Ireland Ranked Second Globally as FDI Flows Jump 15%

2010 was another good year for FDI into Ireland, and 2011 has started well. We continue to see a steady flow of mid-sized projects, particularly in services industries such as software and customer support, though also with some high quality manufacturing projects.

 Dr Ronnie O’Toole, Chief Economist, National Irish Bank,

25th February 2011

Ireland retained second place globally for attractiveness to FDI when adjusted for economy size. This is according to the National Irish Bank / fDi Intelligence Inward Investment Performance Monitor for 2010. Launched today, it also shows that Singapore remains the most favoured destination, with Thailand following in third place.

• Ireland is the second most attractive country globally for Foreign Direct Investment (FDI)
• The number of projects coming to Ireland increased by 15% in 2010, with a corresponding   increase in the rate of job creation
• Quality of jobs high, with a relatively high proportion involving R&D and headquarter facilities
• Improving global economic prospects should result in continued FDI growth in 2011

According to Dr Ronnie O’Toole, Chief Economist, National Irish Bank, “2010 was another good year for FDI into Ireland, and 2011 has started well. We continue to see a steady flow of mid-sized projects, particularly in services industries such as software and customer support, though also with some high quality manufacturing projects.”

2010 saw the number of projects coming to Ireland increasing 15% on 2009, with a corresponding increase in the rate of job creation. According to Dr. O’Toole, “The quality of these projects was high. Fifteen per cent of projects involved the establishment of headquarters in Ireland, second only to the Netherlands. Ireland was also very successful in attracting R&D projects, coming in fifth in the 100 countries ranked, behind Finland, Taiwan, Israel and Puerto Rico.”

There are a number of reasons Ireland remains attractive to foreign multinationals, despite the economic crisis. It offers access to a highly skilled workforce and a low corporation tax rate, while cost-competitiveness has improved as many non-pay costs have fallen since 2008. Ireland has built a critical mass of firms in a number of important industries such as pharmaceuticals, internet services and financial services, which in turn makes Ireland attractive for further investment in these areas.

The number of internationally mobile investment projects this year should increase, according to the UN trade and investment body, UNCTAD. It forecasts that FDI flows will rise to between $1.3 trillion and $1.5 trillion in 2011, up from $1.1 trillion in 2010. Improved macroeconomic conditions in 2010 strengthened multinationals’ cash holdings and boosted stock market valuations, which firms can start to translate into new investments in 2011.

The prospects for the global economy in 2011 are positive. According to Dr. O’Toole, “Asian growth is strong and activity indicators in the US and Europe have turned higher. While the euro debt crisis remains unresolved, the immediate sense of crisis has passed, with countries like Germany returning to strong economic growth. If Ireland can continue to win a disproportionate share of this FDI pie, then further growth in inward jobs should be seen this year.”

Dr Ronnie O’Toole is Chief Economist at National Irish Bank.   The views contained in this bulletin do not necessarily reflect the views of National Irish Bank. Queries on the methodology should be made to Dr. Ronnie O’Toole, e-mail: ron@nationalirishbank.ie.

About fDi Intelligence

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• fDI Intelligence runs a range of services for its clients. fDi Markets is the authoritative cross-border inward investment database and investor tracking tool and is the exclusive source of FDI project data for the UNCTAD World Investment Report and the Economist Intelligence Unit. fDi Markets has tracked over $7 trillion greenfield investment since 2003 and is invaluable for market analysis, site selection and investor targeting.
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• fDi Reports are provided by a specialist research team within fDi Intelligence with access to the global resources of the Financial Times Ltd.

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