Language, business environment cited as attractions to foreign investment

THE ease of doing business, being an English-speaking country and the low corporation tax rate mean Ireland is still a huge attraction for foreign investment.

Research has also found that the total stock of US foreign investment in Ireland is greater than total US investment in China and 81 times the level in Greece. According to some of the country’s leading economists, Ireland is the best country in Europe for ease of doing business and the country has retained “exceptional advantages” as a location for foreign direct investment, despite the economic downturn.

Economists Alan Gray, Greg Swinand and William Batt said that the crisis in the Irish economy has actually reduced some of Ireland’s disadvantages as an investment location, including uncompetitive housing and property prices, high labour rates and escalating electricity and energy bills.

In their book, Economic Analysis of Ireland’s Comparative Advantages for Foreign Investment, the economists survey the chief executives of more than 100 multinational companies based in Ireland.

In the manufacturing sector the level of US foreign investment in Ireland is around 70% of total US investment in manufacturing in China and 22 times the level of Portugal and more than six times US manufacturing investment in the Czech Republic.

According to the authors the factors which have contributed to this remarkable performance include English language and ease of doing business. They also said Ireland’s 12.5% corporate tax rate is a major advantage and according to their estimates because of the tax rate the cost of capital for multinationals investing in Ireland is the lowest of any OECD countries.

According to Mr Gray the analysis suggests Ireland remains one of the most attractive locations in Europe for foreign investment for hi tech and export service.

“The post-crisis developments on the economy have in fact improved Ireland’s competitiveness for specific type of inward investments. If Ireland’s advantages for foreign investment are developed these can be harnessed to secure a return to long growth in the economy.

“Ireland cannot however afford to be complacent and given the policy mistakes in other areas priority needs to be given to maintaining Ireland’s attractiveness for foreign investment, and ongoing adjustments to costs and improvements in infrastructure are needed,” he said.