How a stronger relationship with the USA is contributing to Ireland’s economic success
The tradition of an agrarian economy is still apparent in Ireland. The iconic rolling hills are still lush and picturesque. Many of the streets still boast cobblestones and charming architecture straight from a storybook.
However, there is a new energy in the air, and excitement to witness as Ireland’s economy booms like never before. In cities, modern office blocks and conveniences stand testament to the mix of old and new, statuesque and evolving.
Ireland has quickly become a hub of globalization, a place of economic and social opportunity, and a shining example of the possibilities with a innovative approach to adaptation. With business sectors of all kinds – from financial technology to biopharma – growing exponentially, the current and future state of Ireland’s economy is exceptionally bright.
According to Ireland’s Tánaiste and Minister for Enterprise, Trade, and Employment Leo Varadkar, “Although Ireland is a small country, it proverbially punches above its weight in the world politically, economically, and diplomatically. Historically, we have a unique experience as a nation. Unlike most western countries, we have experienced colonialism, occupation, emigration, and famine. Despite historic and modern challenges, including COVID-19 and Brexit, we have managed to build ourselves up, and today we are the fastest-growing economy in the European Union. We are a global hub for innovation, proud members of the EU, and founding members of the Euro. Ireland’s success relies on the backbone of the economy, small and medium-sized enterprises (SMEs), but also increasingly relies on foreign direct investment. As the USA reengages in multilateralism, Atlanticism, the World Trade Organization, and climate action, Ireland will have an important role as the only English-speaking country in the EU. We are proud of our historic relationship with the USA and will continue to act as a bridge-builder between the states and Europe.”
While much of the country’s economic upturn and exceptional growth are based on the foundation of internalized efforts in Ireland, the country’s relationship with the United States has emerged as an integral catalyst helping Ireland’s economy realize its potential. How deep does this embedded potential go? Quite deep, actually.
The United States is set to sustain its position as the largest external investor in Ireland. Furthermore, the United States’ investment in Ireland will surpass its direct investments in the ‘BRICS countries’ of Brazil, Russia, India, China, and South Africa combined. To put it differently, the United States’ investment in Ireland has accumulated over the years to a grand total of USD 446 billion—that’s about 67% of all foreign direct investment (FDI) in Ireland.
In addition, the number of American companies choosing to invest in and operate within Ireland continues to grow substantially. Currently, more than 700 American companies operate in Ireland, employing roughly 150,000 people directly and about 100,000 people in Ireland indirectly, contributing to around 20% of national employment.
Ireland has been able to attract a high level of FDI for a variety of reasons. Martin Shanahan, CEO of IDA Ireland, the country’s inward promotion agency, stated, “Investors want stability, consistency, and a talented workforce. Ireland offers that and more, our value proposition remains strong. Ours is a safe and stable investment location with access to the EU market, an educated and skilled workforce, an attractive environment where people want to live and work, and a competitive, consistent and transparent corporate tax regime. We offer good access, connectivity, and an excellent return on investment. We have developed a reputation for excellence in sectors like pharma, medtech, technology, and financial services, with many of the top global companies in these fields now located and operating successfully here.”
While the USA and Ireland have shared approximately 50 years of business relationships, the decade since the 2008 financial crash has perhaps been the most impactful. Compounding the necessity of a strong USA-Ireland relationship is the uncertainty of Ireland’s relationship with the United Kingdom. As Ireland’s connection with the UK has fluctuated and faltered, its relationship with the USA has strengthened.
A cornerstone of the relationship shared by Ireland and the USA is the protection of intellectual property. As Danny McCoy, CEO of Ireland’s largest business representative group, Ibec, notes, “The relationship has always been about intangibles such as goodwill, connections, and relationships.”
Today, those intangible things include intellectual property rights and data protection—two of the most crucial elements in a modern world dominated by cloud-based economies and global networks.
Ireland continues to be ranked as one of the best countries for business, and not just for the large, multinational businesses that already have established names globally. This applies for businesses of all size, scope, niche, and beyond – including small startups just trying to make a name for themselves at the beginning of their boom.
Julie Sinnamon, who retired this summer as CEO of Enterprise Ireland, the government agency responsible for aiding Irish companies to develop and grow in world markets, stated, “Investment is a two-way street. Irish entities actually employ nearly as many people in the USA as American companies employ in Ireland. The USA will remain an attractive growth opportunity for Irish companies into the future. We focused our attention on diversifying and working on innovation and competitiveness.”
Ireland’s appeal to attract inward investment is not faltering. In a post-Brexit world, Ireland is now the largest common-law jurisdiction in the EU and will continue to become even more desirable with its stability, commitment to remain in the EU, and of course, now being the only native English-speaking country in the EU, which promises its own level of business appeal.
Shanahan added, “Ireland is at the heart of Europe. Ireland’s continued commitment to the EU is a core part of Ireland’s value proposition to foreign investors. As companies seek Brexit solutions that will impose the lowest possible additional costs and the least possible disruption to trade, Ireland offers a base to sustain access to the European Single Market, to minimize uncertainty and to grow their business.”
This compelling relationship between the USA and Ireland, both in terms of economic benefit and goodwill, has accompanied a time of growth in Ireland that is not limited to just the economy.
Tánaiste Varadkar noted, “Investments from American multinationals into Ireland have been transformational for our economy. We have a similar business culture to America, and when non-European companies seek a gateway into Europe, they naturally choose Ireland. We are an innovative nation, and Irish companies have a global impact. To keep up with the demands of our growing society, we are embarking on Project Ireland 2040, which has significantly increased capital investment in public housing, broadband infrastructure, new schools, new hospitals, and public transport.”
The progress of Ireland’s economy and emergence as a global leader in innovation has been rapid and impressive. Today, Ireland has surpassed the UK in several performance metrics, including income per capita. Irish companies have been embracing digitalization and diversification. They are continuously innovating and pushing forward with new ideas to drive economic recovery during the pandemic.
Shanahan mentioned, “Ireland is a high value location. In order to be successful, our focus is on talent availability, research and development (R&D), and innovation. Digitization and climate action are pervading all discussions we are having with clients. An exceptional level of collaboration between industry, academia, and state agencies drives Ireland’s dynamic R&D and innovation sector. This is supported by a highly pro-business government policy. A world-class research system, designed to work with and for the benefit of industry, is being further developed thanks to an unprecedented investment of EUR 8.2 billion under the Irish government’s Strategy for Science Technology and Innovation. Ireland is currently 11th in global scientific rankings for overall quality of scientific research, an impressive upward trajectory from a position of 48th just 13 years ago. Ireland offers a strong and growing R&D and innovation environment, complemented by a robust Intellectual Property (IP) regime.”
McCoy, however, argues that “all innovations are networked” in today’s interconnected world. In other words, Ireland cannot claim sole responsibility for leading innovation, but instead, it can take pride in providing a location in which globalization can occur.
