Sharp fall in foreign investment as multinational jobs decline

FOREIGN DIRECT investment (FDI) in Ireland fell sharply in 2009, a new report has found, with job creation by foreign multinationals slipping 42 per cent.

According to the National Irish Bank/FDI Intelligence Inward Investment Performance Monitor, the global FDI market was weak, with the number of new jobs created falling 25 per cent compared to 2008.

In Europe, new jobs declined by about a third, while Ireland was particularly hard hit, with jobs created falling from 12,900 to 7,500. However, the report said Ireland attracted a large share of global FDI flows given its small size, accounting for 0.7 per cent.

“The particularly sharp fall in investment in Ireland is largely due to the negative perceptions Ireland has suffered following the rapid increase in unemployment and the sharp deterioration in the Government’s finances over the last 18 months. Other factors – such as the strength of the euro – also didn’t help,” said National Irish Bank’s chief economist Dr Ronnie O’Toole.

Services rather than the manufacturing sector was strong in 2009. Services exports grew from €20 billion in 2000 to around €70 billion last year. In contrast, there was no growth in goods exports from 2000 to 2009, which totalled €80 billion. This was indicative of a change from manufacturing to services jobs in Ireland.

Ireland slipped in the overall Inward Investment Index, which looks at job creation, the number of investment projects and the amount of money invested. Last year, the country fell to 23rd from 21st place in the ranking, which includes 30 of the world’s largest economies.

“Ireland remains an attractive place for foreign investment, though clearly the reputational issue caused us problems last year,” Mr O’Toole said.

Further troubles loom, the report said, with total global FDI remaining weak into next year making it more difficult for countries to attract new investment.

Competition will grow, the report warned, with little prospect of an immediate jobs boost.