Market access a major factor in attracting FDI to Ireland
One of the main reasons companies look to invest in countries outside of their home markets is to gain access to new markets. A report from the Economist Intelligence Unit found that three in five, or 58%, of respondents, emphasised market access as one of their top three motivations for setting up international operations. Market access was prioritised over of eight other factors;
- Availability of key skills - 34%
- Government incentives - 32%
- Ease of doing business - 32%
Financial services - FDI priorities
The financial services and non-financial services respondents had similar results with regards to the importance of market access. 55% of non-financial services respondents highlighted market access as a primary factor for setting up outside of their home markets, compared to 61% of financial services respondents. However, differences did exist in secondary factors. Government incentives and the ease of doing business were both highlighted by almost 40% of financial services respondents, compared with about 25% of others.
Non-financial services respondents placed more emphasis on the cost base, with over 40% mentioning either labour or non-labour costs as a factor for setting up outside of their home markets. This was almost twice the level of financial services respondents.
Access to the EU - Ireland’s specific advantage
The report shows that when asked about Ireland’s main competitive advantages, the country's access to European markets was top of the list. 46% of respondents highlighted market access, much more than any other factor.
(see below graph/Figure 1).
The report shows that the opinions of the interviewees’ reflected the findings of the survey.
“A major factor behind Ireland’s success in the 1990s, and a key differentiator between Ireland of the 1970s and of the 1990s was improved access to the EU as a result of the
Single Market.” - Peter Neary, Professor of Economics at Oxford University.
Differences between first-time investors and those with existing operations in Ireland
44% of first-time investors cited Ireland's access to EU markets as the principal competitive advantage, although greater emphasis was placed on access to government and ease of doing business.
While nearly 50% of respondents with existing operations placed the corporate tax rate as the main factor that originally encouraged them to choose Ireland, first-time
investors cited access to EU markets the most significant factor.
The presence of a cluster of similar companies was of high importance, especially for financial services companies.
“Ireland, in particular Dublin, thanks to the International Financial Services Centre (IFSC), is a global centre of excellence for mid to back office staff,” says Bob Keogh, director of Goldman Sachs Bank (Europe).
Ireland is pro-EU
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