Since the 1960s, Irish enterprise policy has focussed heavily on attracting Export Platform Foreign Direct Investment, with demonstrable benefits in creating employment and export performance. Identify and analyse the challenges to the future success of this policy focus and discuss potential adjustments to enterprise policy that should be considered by policy makers.
Foreign-owned firms account for almost 50 percent of Irish manufacturing employment.This compares to an average figure of 19 percent for the eleven other EU member statesfor which OECD (2001) presents data. A higher-than-average share of Ireland’s services sector is also under foreign ownership, illustrating the crucial role that foreign transnationalcorporations (TNCs) play in the Irish economy. This is further confirmed by the value of thestock of foreign direct investment (FDI). Per head of population, the Irish inward FDI stockfor 2000 is twice the EU average.The foreign firms to which Ireland plays host are highly export oriented and account forthe vast bulk of Irish exports. Foreign manufacturing firms export more than 90 percent ofgross output, and US firms – the most export oriented – export more than 95 percent. Withrespect to services, Ireland is reported to be the third largest exporter per capita in theworld, after Hong Kong and Singapore, and is the world’s largest exporter of software.Foreign-owned services enterprises account for 89 percent of the country’s service-sectorexports, an even greater proportion than the 86 percent of manufactured exports accounted for by their counterparts in that sector.The present paper charts the story of Ireland’s success as a host location and export platform for foreign TNCs. Section 2 begins by outlining the history of Ireland’s FDI-oriented development strategy, which came to fruition only in the 1990s – the so-called‘Celtic Tiger era’. That Ireland had been successful in attracting FDI since the 1960s illustrates that this alone cannot account for the dramatic growth performance of the last15 years. A multitude of other factors, some exogenous and some driven by changes in Irishpolicy, were also crucial for Ireland’s impressive economic growth. Section 3 considers therange of factors that have been instrumental in making Ireland such an attractive locationfor FDI