The relationship forged between the US and Ireland has been a remarkable one.
It is one where personal sentiment has combined with cold commercial calculation to produce a remarkable result. There is little doubt that the affection of Irish America has played its part. Key figures on the boards of leading players, such as Donald Keough at Coca Cola, have looked kindly on their ancestral country and have played a part in persuading colleagues to back on investment in Ireland.
The country is seen as stable, pro-enterprise and with a tax system designed to maximise the sheltering of profits earned. Our politicians have been willing to back up the efforts of the IDA, one of the most effective sales and marketing organisations of its kind.
All of which counts with the hard-headed if occasionally sentimental characters who make the key decisions on the location of overseas plants and on which facilities will benefit from further expansion.
The handling by the country of the huge challenges posed by the financial crash has not gone unnoticed in high places.
Our leaders have beaten a track to Washington DC and beyond. Former Taoiseach Enda Kenny, was at his most effective when he energetically pitched the country to America’s business community during the darkest years of the economic crisis.
The low corporation tax strategy has always had its critics, particularly on the Left of the political spectrum, but the impact of the flows US-sourced foreign direct investment on the wider Irish economy over the past 30 years cannot be denied.
US firms began investing heavily in Europe after World War Two as the Continent’s economies began to rebuild, with financial aid provided under the Marshall plan. By 2015, total US overseas direct investment amounted to five trillion dollars ($5,000 billion), according to the US Congressional Research Service.
In the case of Ireland the total amount of accumulated FDI by US firms here had reached $343 billion.
Only the Netherlands and Luxembourg fared better – at $858bn and $503bn respectively.
This compares with accumulated US FDI in Italy of just $22 billion and in Germany of $108bn, in France, $78bn.
The total sum invested by US companies in Latin America was $847bn – in the Continent of Africa, a mere $64bn.
Almost 14 million were employed overseas by US firms at the end of 2014.
Since the publication of this data, of course, an important event has taken place – the election as President of Donald Trump on an ‘America First’ platform.
One of the new Administration’s first steps was to push through tax reforms aimed at narrowing the differences in US corporation tax rates with those of competitor countries. A key underlying aim was to encourage the repatriation of invested funds from overseas.
Despite these changes, foreign investment has continued to flow, with 13,500 jobs secured from overseas by the IDA in the first half of 2019 – a 20% increase on the same period in 2018.
Three-quarters of US companies based, here, have expanded their operations in 2019. But despite the spreading of the recovery, there remains an excessive concentration of investment activity in the cities.
Every player seeks to build on success. We must ask ourselves the question: Is Ireland exploring all the opportunities when it comes to sourcing capital from the US? Arguably not. One approach would be to promote local entrepreneurship through a further strengthening in links between young high potential firms and providers of capital.
The long period of quantitative easing and low-cost loans has generated a bull run in the equity markets. Those with accumulated savings have been seeking profitable outlets. One result is that the venture capital industry has been in growth mode.
Irish firms need to tap into these new sources of funding, management expertise and contacts.
KPMG global has produced interesting figures on the rise of the venture capital industry. In the first three quarters of 2019, venture capital investment in Europe reached almost $29bn. In Ireland, the VC industry is growing, but it remains modest in size comparatively speaking.
In the third quarter of 2019, 22 venture capital deals closed here worth in total $185m.
In its report, KPMG was positive about the country: "Ireland continues to attract a significant amount of attention from VC investors and Fintech ( financial technology) remains a very hot sector," said Anna Scally, Head of Technology and Media at KPMG.
Irish entrepreneurs have certainly been attracting interest from overseas. The outstanding recent example has been the decision of Google – a major investor in Ireland – to pay a reported $163m for an Irish IT firm, ‘Pointy, co-founded by Charles Bibby and Mark Cummins.
This is an example of how a major FDI player can deepen its links with a country without adding one brick to its existing set of facilities where thousands are directly employed.
As has been reported, ‘Pointy’ previously raised $19m in three rounds from investors including Frontline Ventures and Vulcan Capital. As Mr Cummins told RTE, ‘over the years, we have developed a very close partnership with Google.’
Firms such as this have frequently benefited from seed funding provided by Enterprise Ireland.
One of the key IDA strategies over the years has been the development of clusters of firms in particular sectors. But the incentives have not always existed to maximise the commercial potential offered by the presence of major plants.
The development of an entrepreneurial economy requires that the right infrastructure – financial, managerial, technical is in place.
In the US, such financial infrastructure exists in abundance, though it has tended to be concentrated in particular areas – in Silicon Valley, south of San Francisco, in particular.
As it happens, Irish universities and technology colleges have become increasingly adept at generating commercial spin-offs. These have risen from one or two, a decade ago, to more than thirty a year. Typically, they receive backing from EI’s commercialisation programme.
A good example is Sensl, a company created by a UCD based team of physics researchers which was sold to a US semiconductor firm.
A key goal is to try and ensure that such companies are not sold off prematurely before they have realised their full potential.
A delicate balance must be struck here as promoters/founders and financial backers are entitled to realise the benefits of their hard work.
The question to be asked is whether the system is geared in such a way as to encourage founders to stay the course.
What outsiders like Americans can bring is a huge expertise in the financing of projects, not to mention expertise in management and in allied professional skills.
Ireland needs to reduce its reliance on the relatively small group of major companies who have been drivers of the Irish FDI success story over the past decade.
We also need to ensure that investment is less concentrated.
Measures such as the rollout of broadband and other infrastructure will help. Already towns such as Skibbereen are benefiting from the presence of IT hubs.
It is important to be aware that the size of a country is not necessarily a factor when it come to innovation.
Recently, the publication ‘Silicon Republic’ interviewed the Austrian entrepreneur, Dr Hermann Hauser, a man who has founded more than twenty companies.
He points out that despite its small size, Austria is an important player in quantum computing, one of the major global start up growth areas.
He believes that Ireland shows ‘great potential ‘ in areas such as software, digital-health and fintech.
Concerns remain that the country remains over reliant on traditional forms of direct investment by large US companies, most of which has bypassed the country’s regions. This in turn has meant that much of our skilled labour is not being fully used, and with people being forced into long commutes into Dublin, in particular.
A new lobby group, Scale Ireland, has expressed the view that the system for start up businesses in Ireland is too fragmented. They claim that the government does not give the same attention to start ups as it does to farming groups ( farmers may disagree about this )
But we also perhaps need to consider building alliances with young businesses across the Atlantic seeking market openings in Europe.
We could be seeking to license bright new ideas, or enter into supply and research agreements.
State agencies could consider hiring people with inside knowledge from the US of how best to fast track businesses towards success.
In the 1960s, we imported skilled arts, craftspeople and marketeers from overseas, under the Kilkennuy Design umbrella. Many of these people stayed to build businesses, here, contributing greatly to the economy and to the localities where they settled.
As we entered the third decade of the twenty first century, we can look back on a period of great success on the foreign investment front, but the time has come for the country to enter into a new period of innovation and reinvention. A key of this process must surely involve a broadening out in the type of relationships between this country and the US business community.