The COVID-19 crisis has already had a serious impact on Ireland’s economy in 2020 and will continue to do so in 2021. An economy bustling with activity with a forecasted budget surplus turned by mid-March to an economy with surging unemployment with a virtual shut-down. Ireland’s government introduced emergency wage measures for out-of-work employees as the unemployment rate surged from 5 to 22 percent. This sudden unexpected expenditure, the need for additional sovereign borrowing, and lack of economic activity will push Ireland to a budget deficit in 2020 and 2021. The government is hopeful its emergency measures will help businesses and its once-sound economy to quickly return from its COVID-19 enforced hibernation.
The Irish government actively promotes foreign direct investment (FDI) and has had considerable success in attracting U.S. investment, in particular. There are over 700 U.S. subsidiaries in Ireland operating primarily in the following sectors: chemicals, bio-pharmaceuticals and medical devices, computer hardware and software, internet and digital media; electronics, and financial services.
One of Ireland’s most attractive features as an FDI destination is its 12.5 percent corporate tax (since 2003). Firms also choose Ireland for other factors including the quality and flexibility of the English-speaking workforce; the availability of a multilingual labor force; cooperative labor relations; political stability; and pro-business government policies and regulators. Additional positive features include a transparent judicial system; transportation links; proximity to the United States and Europe; and Ireland’s geographic location making it well placed in time zones to support investment in Asia and the Americas. Ireland benefits from its membership of the European Union (EU) and a barrier-free access to a market of almost 500 million consumers. In addition, the clustering of existing successful companies has created an ecosystem attractive to new firms. The United Kingdom’s (UK) departure from the EU, or Brexit, leaves Ireland as the only remaining English-speaking country in the EU and may make Ireland even more attractive as a destination for FDI.
The Irish government treats all firms incorporated in Ireland on an equal basis. Ireland’s judicial system is transparent and upholds the sanctity of contracts, as well as laws affecting foreign investment. Conversely, Ireland’s ability to attract investment are often marred by: high labor and operating costs (such as for energy); skilled-labor shortages; Eurozone-risk; a sometimes-deficient infrastructure (such as in transportation, housing, energy and broadband Internet); uncertainty in EU policies on some regulatory matters; and absolute price levels among the highest in Europe.
A formal screening process for foreign investment in Ireland is still being developed. At present, investors looking to receive government grants or assistance through one of the four state agencies responsible for promoting foreign investment in Ireland are often required to meet certain employment and investment criteria.
Ireland uses the euro as its national currency and enjoys full current and capital account liberalization.
The government recognizes and enforces secured interests in property, both chattel and real estate. Ireland is a member of the World Intellectual Property Organization (WIPO) and a party to the International Convention for the Protection of Intellectual Property.
Several state-owned enterprises (SOEs) operate in Ireland in the energy, broadcasting, and transportation sectors. All of Ireland’s SOEs are open to competition for market share.
The United States and Ireland do not have a Bilateral Investment Treaty, but since 1950 have shared a Friendship, Commerce, and Navigation Treaty, which provides for national treatment of U.S. investors. The two countries have also shared a Tax Treaty since 1998, supplemented in December 2012 with an agreement to improve international tax compliance and to implement the U.S. Foreign Account Tax Compliance Act (FATCA).
|TI Corruption Perceptions Index||2019||18 of 175||http://www.transparency.org/
|World Bank’s Doing Business Report||2019||24 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2019||12 of 129||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, historical stock positions)||2018||$442,167||http://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2018||US$ 61,390||http://data.worldbank.org/