Reflections on Irish Industrial Policy towards Foreign Direct Investment

Irish policy towards foreign direct investment has evolved since the 1950s as a strategy driven primarily by the use of fiscal incentives to enhance the profitability of locating in Ireland, with grants as required to achieve a particular bargaining advantage in competing against alternative international locations. Our empirical analysis of European firms in Ireland suggests that the investment incentives offered appear to have led to significant gross job gains in the targeted high-tech sectors, as proxied here by the Metals & Engineering and Chemicals sectors. However, these gross gains have not translated into net gains of a similar magnitude. Acknowledgements We are grateful to participants of the conference on 'Investment, Innovation and the Diffusion of Technology in Europe: German Foreign Direct Investment and its role in European Growth' held at the National Institute of Economic and Social Research, London, and Jim Bourke and Kieran McGowan for helpful comments. Frances Ruane gratefully acknowledges support from the Royal Irish Academy Social Science Research Council.