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The Impact of Foreign Direct Investment on Sectoral Adjustment in the Irish Economy

Published online by Cambridge University Press:  26 March 2020

Frances Ruane  and
Holger Görg
Frances Ruane*
Affiliation:
Department of Economics, Trinity College, Dublin 2
Holger Görg*
Affiliation:
Department of Economics, Trinity College, Dublin 2
*
Telephone x353 16081325, Fax x353 1 677 2503, e-mail: [email protected]
[email protected]
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Extract

Foreign direct investment (FDI) has played a crucial role in the overall development of the Irish economy over the past three decades, as the Republic of Ireland, hereafter referred to as Ireland, has pursued an industrial strategy characterised by (i) promoting export-led-growth in Irish manufacturing through various financial supports and fiscal incentives, and (ii) encouraging foreign companies to establish manufacturing plants in Ireland, producing specifically for export markets. The significance of FDI for the Irish economy is now reflected in, inter alia, the significant gap between GNP and GDP; in 1994, GNP was roughly 88 per cent of GDP in Ireland. As regards the manufacturing sector, the high shares of output and employment in foreign-owned companies in Ireland also indicate the importance of foreign firms. As we discuss in some detail in Section 3, foreign companies produced roughly 69 per cent of total net output and accounted for 45 per cent of employment in Irish manufacturing industries in 1993.

Type
Articles
Information
National Institute Economic Review , Volume 160 , April 1997 , pp. 76 - 86
Copyright
Copyright © 1997 National Institute of Economic and Social Research

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Footnotes

We are grateful to Jim Bourke and Kieran McGowan for comments on an earlier version of the paper and to Ray Barrell, Nigel Pain and their colleagues at NIESR for comments on the penultimate version. We have also benefited from helpful discussions with John FitzGerald, ESRI and Donal de Buitléir, AIB Bank on issues raised in the paper. Frances Ruane gratefully acknowledges support from the Royal Irish Academy Social Science Research Council.

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