Foreign direct investment (FDI) in Ireland remained strong in 2007, according to Ernst & Young’s latest European Investment Monitor (EIM). However, this upward trend is most unlikely to continue in 2008, the analysts note. The survey showed that Ireland attracted 80 FDI projects in 2007, up from 74 in 2006. This is the highest level of investment since 2000, when 113 projects were secured.
Across Europe last year, there was a record number of FDIs for the fourth year in succession, with a 5% increase on the 2006 figure, to 3,712 FDI projects.
Although there was a decline in the overall share of investment from the USA (down 9% to 47%) and UK (down 9% to 12%), they still represent the top two FDI investors in to Ireland.
Canada, Germany and Bermuda all increased their levels of investment in 2007 (Canada, (up 4.8% to 7.5%); Germany, (up 2% to 5%) and Bermuda (up 4% to 5%)). The 80 projects created a total of 4,052 FDI jobs in 2007, a decrease of 44% on 2006. However, 17% of these new FDI jobs were in research and development, far above the 6% European average.
Most projects (34) in 2007 were in the Dublin area, with 11 in Cork followed by Clare with seven while Galway and Limerick attracted four each.
The software sector attracted the highest level of investment for the second year running, accounting for almost a quarter (24%) of the investment in Ireland. This was followed by pharmaceuticals (up 2% to 14%). Both financial intermediation (down 7% to 11%) and business services (down 2% to 10%) saw drops in the level of investment. The electronics sector which was ranked fifth showed an increase from 6% in 2006 to 9% in 2007. A total of 64% (51) of the projects in Ireland were new and 29% (23) of the projects were a result of expansion by companies that had already invested in Ireland.
In Europe as a whole, software was also the leading sector in generating investment – with 474 projects attracted in 2007, followed by business services (467 or 30%), financial services (235 or 15%), machinery and equipment (205 or 13%), and electronics (203 or 13%).
Ernst & Young Ireland’s transaction advisory service director, Garry O’Rourke, commented: “Along with the rest of Europe, Ireland benefited from overall growth in the software sector in 2007. The jobs created here are also high value R&D positions. However, the impact of the US economic downturn will not filter through until this year or next year, as many companies rethink their growth and investment plans.”
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