California's Santa Clara and San Mateo counties were called 'Silicon Valley' by Don C Hoefler, a journalist, in a series of articles in 1971. He had begun his career in electronics journalism as a publicist for Fairchild Semiconductor, which had pioneered the development of the silicon microchip. The tag 'Silicon' has become popular across the world - e.g. Silicon Glen and Silicon Fen in the UK - and in recent times, the area of the south inner city Dublin around the Grand Canal Dock - near the confluence of the Grand Canal, and the rivers, Liffey and Dodder - has been developed and several American companies, led by Google on Barrow Street and Facebook, Twitter, LinkedIn, Dropbox, venture capital companies and others, have established operations in the area, which has been dubbed Silicon Docks by tech or policy folk.
The decision of Charles Haughey, taoiseach / prime minister, in the late 1980s to actively support the development of an offshore finance centre in a once bustling dockland area that had like London's Canary Wharf become dilapidated over a long period, was an inspired one and the Docklands Business Forum estimated for an Oireachtas committee in 2014 that employment in the area was at over 40,000 including over 25,000 employed in the IFSC (International Financial Services Centre) area alone [pdf].
The Silicon Docks area is part of Docklands and instead of a sometimes cited direct jobs total of 40,000, the number of tech professionals working in technology firms in the area may well be at about 7,000 - see below for more data.
'Silicon Docks: The Rise of Dublin as a Global Tech Hub,' a book written by "a team of journalists who have been covering this story for years, led by Irish Times business journalist Pamela Newenham, and including Joanna Roberts, JJ Worrall, Elaine Burke, Philip Connolly, Emmet Ryan and Ciara O’Brien" has recently been published and The Irish Times publishes two extracts today: 'A seismic shift for Dublin: how Google was persuaded to set up shop in Ireland'; 'Just being sociable: IDA business development executive John Nugent’s crusade to bring Facebook and Twitter to Dublin.'
How much of a "seismic shift" was Google's decision to locate in Ireland when it was likely aware of Microsoft's tax arrangements and it then used the same Dublin law firm as the software giant.
In 2005, The Wall Street Journal brought attention to Microsoft's efforts to route for example profits on sales in Germany to Dublin on which the software firm paid Ireland at the low headline tax rate of 12.5%. The Journal said a subsidiary, Round Island One Ltd., operated from the offices of a Dublin law firm and was one of the country's biggest companies, with gross profits of nearly $9bn in 2004 but it had no direct staff. Google and Facebook then followed on Microsoft's trail.
The Journal said much of Round Island's income was licensing fees came from copyrighted software code that originated in the US. Some of the rights to these lucrative assets ended up in Ireland via complex accounting rules on intellectual property
Through a key holding, dubbed Flat Island Co., Round Island licensed rights to Microsoft software throughout Europe, the Middle East and Africa. Thus, Microsoft routed the license sales through Ireland and Round Island paid a total of just under $17m in taxes to about 20 other governments that represented more than 300m people and $300m in taxes to a country of just over 4m.
The Amazon blurb for 'Silicon Docks: The Rise of Dublin as a Global Tech Hub,' says: "Silicon Docks contextualizes the impact of the sudden spurt of technology companies, from the sudden rise in real estate and enterprise in the area to the instigation of conferences and the influx of immigrants. The impact of the Silicon Docks is far-reaching and powerful."
We haven't seen the book but it would be welcome if it is a departure from a system where there is very little critical analyses with ministers and State agencies chiefs never entertaining downsides while most technology journalists like their property counterparts during the bubble, acting as cheerleaders.
While IDA Ireland, the inward investment agency, does a good job, Finfacts is always happy to make the communications staff angry by presenting unpalatable facts. Credit where it's due, they are also very helpful too.
Hype and the tech world are handmaidens but there was silence when Elan, an indigenous biotech firm founded by an American resident in 1969, first became a shell operation and then it was sold off to an American white-label manufacturer - in 2001, Elan was the 20th most valuable drugs company in the world.
It was also extraordinary in 2006 when a new public science policy was announced and no lessons had been learned from the demise of the indigenous tech firms that had triggered high hopes in the 1990s. By 2008, IONA Technologies was sold off to an American firm of more recent vintage and today employment in the indigenous tech sector is about 10,000 - equivalent to the combined employment in the Irish operations of Apple, Intel and Google.
Last November, we published research on the Irish startup scene here:
Dublin Web Summit 2014: Separating hype and reality - Paddy Cosgrave, co-founder of the Web Summit commented in a tweet: "Phenomenal level of research + info in this post about Irish tech policy & startups in general"
40% of firms are micro and employ 1-5 people;
Silicon Docks is a sexy story with the likes of Google and Facebook drawing attention - that is fine and the jobs are welcome but Patrick Honohan, the central bank governor, who is a former professor of economics, said in a speech [pdf] last March: "In the interests of robust diversification, most Irish economists observers would hope for a greater convergence towards normality in this aspect of Irish economic development, with a stronger emergence of innovative Irish companies alongside those steered from abroad."
Less spin and more inspired policy making is needed:
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