Foreign Direct Investment
Ireland and foreign direct investment
Ratifying the Lisbon Treaty is a vote for employment, growth,
investment and economic security argues Paul Duffy
It is no coincidence that Ireland’s
phenomenal growth since the early
1990s happened since the establishment
of the single market itself in 1993. We
have grown and developed as a nation
not in spite of but because of the
European Union.
Ireland’s place in the world and our
wealth as a nation are inextricably linked
to our place in Europe. That is not a
political claim. It is an economic fact that
matters and counts in every community
in the country. Many US companies in
Ireland will tell you that this country’s
membership of the EU and the stability
that this brings has been one of the factors
influencing their decision to locate here.
Ease of trade between EU member states
has also benefited indigenous companies,
who have access to a market of 500 million
consumers versus 4 million in Ireland. No
longer reliant on the UK as a primary
exporting market, Irish companies are
growing their investment and employment
as a result of the ease of trade within
Europe which our membership of the EU
has provided. A strong indigenous base
compliments the base of FDI companies
located in Ireland.
Ratifying the Lisbon Treaty is a vote
for investment, employment, growth and
economic security.
Investment
The contribution of US foreign direct
investment to Ireland is immense.
• Approximately 100,000 people directly
employed in over 570 US firms in
Ireland with indirect employment in
sub-supply, community industry and
services estimated at over 200,000.
• Total US direct invest in Ireland now
outstrips total US investment in Brazil,
Russia, India and China combined.
• In 2008, US firms paid over €2.5bn to
the Irish Exchequer in Corporate Tax.
This equated to approximately 40 per
cent of the total corporate tax take in
2008.
• US firms contributed a further €13bn to
the Irish economy in terms of payroll,
goods and services employed in their
operations
• In 2007, US firms exported an estimated
€83bn of products and services from
Ireland into world markets.
Ireland’s position as a gateway to Europe
is a factor in attracting foreign investment
Public Affairs Ireland
“US companies in particular are
attracted to establish European
headquarters here because of our
skilled labour force, our excellent
business environment and the
ready access to European markets
from Ireland.”
to Ireland and any diminution in our status
or influence within the Union could impact
our ability to attract this investment.
Employment
Since we joined the EU there has been
over 70 per cent increase in the number of
people working in Ireland. Much of this
growth has been driven by foreign direct
investment with IDA supported companies
giving direct employment to more than
152,000 people and indirectly supporting
more than 300,000 additional jobs.
US companies in particular are attracted
to establish European headquarters here
because of our skilled labour force, our
excellent business environment and the
ready access to European markets from
Ireland.
The Lisbon Treaty proposes further
enhancements to the Single Market,
particularly in the services sector. If ratified,
the treaty will open up new opportunities
for business in Ireland with the potential
for significant job growth. More jobs are
also likely to be created in US companies
here if Ireland is at the heart of Europe and
influencing decisions at EU level.
Growth
The EU provided an indispensable
injection of funding during the late 1980s,
when Ireland´s economy was on its knees.
At a time when US multinationals wanted
to expand into the European Market,
Structural and Cohesion funds helped
develop Ireland’s physical and human
capital base, increasing its attractiveness
as a location for US companies.
Continued support from the EU
will enable Ireland to invest in R&D,
innovation, people as well as physical
infrastructure creating a climate for job
retention and economic growth. Article
179 of the Treaty for example, says that
a European ‘research area’ will be a
priority for the EU. This is good news
for companies and third level institutions
where research and innovation create new
jobs. In addition to this Article 194 of the
Treaty makes energy a top priority of the
EU. This includes the development of
renewable energies such as wind and wave
energy. Ireland has enormous potential in
this area however this needs investment,
access to trans-national grids and large
markets to be fully exploited. The EU
offers all three.
Economic security
EU support will help see us through our
current economic difficulties. In 2008
the EU launched a European Economic
Recovery Plan valued at some €200
billion. The plan, which is funded directly
by Member States, includes €5 billion
of additional funding from the EU’s own
Budget. It will provide vital funding to
support a return to economic growth and
job creation across the European Union.
In the past support provided by the
European Union established the necessary
conditions for the investment which led to
Ireland’s economic growth in the 1990s.
More importantly, being a member of the
Union has helped to protect Ireland from
the full effects of the global economic
recession.
The American Chamber is advocating
a “Yes” Vote in the Lisbon Treaty because
we believe it is in Ireland’s economic and
social interests to do so. The importance
of the decision we are about to make is
underlined by the reality of the global
recession. Hard times are here and new
investment will be more difficult to get for
some time to come.
In a context where the downward
pressures are real, we need to accentuate
the positive opportunities that present
themselves. At a time when our focus
must be on the retention and creation of
jobs, Ireland as a full member of the Union
will be better positioned to create the
conditions for innovation, entrepreneurship
and employment creation.
Dr Paul Duffy is President of the
American Chamber of Commerce in
Ireland
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