If 2020 was a year most people would rather forget, there was at least some cause for Irish eyes to smile. Even in the face of the Covid-19 pandemic, Ireland’s economy grew by 3.4 per cent, figures revealed in March.
The relative resilience of Ireland’s economy was buoyed by its continuing success in attracting foreign direct investment (FDI), which proved highly resilient during 2020.
It helped, of course, that Ireland is strong in key sectors that survived and even thrived during the pandemic, especially ICT, medtech and pharmaceuticals.
Today, 257,000 people are directly employed by foreign direct investment (FDI) in Ireland, a 35 per cent increase over five years. In the first quarter of 2021, IDA Ireland clients, the government agency in charge of attracting FDI, accounted directly for 11.5 per cent of national employment, up from 10.7 per cent in 2019.
“To be adding jobs at this level looks like a remarkable outcome,” said IDA Ireland’s CEO Martin Shanahan in January 2021, before adding that “we cannot rest on our laurels and take investment for granted.”
Nonetheless, it augurs well for growth: Ireland’s economy is projected to increase by 4.6 per cent in 2021 and 5.0 per cent in 2022, according to the European Commission’s Spring Economic Forecast.
257,000 people are directly employed by FDI in Ireland.
Ireland is one of the world’s most open economies; proportionally it has the fourth highest international workforce in the EU. Visit Cork, for instance, and you will find plenty of multinational companies (MNCs) that have had a base in the city for decades — including Pfizer, Boston Scientific, DePuy Synthes, Stryker, Pepsi, GSK and Eli Lilly.
Ireland’s success in attracting investment through pro-business policies, committed EU membership, and its youthful talent pool are widely acknowledged. Its educated workforce, in particular, will stand it in good stead coming out of the pandemic.
Youth is on Ireland’s side, too. “We have the youngest population in Europe — about half the population is under the age of 34. So there's a strong pool of talent here,” says Rachel Shelly, Head of Medical Technologies at IDA Ireland, “but through our EU membership we also have access to the European market for talent — that’s been a great benefit for multinationals.”
MNCs frequently cite the Irish workforce’s adaptability and flexibility as a key benefit. “Companies can evolve what they’re doing: they can scale, they can pivot and the workforce will adapt with them,” says Shelly.
In 2019, FDI contributed €25.2 billion to the Irish economy.
9 of the top 10 pharma companies in the world
14 of the world’s 15 top medtech companies
There are plenty of other draws — not least for US multinationals the fact that Ireland is the only English-speaking country in the eurozone, providing a gateway to the European market.Significantly, interest has started coming from other directions. “We are increasingly seeing Ireland’s attractiveness as a European base being recognised by Asian investors, who in turn may be able to leverage Ireland as a platform for the US and other markets,” says Liam Diamond, Head of FDI/International Tax, PwC Ireland.Another strength would be the fact that the country is the fastest growing digital economy within EU. That has helped during the pandemic as businesses have turned to new ways of doing business. To drive further transformation, the new Advanced Manufacturing Centre in Limerick, is designed to help MNCs and small and medium sized enterprises (SMEs) to digitise their manufacturing and adopt and scale the latest technologies to drive the next wave of manufacturing.More broadly, IDA Ireland and other government agencies, such as Enterprise Ireland and Science Foundation Ireland, have over several decades applied joined-up thinking in identifying emerging trends and nurturing collaborative business ecosystems in Dublin and regional clusters in cities such as Cork, Limerick and Galway. Galway has become a global hub for medtech and is home to 14 of the world's top 15 medtech companies, part of a nexus of interconnected businesses — SMEs, OEMs, MNCs — in a co-location with Cúram, the transdisciplinary research centre based at the National University of Ireland, Galway that brings academics and industry together to develop next-generation medical devices.
Ireland is home to 20 of the world’s top 25 financial services companies.
Being a small country helps foster these collaborative connections. “The scale of our island means you’re never within a long distance from a university or from another academic centre,” notes IDA Ireland’s Shelly.
Ireland’s Disruptive Technologies Innovation Fund (DTIF), worth €500 million, exemplifies the drive towards interconnected development. The DTIF promotes collaboration between MNCs and SMEs and academics on cutting-edge research into next-generation solutions. “We’re very much about driving that ecosystem for the good of industry and academia,” says Shelly.
IDA Ireland is encouraging further growth through its five-pillar 2021-2024 strategy, which includes a raft of investments such as €116bn for infrastructure and capital works under Ireland’s National Development Plan.
In attracting future growth, Ireland’s track record on FDI is a proof point in itself. “Investors want a ‘tried and tested’ location,” says PwC’s Diamond. “One of the first questions they ask is ‘who from my sector has already used Ireland?’ and this track record gives them great comfort.”
Almost 30 per cent of higher-education students in Ireland are enrolled in STEM courses.