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Foreign direct investment (FDI) in Ireland

FDI in Figures

Ireland is an attractive destination for investment but inflows are highly volatile as they are dependent on the activities of large multinational companies that are present in the country. According to UNCTAD's World Investment Report 2021, FDI inflows fell sharply by 59%, from USD 81 billion in 2019 to USD 33 billion in 2020, following the outbreak of the Covid-19 pandemic. The main cause has been a fall in intracompany loans from USD 24 billion in 2019 to - USD 69 billion in 2020. Nevertheless, Ireland ranks 8th in terms of FDI inflows in 2020. The stock of FDI reached USD 1,350 billion in 2020. According to OECD data, Ireland’s inward FDI flows were negative in Q1 2021 (USD -8.75 billion) but rebounded to USD 7.26 billion during the second quarter of 2021. The United States is by far the largest investor in Ireland, followed by Luxembourg, offshore centres, Switzerland and the UK. FDI flows mainly target manufacturing, financial intermediation, IT and administrative services (Central Statistics Office). The structure of FDI is changing, as low-value activities are being replaced by R&D and high-end services (engineering, information and communication technologies, pharmaceuticals, medical technologies).

The business climate is favourable, as the country is ranked among the top 25 countries in the World Bank's Doing Business 2020 report (24th out of 190 countries). However, this represents a drop of 7 places compared to 2018 ranking. A change in the processes needed to register property makes it more difficult to do business. According to the Investment Promotion Agency of Ireland (IDA), more than 29,000 jobs were created through FDI in 2021, despite the economic crisis. In 2021, the agency announced a new five-year strategy, which aims to create 800 investments and 50,000 new jobs, focusing on five pillars: growth, transformation, regions, sustainability and impact. Among the country's assets are an attractive tax and legal framework, a skilled and multicultural labour force, and strong ties with the United States. Ireland is also the only English-speaking country of the euro zone.

Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 149,43380,87115,702
FDI Stock (million USD) 1,212,7891,346,8081,362,510
Number of Greenfield Investments* 228246284
Value of Greenfield Investments (million USD) 11,27410,2808,828

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Ireland OECD United States Germany
Index of Transaction Transparency* 9.0 6.5 7.0 5.0
Index of Manager’s Responsibility** 8.0 5.3 9.0 5.0
Index of Shareholders’ Power*** 9.0 7.3 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Ireland

Strong Points

Ireland's strong points include:

  • Strong and tightly knit industrial and tertiary fabric
  • One of the lowest corporate tax rate in Europe
  • Young, skilled and multilingual workforce
  • Competitive economy, with pro-business government policies and regulators
  • Modern infrastructure
  • One of the lowest unemployment rates in Europe
  • Strong and stable domestic demand, notably thanks to high wages and living standards.
Weak Points

Ireland's weak points in term of FDI attractiveness include:

  • The economy is voluntarily very open internationally and therefore highly dependent on the European economy (especially on the UK) as well as the strategies of multinationals that are currently attracted by favourable taxation
  • The economy is highly dependent on the activities of  multinationals: their offshore business, mainly in the form of contract to manufacture abroad, accounts for a quarter of GDP and has a great deal of weight in the labour market
  • Exposure to the consequences of Brexit
  • High labor and operating costs
  • Internal market is relatively small and is under increasing pressure on labour costs
  • Banking sector remains vulnerable to shocks and the level of public and private debt remains high.
Government Measures to Motivate or Restrict FDI
For years, the Irish Government has actively promoted foreign direct investment (FDI). Ireland provides an attractive taxation framework for foreign investors and has one of the lowest taxation rates in the European Union. This strategy has fuelled robust economic growth since the late 1990s.

More recently, the Government has focused on Ireland’s international competitiveness by encouraging companies with foreign investments to increase their research and development (R&D) activities and to provide goods and services with higher added value. The United Kingdom’s departure from the EU (Brexit) leaves Ireland as the only remaining English-speaking country in the EU, an asset for the country.

Several state organisations promote investment inflows:

The Irish government provides aid grants through its investment organizations, which will only pay grant aid after the foreign investors have achieved externally audited performance targets.

The government has invested heavily in ambitious programs to attract the best researchers specialised in business. Science Foundation Ireland (SFI) is the state science agency that has been responsible for administering Ireland’s R&D funding.
In the same vein, by investing in the entrepreneurial ecosystem, the state seeks to attract entrepreneurs to Ireland who wish to create start-ups with a strong international orientation.

Bilateral investment conventions signed by Ireland
To see the list of investment treaties signed by Ireland, consult UNCTAD's International Investment Agreements Navigator.

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Latest Update: January 2023