CASE STUDY:Foreign direct investment has played a major role in developing the Irish economy, but we will need a different set of skills if we are to continue to attract that essential investment
THERE IS no gainsaying the vital role foreign direct investment (FDI) has played in Ireland's economic growth. Indeed, the opening up of the economy to inward investment was a key plank of the now near legendary Whittaker Report back in the late 1950s.
In the subsequent half-century Ireland has become highly dependent on overseas industry. The latest figures from IDA Ireland show that in 2007 there were almost 1,000 overseas firms in the Republic directly employing more than 135,000 people and accounting for more than €90 billion in exports.
In recognition of the vital importance of this sector to the economy, the UCD Michael Smurfit Graduate Business School will host a seminar on the future of foreign direct investment in Ireland on Tuesday, November 4th in O'Reilly Hall, UCD. The seminar, named Foreign Direct Investment: What's the Forecast?, will examine the key challenges and opportunities for FDI in a more globally competitive marketplace and will hear from a range of respected Irish and international experts.
The keynote speaker at the seminar is Robert Shapiro, a former adviser to the Clinton administration in the US, and author of several books which examine the future of the global economy. Shapiro will argue that while Ireland's economic success has been the biggest of the last generation and though the country has now lost much of the competitive edge that delivered that success, it is still well placed to hold on to existing investment due to the high exit costs associated with moves to lower-cost economies.
Other key contributors include former IDA chief executive Kieran McGowan, Intel Ireland general manager Jim O'Hara and Aidan Brady, country officer with Citibank Ireland. Prof Eamonn Walsh, PricewaterhouseCooper professor of accounting at the UCD School of Business, will argue that while the single most important source of inward investment in the past has been the US, this might not necessarily be the case in the future.
"I'd agree with everything that has been said about Ireland's remarkable success in attracting FDI and the crucially important role investment from the US has played - and long may that remain the case, but just because it has been that way in the past doesn't mean it's going to be the same in the future," says Walsh.
"There are 2.4 billion people in China and India - that's almost 10 times the US population," he continues. "Within a decade those two countries will account for 40 per cent of world trade."
He also agrees with the economic forecast that China and India between them will account for one-third of global GDP within the next 20 years - the same proportion they accounted for some 200 years ago, and a massive increase from the mere 5 per cent in 1979.
"When you look at these statistics you have to ask questions," he points out. "There is clearly a possibility that a global shift is taking place and we can't afford to ignore that. Then there are the Gulf States. Look at oil prices at present, they are around $100 per barrel yet the production cost is $4 in Saudi Arabia - that's a lot of money being generated there. We have successfully offered ourselves as a window into Europe for US firms, we should now be looking at how we can offer the same proposition to firms from the Gulf and Asia," says Walsh.
Doing this requires a shift in emphasis, he contends. "In the past we have emphasised education, but India, China and Russia all have rather fine traditions in education, so we have to look to other strengths," he argues.
"These are our cultural advantages in terms of being English-speaking, our fine networking skills, our lack of an imperial past, as well as an enviable record of treating investor firms well when they come here."
Walsh sees these strengths creating opportunities in the areas of marketing, commercial and financial services.
"We will be able to provide headquarters services, administration services, a favourable tax regime and an ability to connect with people," he says.
Walsh says that we should be looking to exploit these new opportunities now, before it is too late. "The first step is to go out and say that we are open for business. Sadly, I haven't seen much evidence of that being done so far," he says.
The FDI: What's the Forecast? seminar takes place on Tuesday, November 4th in O'Reilly Hall UCD from 8.15am-noon. For more information and to register visit ucd.ie/fdievent. Tickets from €175
