Small towns face 'struggle to win investment'

Sparsely populated provincial towns will struggle to win "high-value" multinational investment in the short term because they cannot compete with larger urban centres, both in the Republic and abroad, IDA Ireland chief executive Mr Sean Dorgan told an Oireachtas committee yesterday.

He said foreign direct investment was likely to be concentrated on those towns identified as gateways under the National Spatial Strategy as they developed.

In a frank assessment of the outlook, Mr Dorgan said it was unrealistic to expect regions disadvantaged by their remoteness to attract significant research and development projects, which will become vital as manufacturing industries abandon the State in favour of low-wage economies in increasing numbers over the coming decade.

Because many major global players will locate only in large cities, Dublin is increasingly competing for investment not against other Irish population centres but against European capitals such as Amsterdam and Geneva, Mr Dorgan told the Joint Committee on Enterprise and Small Business.

His comments will dishearten the Government, which has prioritised encouraging inward investment to locate outside Dublin, particularly in the BMW region encompassing parts of the west, midlands and north-west.

Labour finance spokesman Mr Brendan Howlin, whose Wexford constituency suffers one of the Republic's highest employment rates, said he was depressed by Mr Dorgan's conclusions.

The IDA chief said the development of regional gateways, as set out in the national spatial strategy, was crucial if areas outside the major population centres were to win substantial projects.

It may have been wiser for Government to focus on nurturing gateway towns rather than "compromising" by concentrating on developing smaller "hub" centres, he suggested.

Focusing exclusively on local needs while ignoring wider trends would "condemn the regions to long-term decline", Mr Dorgan added.

With the Republic's competitiveness severely eroded, the watchword for investment must be "quality rather than quantity", he told the committee.

Multinationals will be wooed by a flexible and innovative workforce, not by the rapidly diminished potential for cheap labour.