Flow of European direct investment into Ireland grew slightly last year

IRELAND’S SHARE of European foreign direct investment (FDI) flows grew in 2010, according to the United Nations Conference on Trade and Development.

With inflows of more than $26.3 billion, up slightly on 2009, Ireland’s share of the EU-27 total rose to 8.6 per cent, from 7.5 per cent a year earlier.

Only four of the 26 other EU countries attracted more FDI last year. In absolute terms, Belgium received the most ($62 billion) followed by Germany, the UK and France.

Ireland’s share of the total stock of EU FDI also rose, from 2.6 per cent in 2009 to 3.6 per cent in 2010. The Republic’s improved relative position in both flows and stocks of FDI was accounted for both by a better Irish performance and a worse one across the EU as a whole.

The annual World Investment Report also provides figures on the number of companies establishing operations in different jurisdictions. This measure may provide a better indicator of the impact of FDI on the real economy as the headline FDI dollar figures (cited above) can be distorted by capital flows associated with Dublin’s international financial centre.

According to UNCTAD, Ireland attracted 136 “greenfield” FDI projects last year. This was down from 146 in 2009, but it was the second highest since 2005.

The decline, of 7 per cent on 2009, was larger than the EU average of 4 per cent.

Globally, flows of FDI rose by 5 per cent in 2010, according to the report, reaching $1.24 trillion. However, worldwide cross-border FDI flows remain well below the all-time peak reached in 2007.

UNCTAD forecast that strong growth in FDI will take place this year, but does not expect total flows to return to 2007 levels until 2013.