
Foreign Direct Investment
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 2022, after falling sharply from USD 149.4 billion in 2019 to USD 80.9 billion in 2020, FDI inflows to Ireland further shrank to USD 15.7 billion in 2021. Ireland dropped to the 25th rank in terms of FDI inflows, but ranked 9th in terms of FDI stock, which reached USD 1,362 billion in 2021 (UNCTAD). According to OECD data, Ireland’s inward FDI flows dropped to negative levels in Q1 2022 (USD -522 million) and in Q2 2022 (USD -36.1 billion). In addition to the COVID-19 pandemic, the war in Ukraine and inflation created a challenging business environment.
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).
According to the latest The Economist’s Business Environment ranking, Ireland is a top performer, occupying the 8th position out of 82 countries. The business climate is favorable, but it worsened recently due to changes to the tax regime. Having signed the International Tax Agreement in October 2021, the corporate tax rate will be increased from 12.5% to 15% for companies with a turnover of at least EUR 750 million, reducing the attractiveness of the Irish economy. According to the Investment Promotion Agency of Ireland (IDA), more than 32,000 jobs were created through FDI in 2022 (over 24,000 net jobs). In the first half of 2022, investments were up 9% on 2021, with associated employment potential of over 18,000 jobs. 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 | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 76,572 | -4,930 | 1,490 |
FDI Stock (million USD) | 1,384,691 | 1,394,868 | 1,408,749 |
Number of Greenfield Investments* | 248 | 291 | 331 |
Value of Greenfield Investments (million USD) | 12,022 | 9,569 | 26,533 |
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.
