Ireland's progression towards a Knowledge Economy

Abstract

Globalisation has made the world a very small place. Multi-National Companies (MNCs) seek to optimise their return on overseas investmentby applying stringent techniques for assessing the suitability of new markets. The growth over the last decade in global foreign direct investment (FDI), points to an increasing need by MNCs to find appropriate overseas locations to serve fragmented local markets and to be closer to key customers. There is a belief that MNC's provide quality jobs,superior skills and technology and opportunities for local linkages and exports (Dunning, 1993, Young et al., 1994a; Dicken, 1998).In recent years, the Republic of Ireland has been haloed as a leading location for foreign direct investment. Neatly perched on the periphery of Europe, Ireland has in the last decade, outperformed many developed countries. More recent waves of investment are seen as being of higher quality in terms of affiliate autonomy and local sourcing (Amin et al.,1994) and as a result, the extent to which inward investors become embedded in host countries takes on even greater significance (Phelps,2000). The scope of this research is to conduct an exploratory investigation into the factors that specifically influenced decisions by MNCs to invest in R & D facilities in Ireland.The investigative methodologies employed saw the application of both primary and secondary research. An initial review of the relevant literature focused on FDI in the global and Irish contexts. Primary research, in the form of depth-interviews, was undertaken with existing MNCs in Ireland.The results of the research indicate that whilst Ireland has been extremely successful in attracting manufacturing and service related activity, it has not done as well in securing large scale R&D investment. Equally, the factors that conspired to attract existing R&D investment in Ireland do not follow the more traditional and expected investment requirements matrix as applied by MNCs in seeking new investment locations.