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News : Irish Economy Last Updated: Dec 19, 2013 - 9:28 AM


Irish Economy: Dublin and Cork get the lion's share of FDI projects
By Dr. Chris van Egeraat, Department of Geography and NIRSA, NUI Maynooth
Dec 19, 2013 - 7:57 AM

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Richard Bruton, enterprise minister, announces Facebook would create more than 100 new jobs in Dublin, Feb 2013

Irish Economy: The activities of the two main enterprise promotion agencies, IDA Ireland and Enterprise Ireland, play a key role in regional development processes in Ireland. In order to drive regional economic development, the IDA Horizon 2020 strategy aims for 50% of FDI (foreign direct investment) projects between 2010 and 2014 to be located outside of Dublin and Cork.

 The IDA End of the Year Statement 2011 suggests that this target has proven very difficult to achieve. In 2011, 72% of investments occurred in the Greater Dublin Area and Cork alone (up from 63% in 2010). The Forfas Annual Employment Survey reports provide a bit more detail. In 2011 employment in foreign companies in Dublin increased by 4,018. Dublin’s 6.1% growth rate was the second highest after the Midlands region (9%) and substantially higher than the third-placed South West Region (4.7%).

One problem with the Forfas publication is that it only provides the net employment gains/losses. An assessment of regional employment dynamics against the IDA targets requires figures for job creation and job losses. In addition, a dynamic analysis would benefit from a distinction between job creation in existing firm and newly established firms.

One year ago Van Egeraat et al. (2012)* conducted such an analysis as part of their assessment of the performance of the National Spatial Strategy (NSS). Focussing on the position of NSS Gateways, the study identified an increasing level of concentration of foreign firm employment in a select number of Gateways. In the period 2006 to 2011, Cork enjoyed an 8.5% growth in foreign firm employment while employment in foreign firms in Galway was stable (- 0.3%). Dublin, although experiencing a fall in foreign firm employment of 6.2%, was still among the better performing Gateways. As a result, the combined share of national employment in foreign firms attributable to these three Gateways increased from 50.3% in 2006 to 53.2% in 2011. More importantly, in relation to newly established firms, Dublin and Cork together accounted for 69% of all jobs in newly established foreign firms, with the Dublin Gateway alone accounting for 46%.

As part of a recent study of industrial concentration processes in Ireland we investigated spatial concentration dynamics in 2012. We used the cruder spatial scale of Irish counties. Individual investments can have a strong impact on annual figures, particularly in small counties, but the results for larger counties are robust.  Growth rates of employment in foreign firms in both Dublin (6.1%) and Cork (4.6%) were higher than the national rate (3.9%). Combined, the two counties accounted for 78% of the net gain in employment in foreign firms. In a single year, Dublin’s share of national employment in foreign firms increased by 2.3 percentage points to 40.1%. Cork’s share increased by 0.8 percentage points to 17.3%.

Part of this new employment is created through expansions by existing firms in current operations. These operations are not locationally flexible in their investment decision. Therefore, from a dynamic perspective, focusing on future spatial distributions, the spatial pattern of investment by new operations is of particular significance. Results need to be interpreted cautiously due to the relatively small number of newly established firms in a single year but we identify one clear dynamic: the concentration of foreign firm employment in Dublin. With 24 new foreign operations, creating 1,147 jobs, County Dublin accounted for 71% of all employment in new foreign operations in Ireland in 2012. Financial services and computer consulting services firms show a particular preference for County Dublin.

We were also in a position to analyse the other side of the story: the spatial pattern of foreign firm employment losses. Foreign firms in Cork accounted for 16% of national employment losses in 2012, roughly proportionate to the county’s share of foreign firm employment in 2011. Foreign firms in Dublin on the other hand accounted for a disproportionately high share of foreign firm employment losses (46% compared to a 38% share in foreign firm employment in 2011). The data paints a picture of a very dynamic Dublin region, characterised by a disproportionately high level of employmentloss in the foreign sector but even more disproportionate employment creation in the foreign sector.

The distribution of employment created by agency supported indigenous firms is more in proportion to the existing stock of employment. In 2012, Dublin and Cork experienced slight increases in their share of employment in agency-supported indigenous firms (0.5% and 0.3%, respectively). However, both counties accounted for a disproportionately small share of employment created by new agency-supported indigenous firms established in 2012. Dublin accounted for a mere 14% of jobs created by new indigenous firms, compared to a 40% share of indigenous firm employment in 2011. Cork accounted for 10% of indigenous jobs created in 2012, compared to a 12% share of the stock of indigenous jobs in 2011.

*Van Egeraat, C., Breathnach, P. and Curran, D. (2012) Gateways, hubs and regional specialisation in the NSS, Administration, 60(3), 91-115.


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