Madam, - It should be noted that statistics from the US Department of Commerce Bureau of Economic Analysis (BEA) for US foreign direct investment (FDI) in Ireland in 2005 differ from those reported in your edition of October 17th in a front-page report on the UN Conference on Trade and Development 2006 World Investment Report.
The UNCTAD report cited a total negative FDI flow of $22.7 billion (€18.2 billion) for Ireland in 2005, without disaggregating this outflow by nationality or sector. The Irish Times report attributed this trend to a one-year-only opportunity for US firms to repatriate profits at a 5.35 per cent corporation tax rate (under the 2004 American Jobs Creation Act), although the UNCTAD report itself did not discuss this explanation.
Statistics recently published by the BEA (to be found at http://bea.gov/bea/di/di1usdbal.htm) showed a negative US FDI flow of $3.1 billion for Ireland in 2005, still a net outflow, but markedly lower than the UNCTAD figure. According to BEA statistics, moreover, the value of the total US investment stock in Ireland in 2005 was $61.6 billion, a decrease of only $2.4 billon from 2004. While the US tax amnesty undoubtedly played a role in negative net US investment in Ireland last year, the discrepancy in the US and UNCTAD findings, rooted in different calculation methods, is noteworthy.
It is also important to point out that, in discussions with the US Embassy, local representatives of US firms continue to identify Ireland as an attractive investment destination for numerous reasons, including access to the EU market; political stability; government fiscal responsibility; positive industrial relations; cultural familiarity; a highly educated workforce; low taxes; and an overall pro-business climate.
These investment incentives are unlikely to change in the near term and probably explain UNCTAD statistics showing an increase in greenfield investment projects in Ireland between 2004 and 2005. Concerns voiced by US businesspersons about Ireland's continued attractiveness have centred not on the once-off US tax amnesty, but rather on Ireland's ability to compete with lower-cost economies in Asia and Eastern Europe, as the Irish Times article noted. In this context, US firms have sought to provide higher-value goods and services through innovation, research and development, an objective that will depend critically on education and the quality of human capital in Ireland.
The Irish Government appears to have grasped this connection, as seen in recent significant funding increases for post-graduate and doctoral-level education and research. - Yours, etc,
JOSEPH YOUNG, Head of Political/Economic Section, US Embassy, Dublin 4.