU (both lender and debt economies), exacerbated the nascent financial crisis in Ireland, which came to a head in 2008. Recapitalisation, coupled with initiatives intended to cope with a hemorrhaging banking sector, resulted in contingent and actual fiscal liabilities that led to the Irish State pursuing external assistance in 2010. Subsequent to this move, the country has been working to adhere to its regimen of financial and structural reforms (austerity measures) and continues its bold pursuit of foreign investment.
FDI, or foreign direct investment, is a substantial contributor to Ireland’s economy, and consequently, to Ireland’s economic recovery. In fact, according to the Deloitte report Investing in Ireland Your move in the right direction, large companies (e.g., multinationals) contribute the lion’s share of corporate tax revenue paid in Ireland (approximately 75%). And while Ireland’s financial crisis continues, the country has made great strides through its rigorous campaign to attract FDI; even as the crisis escalated, in 2009 Ireland procured 2.4% of GDP from corporate tax revenue, whereas two of its strongest lender compatriots only garnered 1.3% and 1.4% (Germany and France, respectively).
The Emerald Touch: How Ireland is Repositioning Itself through FDI
According to the Deloitte report, nearly 1,000 multinational corporations have established their European base in Ireland. Pharmaceutical manufacturers, medical device makers, information communications technology (ICT) providers, and financial services, are leaders of FDI in Ireland. The incentives for these companies are numerous and extend far beyond the highly attractive 12.5% corporate tax rate. Of foreign companies in Ireland, U.S. companies comprise a significant portion: 600 U.S. companies currently operate in Ireland and employ 100,000 workers, according to a report by ‘60 Minutes’. Moreover, the U.S. paid 33% (or one-third) of Ireland’s total corporate tax, according to the Deloitte report, over the past 10 years.
A Package Deal
Ireland’s Investment and Development Agency (IDA Ireland) can offer funding and grants (e.g., interest subsidies, capital grants, rent reduction grants, and loan guarantees) and a range of support services to companies setting up a business in Ireland, such as introducing potential investors to local industry, government, service providers and research institutions and offering advice on property solutions for international investors. ICT, pharmaceutical, medical technology, consumer and universally high-value service sectors (i.e., software developers, etc.) are strongly favored by the IDA. IDA-supported entities have created 135,000 jobs in Ireland. Additionally, foreign and local investor joint-ventures are sought and encouraged by the government.
Where the Action Is
At the February 2012 New York Investment in Ireland Summit, former U.S. president Bill Clinton was quoted as saying, have to be nuts not to take advantage of the unique investment opportunity presented by one of the most business-friendly countries in the world, with the youngest, best-educated workforce in Europe.
It would appear he was preaching to the choir. Heavyweights such as: Eaton Corp, Ensco International, Rowan Cos., Sara Lee Corp.’s D.E. Master Blenders, Oracle, Microsoft, Google, GE, Pfizer, and Merck, have set up shops in Ireland. Nine of the top ten pharmaceutical companies in the world have set up operations in Ireland. Seventeen of the top 25 global medical technology companies have established operations there, engaging in everything from supply chain management, to high-value manufacturing, to R&D.
Life sciences companies operating in Ireland benefit from a convergence of several world-class research institutes and programs, an abundance of young, highly-educated workers (with the requisite science and engineering backgrounds), R&D grants and tax incentives, and relocation packages that draw top-tier talent to the industry. Technology companies are drawn by similar inducements, including a substantial pool of highly-skilled, young workers with technology and software development expertise, as well as Ireland’s vigorous investment in emerging tech