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

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  • Frances Ruane
  • Holger Görg

Abstract

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.
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Suggested Citation

  • Frances Ruane & Holger Görg, 1997. "The Impact of Foreign Direct Investment on Sectoral Adjustment in the Irish Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 160(1), pages 76-86, April.
    • Handle: RePEc:sae:niesru:v:160:y:1997:i:1:p:76-86
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    Cited by:

    1. Görg, Holger & Hanley, Aoife & Godart, Olivier, 2011. "Surviving the crisis: Foreign multinationals vs domestic firms in Ireland," CEPR Discussion Papers 8596, C.E.P.R. Discussion Papers.
    2. Frances Ruane & Julie Sutherland, 2002. "Globalization, Europeanization and Trade in the 1990s: Export Responses of Foreign and Indigenous Manufacturing Companies," Palgrave Macmillan Books, in: Henryk Kierzkowski (ed.), Europe and Globalization, chapter 10, pages 207-228, Palgrave Macmillan.
    3. Kate Hynes & Yum K. Kwan & Anthony Foley, 2017. "Local linkages: The interdependence of foreign and domestic firms," GRU Working Paper Series GRU_2017_006, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    4. Holger Görg & Eric Strobl, 2016. "Multinational companies and indigenous development: An empirical analysis," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT, chapter 17, pages 305-322, World Scientific Publishing Co. Pte. Ltd..
    5. John Fitz Gerald, 2006. "Lessons from 20 Years of Cohesion," Chapters, in: Susanne Mundschenk & Michael H. Stierle & Ulrike Stierle-von Schütz & Iulia Traistaru-Siedschlag (ed.), Competitiveness and Growth in Europe, chapter 4, Edward Elgar Publishing.
    6. Frances Ruane & Ali Ugur, 2005. "Labour Productivity and Foreign Direct Investment in Irish Manufacturing Industry - A Decomposition Analysis," The Economic and Social Review, Economic and Social Studies, vol. 36(1), pages 19-43.
    7. Godart, Olivier & Görg, Holger & Hanley, Aoife, 2011. "Surviving the crisis: Foreign multinationals vs domestic firms," Kiel Working Papers 1700, Kiel Institute for the World Economy (IfW Kiel).
    8. Roper, Stephen & Du, Jun & Love, James H., 2008. "Modelling the innovation value chain," Research Policy, Elsevier, vol. 37(6-7), pages 961-977, July.
    9. Joanna Scott-Kennel, 2007. "Foreign direct investment and local linkages: An empirical investigation," Management International Review, Springer, vol. 47(1), pages 51-77, February.
    10. Roberto Chavez, 2014. "Customer integration, information quality and operational performance: A social capital view," Working Papers 57, Facultad de Economía y Empresa, Universidad Diego Portales.
    11. Michael Freudenberg & Harald Trabold, 1999. "Vertikale Produktdifferenzierung im Außenhandel: Theoretische Grundlagen und empirischer Befund," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 68(3), pages 356-385.
    12. Allan Kearns & Frances Ruane, 1997. ""To R&D or not to R&D, that is the Question": A Firm Level Study of Employment Growth in the Irish Manufacturing Sector, 1986-95," Economics Policy Papers 975, Trinity College Dublin, Department of Economics.
    13. Donna Marshall & Lucy McCarthy & Marius Claudy & Paul McGrath, 2019. "Piggy in the Middle: How Direct Customer Power Affects First-Tier Suppliers’ Adoption of Socially Responsible Procurement Practices and Performance," Journal of Business Ethics, Springer, vol. 154(4), pages 1081-1102, February.
    14. Paolo Figini & Holger Görg, 1999. "Multinational companies and wage inequality in the host country: The case of Ireland," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(4), pages 594-612, December.
    15. Nagy, András, 1999. "Írország Európai Uniós csatlakozásának tanulságai [The lessons of Ireland's accession to the European Union]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1092-1115.
    16. Ogbeifun Lawrence & Shobande Olatunji Abdul, 2020. "Causality Analysis of Disaggregated FDI Inflows on Sectorial Growth in OECD Area," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 30(4), pages 92-110, December.
    17. Lionel Fontagné & Michael Freudenberg, 1999. "Marché unique et développement des échanges," Économie et Statistique, Programme National Persée, vol. 326(1), pages 31-52.
    18. Holger Görg & Frances Ruane, 1998. "Linkages between Multinationals and Indigenous Firms: Evidence for the Electronics Sector in Ireland," Economics Technical Papers 9813, Trinity College Dublin, Department of Economics.
    19. Holger Görg & Frances Ruane, 2000. "An Analysis of Backward Linkages in the Irish Electronics Sector," The Economic and Social Review, Economic and Social Studies, vol. 31(3), pages 215-235.
    20. Paul Teague, 2009. "Developing Ireland: Committing to Economic Openness and Building Domestic Institutional Capabilities," WIDER Working Paper Series RP2009-24, World Institute for Development Economic Research (UNU-WIDER).
    21. Palle S. Andersen & P. Hainaut, 1998. "Foreign direct investment and employment in the industrial countries," BIS Working Papers 61, Bank for International Settlements.

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