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8/10/2019 FDI in Ireland in the Coming Times
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FDI in Ireland in the Coming
Times
IIEA Seminar
Frank BarryJanuary 2009
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FDI-Intensity of the Irish Economy
Share of
foreign
affiliates in
manufacturingemployment
Share of
foreign
affiliates in
servicesemployment
FDI inward
stock (USD)
per head of
population(2004)
Ireland 49 22 57372
EU15 23 10 9796
CEE 33 16 2403
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The Changing Sectoral
Structure of FDI
Inward FDI stock in Developed Countries% of total FDI in each year
1990 2002
Manufacturing46 34
Services 54 66
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The vast bulk of FDI still originates in thedeveloped world and goes to developed
world locations
Over the last decade, Europe hasaccounted for over 57% of total US foreign
direct investment, and for about 43% offthe jobs created
U.S. firms invested $26.4 billion in Chinasince 2000, which is less than half of USinvestment in Ireland.
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World FDI Inward Flow
0
500000
1000000
1500000
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
20
03
World FDI Inward Flow
millions of USD
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World foreign direct investment (FDI) flowsreached an all-time high in 2007. 2007also recorded the highest ever nominal
inflows to Ireland
The 2008 decline is likely to be around
25% both globally and in Europe. Thisyear it could well reach another 30% ormore
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Besides the FDI recession, there areincreased threats for Ireland (quite apart
from IFSC-related issues)
We are entering a new era of much lower
global corporate profitability. 1990s was anera of high global corporate profitability
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Financial Times editorial
January 11, 2009
Current levels of government spending should
fall, or ministers will be forced to raise taxes.
This will be deeply unpopular. Even measures,such as a carbon tax, that can be presented ashelping the planet as well as public financesmay well be unpopular. In the long run, its
commitment not to raise the 12.5 per centcorporate tax rate may prove to beunsustainable
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Irish Times
Monday, March 17, 2008
Let's face it, Dell is on the way out
JOHN McMANUS
BUSINESS OPINION: Finally the unspeakable has been spoken: Dell, the UScomputer giant that employs 4,500 people and accounts for something in the region of
6 per cent of Ireland's GNP, is on the way out the door and we better face up to it.
It is not going to happen overnight and it's not going to happen tomorrow, but it willhappen.
Whom do we have to thank for this unpalatable dose of realism? Is it the IDA, the
Minister for Enterprise and Employment or even Dell itself?
o. The appalling vista was in fact unveiled last week by a Trinity College professor,
Frank Barry, and his colleague from NUI Maynooth, Dr Chris Van Egeraat. It took
the form of comments they made after presenting a paper accompanying theEconomic and Social Research Institute spring quarterly which was released on
Thursday.
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Irish Times
Friday, March 14, 2008
Higher-value work has foreign technology firms more embedded
FOREIGN TECHNOLOGY firms are now far more embedded in Ireland than when
manufacturing was their primary activity, according to new research published by the
Economic and Social Research Institute (ESRI), writes John Collins.
"I would be very sure Dell is on the way out of Ireland given the trend in the sector,"
said Prof Frank Barry from Trinity College, Dublin, one of the report's two authors.
However, he said that if Dell decided to cease manufacturing here it "won't be as
catastrophic as you might think" as less than half of its staff were now engaged inmanufacturing.
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Dell announced this month that it was shedding1900 assembly jobs out of its total of about 3000in Limerick plus 1300 in Cherrywood in Dublin
The jobs to remain in Limerick were in productdevelopment, engineering and logistics, insupport of overseas manufacturing. The jobs in
Cherrywood are in sales and marketing support
The ones to remain are the better-paidsegments. (The assembly workers were making
just10-14 per hour, which is well below theaverage in the sector).
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Forfs data suggest that local sourcing ofcomponents comprise also 30 percent ofmaterial inputs
These figures, however, includeexpenditures on items purchased from
local supply chain managers butmanufactured in other regions, as well asexpenditures on complete systemsmanufactured by contract manufacturers
with local operations. More carefulanalysis which excludes these itemsbrings the figure down to 10 per cent.
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INTEL
Strong record in process development Intel has invested some7 billion in Ireland
since 1989, during which it has shifted its labour-intensive assembly activities to Puerto Rico and
the far east and refitted its Irish plant for waferproduction.
Has spent2 billion in Ireland in recent years toconstruct its FAB 24 fabrication facility, which
will implement the worlds most advanced 300-millimetre semiconductor manufacturingtechnology.
Also new IT innovation centre.
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Pharma and Medical Devices
In Pharma, Ireland competes with
Singapore and Puerto Rico
In Medical Devices, with Switzerland
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IT Services
Persons Employed in Computer and Related Services and in All Services
Computer andRelated Activities All Services
1999 18,612 515,500
2000 18,779 553,700
2001 22,260 608,5002002 22,211 668,876
2003 24,030 713,117
2004 28,426 736,969
2005 no data 740,419
Absolute increase 1999-2004 9,814 221,469
Percentage increase 1999-2004 +53% +43%
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Employment in non-IFS Business
Process Services Export activities
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Number of Services-Sector FDI Projects
by Destination Countries, 2002-2003
Call centres Shared
services
IT services Regional HQ
EU15 169 38 198 185
Ireland 29
(17%)
19
(50%)
14
(7%)
15
(8%)
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Ireland has the highest proportion of call centrestaff of any European country as a proportion ofits working population, at 3.6%, compared to its
nearest competitors, the UK at 2.8 and theNetherlands at 2.5.
A UK report by CM Insight (2004, p 160),however, finds that Ireland attracts more high-value, less price-sensitive contact centre activitythan other offshore locations. The report notesthe substantial element of technical andsoftware support in the Irish sector as well as arelatively high ratio of team leaders to agents,the latter suggesting a focus on quality and morecomplex (less scripted) contact centre functions.
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IFSC
IFSC now employs > 16,000 people and pays anestimated 15 percent of all corporation taxescollected.
Almost 450 international financial institutionsoperate from Dublin, including half of the worldstop 50 banks and half of the top 20 insurancecompanies.
Dublin specializes in back office activities, andhas a particular specialisation in four nicheareasfund administration, treasury operations,corporate banking and insurance.
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Employment allocation within IFSC
Funds/Asset Admin 42 percent
Banking 37 percent
Insurance 21 percent
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Dangers for IFSC: Global reregulation
The rationale behind the financial-services policy
proposal was clear. The analysis suggested that acombination of factors now created an opportunity for aregional location like Ireland to become a player in theinternational financial services industry. First, worldfinancial markets had become highly interdependent andoperated on a round-theclock basis. Second, thetechnology to set up and run international data- andfund-management centres was, in turn, creating, anelectronic market place, thanks to improvements ininternational communications. And third, globalderegulation of financial services meant that an
increasing range of these services were provided frombeyond national boundaries
MacSharry and White: The Making of the Celtic Tiger, 2000, page 318
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Dangers for IFSC: Financial R&D
Citi now employs over 1,500 in theInternational Financial Services Centre(IFSC) in Dublin and is the largest
employer in the IFSC. In July 2005, CitiIreland announced the creation of aResearch and Development Centre with
an investment of10 million. This is thefirst ever-dedicated R&D Centreestablished by Citi worldwide.
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