Posted 05 November 2008
Ireland should wean itself from dependence on Foreign Direct Investment, says US expert
Senior economic advisor to Barack Obama and former U.S. Under-Secretary of Commerce for Economic Affairs, Dr Robert Shapiro has declared that Ireland must ‘wean itself from dependence on Foreign Direct Investment’.
Speaking at a seminar hosted by UCD Business Schools, Shapiro predicted that a highly skilled, English speaking workforce is the key to giving Ireland an advantage over all other states competing for FDI.
Pictured far right: Dr Robert Shapiro speaking at UCD
“Ireland is the greatest economic success story in the last fifteen years and it will continue to be an attractive site for FDI as long as it continues to provide the caliber of graduate that foreign investors have come to expect,” said Shapiro.
“A low corporate taxation rate is not the most important factor moving forward, it goes beyond that,” he explained. “The next stage is not FDI, but a series of policies that actively promote spillovers from FDI corporations to Irish indigenous firms.”
According to Shapiro, the best way forward is for young Irish people to become entrepreneurs and force existing business to compete and become the best in the world. “If you look at the Chinese model, FDI is a transitional strategy, not an end game strategy, that creates a lasting impact. The key to Ireland’s next stage is to make the entire economy a modern economy and not one that depends on the success of foreign companies.”
“The ability to develop ideas is the single most critical factor and source of wealth and growth for advanced economies today, replacing physical assets and this is what Ireland needs to focus on.”
Executive VP of Wyeth Biotech, Dr Michael Kamarck, who also addressed the seminar on Foreign Direct Investment, outlined how increased costs are starting to eliminate the advantages of Ireland’s 12.5% business-friendly rate.
“Utility costs have increased 100% in the last couple of years. This, plus increased healthcare costs, erode the tax advantages of doing business here and will result in employment being cut,” said Dr Kamarck. “It will be important to make sacrifices to keep Ireland an attractive location for FDI.
“You can beat a zero tax rate. If you look at Puerto Rico, it has increased its volume based R&D tax rate to 50%. You can provide tax credits for investment in Ireland and continue to invest in education. We need talent that can increase efficiencies in processes,” said Dr Kamarck referring to what Ireland could do to remain a competitive location for FDI.
Speaking at the same seminar in UCD on 04 November 2008, Aidan Brady, Country Officer, Citibank Ireland agreed that countries must reconsider their approach to FDI. “Globally, industry will have to rethink models. Consolidation will mean major job losses of about 15-20% across the board,” he said.
The UCD Business Schools are: the UCD Quinn School of Business and the UCD Michael Smurfit Graduate Business School
The 'FDI: What's the Forecast?' seminar was the most recent talk in a series on 'Growing Ireland' hosted by UCD Business Schools. Previous seminars have included 'IFSC 2.0- The Next Phase' and 'Property: The shape of things to come.'
For more information on the 'Growing Ireland' series, log onto www.ucd.ie/businessalumni
