Irish Economy
Irish Economy: Bruton publishes new FDI policy; Avoids inconvenient facts
By Michael Hennigan, Finfacts founder and editor
Jul 30, 2014 - 8:30 AM

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Irish Economy: Richard Bruton, enterprise minister, has published a new FDI (foreign direct investment) policy statement [pdf] to highlight factors in coming years besides the corporate tax regime but as usual, inconvenient facts are ignored.

Finfacts: IDA Ireland: Jobs in Irish FDI exporting sector remain below 2000 level

The document says:

Ireland continues to punch above its weight, attracting more investment per capita than most other developed countries. In 2013 Ireland was ranked 10th in terms of FDI project inflows globally, ahead of countries such as Germany, Spain and the Netherlands."

The ranking on the basis of cash inflows can be flawed because rising cash balances related to tax strategies are counted as FDI inflows, nevertheless the chosen data is from a January 2014 report [pdf: page 6] published by UNCTAD, the United Nations trade and development agency. It was however revised in April 2014 [pdf; page 5] which showed Ireland with a 16th ranking, behind Germany, Spain and the Netherlands.

In EY's 2014 Europe attractiveness survey, in terms of projects, it said the two top spots on the FDI rankings table were being contested by two heavyweights of the European economy - - the UK (+15% compared with 2012) and Germany (+12%). These two powerhouses reached record highs in terms of the number of FDI projects and together accounted for 38% of all FDI projects in Europe last year, compared with 33% in 2011. Irish projects fell 10% in 2013 according to the survey.

In a related poll of 808 senior executives, Germany, UK, France and the Netherlands, were the preferred locations for 40%, 22%, 11% and 3% of the sample, while in Western Europe, Denmark, Spain, Ireland, Sweden, Switzerland, Belgium, were the choices of 2% each from the sample. Italy was at 1%.

The AT Kearney 2014 FDI Confidence Index has 11 European countries from 25 in the rankings and Ireland is not among them.

In June UNCTAD reported on a poll of 164 global companies on prospective host economies for FDI in 2014-2016. China has the top rank and Singapore the 17th position - - Ireland is not among them.

Our position is that in respect of developing credible strategies for economies or companies, standard SWOT (strengths, weaknesses, opportunities, threats) analyses should be used.

It is as rare as a black swan at policy level in Ireland.

In Ireland's case, presenting myths and fairy-tales as facts should be seen as against the national interest.

The document says on innovation that Science Foundation Ireland estimates that in 2013, 72% of jobs announced by IDA Ireland had a prior collaboration with a Science Foundation Ireland funded research group. State investment in research and technology centres can play even stronger roles within sectoral ecosystems."

The Department of Jobs, Enterprise and Innovation has told us in the past that when IDA Ireland says that there is an "R&D component" in a project, there are no specific criteria for it.

IDA Ireland has also published data showing that less than 30% of FDI exporting firms have R&D budgets from €100,000 annually.

A European Commission report has ranked Dublin at 16th in its 'Atlas of European hotspots' and when a tech cluster mainly comprises sales and administration staff of foreign firms, it's a little hyperbolic to declare Dublin the capital of the "digital world."

The net FDI job creation target is 7,000 annually, in the next five years.

The big FDI services firms have up to 75% of their staff from overseas - Google Ireland's ratio is 70%.

There are 14 strategic actions outlined and 3 objectives:

  • Talent: Ireland as an internationally competitive location for talent attraction and growth;
  • Place-making: to create competitive, dynamic and globally connected city regions as attractors of investment, and position Dublin as the leading European hotbed for start-ups, fast growing firms and talent;
  • Connected world leading research: Ireland recognised as one of the most enterprise aligned science, technology & innovation systems in the world, renowned for excellence in research, connecting and collaborating with enterprise, delivering sustainable economic impact, and attracting investment and exceptional talent.

Then wonder why the Irish Patents Office annual report for 2013 has not yet been published?

We already know that Irish resident applications to the European Patent Office, and Patent Cooperation Treaty (PCT) applications in 2013 were low and not consistent with the third objective.

Finfacts:

Irish corporate tax policy like property bubble driven by short-term interests

Irish Economy: Bruton and politics of jobs numbers; CSO says 47,000 jobs added in 18 months; Dept of Enterprise & Jobs claims CSO data says 70,000????

Submission to the Department of Finance consultation [pdf] - -  on tax policy and outline on the need for a credible enterprise strategy.


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