Ireland now has to innovate or get left behind in fight for FDI
My opinion... Mark Redmond, Chief Executive of American Chamber of Commerce
Published 02/07/2015 | 02:30
There is a growing recognition that while costs and a competitive corporate tax environment are important to attract foreign direct investment (FDI) our key advantage is our base of highly-skilled employees with infrastructure also being critically important.
Over 130,000 talented people work for US multinationals in Ireland and they appreciate the recognition of their central role in the remarkable success story that is the US-Ireland economic relationship - which has never been as strong, in both directions, as it is today.
The leadership teams in those companies will appreciate the recognition of the importance of infrastructure to their determined efforts to retain FDI jobs in Ireland and to attract new ones - but the level of global competition they face has never been stronger.
Because of the disproportionate amount of airtime given to the importance of corporate tax to FDI it is welcome to see prominence being given to talent and infrastructure. So what has Ireland done well under these two headings and what does it need to do to maintain our envied position as the location of choice for US FDI?
Over the past 20 years, in many parts of Ireland, we successfully delivered on the maxim "If you build it, they will come". You can now drive on interrupted motorway from Belfast to Cork - as you do so you pass by Irish and multinational employers of thousands of skilled people.
But the journey from Dublin to, for example, Letterkenny is a very different experience and serves as a barrier to the Northwest region fully developing its massive potential as an FDI zone.
The opposite corner of the country would greatly benefit from the establishment of the long discussed Technological University for the South East region. The more Ireland can offer clusters or ecosystems that comprise of leading Higher Education Institutes (HEI) of scale, innovative Irish start-ups/SME's and research intensive FDI operations the stronger our position will be in the future to win new FDI and create great job opportunities here.
Hanging on the wall of one of the largest FDI employers in Ireland, in the middle of reports on its Irish operations' performance, is this framed quotation from Benjamin Franklin "When the well is dry we know the value of water".
It is a salutary reminder of the thousands of FDI jobs all over Ireland, in sectors including ICT, MedTech and pharmaceuticals, that depend on the guaranteed supply of cost-efficient, high quality water.
Countries that we compete with for these jobs are not blessed with the climate that we have. But they have invested heavily in their domestic and industrial water supply and treatment infrastructure - if we don't do likewise we run the risk of being left behind.
The same principle applies to our energy and broadband infrastructure - innovation in these areas is essential to our competitive position.
Government has set itself a target of effective full employment, IDA Ireland has embarked on a strategy to bring 80,000 new FDI jobs to Ireland in the next five years. The US FDI sector is determined to continue to play our part and our leaders are tirelessly promoting Ireland as a great place to work and to live. So we collectively need to create more great places to live - particularly in our larger cities.
We need to ensure that our construction sector has recovered the necessary strength and depth to meet the burgeoning demand for residential and commercial accommodation.
We really need to ensure that those lucky to get these new jobs have the choice to live within a reasonable commute in well serviced communities.
This will require some fresh thinking and a determination not to repeat the mistakes of the past that condemned young working parents to long commutes bookended by dawn and dusk visits to the crèche.
If we want US FDI to create even more valuable jobs here we have got to do what these companies know they have to do - innovate or die. What worked for us in the past to attract US FDI is not going to cut it in the future.
Ireland needs to become world famous for attracting research, development and innovation (RDI) projects of scale.
To do this we need to send out a statement of intent globally - as clear as our statements on the 12.5pc corporate tax rate. We need to double our investment in RDI (collectively from the public and private sectors) from the current level of 1.6pc of GDP to 3pc of GDP by 2025. We need to create more ecosystems of RDI creation between our HEI's, Irish SME's and multinationals. We need to aggressively develop, attract and retain international RDI "rock stars". If we get this right we have the potential over the coming decade to double the level of US FDI here. If this sounds overly optimistic it is worth noting that in the five very tough years for our country, 2008 to 2012, US FDI exceeded the previous 60.
This is a remarkable demonstration of faith and confidence in the innovation and performance shown by our talented workforce.
We have made the right calls so far - we built it and they did come - if we now aggressively enhance it just watch the response.