In recent years, Ireland has become a magnet for many foreign direct investments (FDIs). The leader in those investments is the United States, followed by Germany, the UK, and Russia. Ireland has many attributes that draw the foreign investments, and they have cultivated these attributes carefully to draw tech companies to their shores. However, with the looming Brexit rapidly approaching, the careful work that has gone into making Ireland an attractive place for foreign investors could suffer some damage, but the extent of the damage is difficult to predict. The opposite effect is also a possibility as Ireland could benefit from companies wanting to invest but not in a UK that is not part of the EU. However, Ireland is prepared for either possibility.
One of the main reasons foreign investors look to Ireland is their workforce. Ireland has invested in technical training so that when foreign investors look to Ireland they see an already trained workforce just waiting for jobs to come to them. This is especially important for U.S. companies, which make up the bulk of Ireland’s foreign investors. O’Brien (2018) of the Irish Times says, “US companies have been clear: what keeps them coming back to Ireland, and investing here, is talent. More specifically, the talent they can find inside the country, and the ease with which they can bring others into the country should they fail to find the skills they require in locally available talent pools” (O'Brien, 2018). That ease of bringing in talent and similar concerns is another reason Ireland is so attractive to FDIs.
Several financial surveys and reports have been done that analyze why Ireland is so attractive to investors. Taylor (2019) also of the Irish Times reports on one by AT Kearney that stresses the educated Irish society as the number one reason for Ireland’s attractiveness to foreign investors. “The authors said a plan to establish the Republic as the European leader in Stem in Europe by 2026 ‘will be a key labour force differentiator in the 21st century digital economy and has likely helped Ireland to become the top FDI destination for US technology companies’” (Taylor, 2019). Still, it is not just the educated citizenry of Ireland that makes it so attractive to foreign investors.
Another aspect of Ireland’s attractiveness to FDIs is their vision toward the future. Ireland has been attracting business to its shores for a quarter of a century now, and while Google, Facebook and Amazon have all invested there, so have many smaller companies. Ireland welcomes them all in the hopes that one of those smaller companies may turn out to be the next big thing in the tech market. The head of the Industrial Development Authority (IDA) of Ireland, Martin Shanahan, points out that it is also about keeping the citizens of Ireland employed. “In 2017, IDA Ireland had 764 client companies of US origin, supporting more than 152,000 employees. To put it in context, employment in foreign-owned companies as a whole reached more than 210,000 – a target the IDA has hit two years ahead of its plan” (O'Brien, 2018). This means that many of the jobs that left the United States for greener pastures for investors in terms of labor costs ended up in Ireland.
Finally, another component of Ireland’s success with IDAs is the relationship it has with the European Union (EU). Some feel that this could be damaged by the looming Brexit issues based on its strong trade partnership with the UK. Others feel that UK’s exist from the EU may be a good thing for Ireland because they will pick up investments that may have once gone to the UK once Brexit is complete.
Many predictions of how Brexit will affect Ireland have been made. Some fear that Ireland will lose some of the gains it has made in terms of FDIs. The significant trade relationship Ireland has with the UK makes it vulnerable to an economic downturn once Brexit is complete. Taylor (2019) explains, “The [AT Kearney] report noted that while the Republic received several high-profile M&A’s last year, overall FDI inflows plummeted due to the impact of US corporate tax cuts in late 2017” (Taylor, 2019). With the instability in the U.S. economy also posing a threat to world markets, some fear that Ireland could suffer even more losses in FDI.
However, O’Brien (2018) points out that Ireland is connected to other economies besides the UK’s and the United States’ such as the economies of the Germany and Russia. It is also currently seeking FDIs from the Asia Pacific region and other countries in Europe (O'Brien, 2018). Investors in each of these nations and regions remain interested and desirous to invest in Ireland with it highy trained talen
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