By: Tracy Watson
Ireland Then and Now... a Brief Retrospective
If the global financial crisis, which came into sharp relief in 2007, had an apogee, it could well have been Ireland. The global fiscal crisis, which shook and continues to shake the EU (both lender and debt economies), exacerbated the nascent financial crisis in Ireland, which came to a head in 2008. Recapitalization, coupled with initiatives intended to cope with a hemorrhaging banking sector, resulted in contingent and actual fiscal liabilities that led to the Irish State pursuing external assistance in 2010. Subsequent to this move, the country has been working to adhere to its regimen of financial and structural reforms (austerity measures) and continues its bold pursuit of foreign investment.
FDI, or foreign direct investment, is a substantial contributor to Ireland’s economy, and consequently, to Ireland’s economic recovery. In fact, according to the Deloitte report Investing in Ireland Your move in the right direction, large companies (e.g., multinationals) contribute the lion’s share of corporate tax revenue paid in Ireland (approximately 75%). And while Ireland’s financial crisis continues, the country has made great strides through its rigorous campaign to attract FDI; even as the crisis escalated, in 2009 Ireland procured 2.4% of GDP from corporate tax revenue, whereas two of its strongest lender compatriots only garnered 1.3% and 1.4% (Germany and France, respectively).
How Ireland is Repositioning Itself through FDI
According to the Deloitte report, nearly 1,000 multinational corporations have established their European base in Ireland. Pharmaceutical manufacturers, medical device makers, information communications technology (ICT) providers, and financial services, are leaders of FDI in Ireland. The incentives for these companies are numerous and extend far beyond the highly attractive 12.5% corporate tax rate. Of foreign companies in Ireland, U.S. companies comprise a significant portion: 600 U.S. companies currently operate in Ireland and employ 100,000 workers, according to a report by ’60 Minutes’. Moreover, the U.S. paid 33% (or one-third) of Ireland’s total corporate tax, according to the Deloitte report, over the past 10 years.