For a country with a population of less than five million, Ireland continues to punch above its weight when it comes to attracting international business. It can be difficult to quantify the reasons why 20 of the world's top 25 financial services companies and the top 10 pharmaceutical companies have made Ireland their home, however in this post we will highlight three annual studies from independent and reputable sources which have been attempting to measure a country’s investment appeal by using a variety of benchmarks.
IBM Global Location Trends 2018
Ireland’s phenomenal success at attracting foreign investment is again highlighted in the IBM Global Location Trends report 2018. IBM has compiled a database which they have used to compare and contrast countries based on their ability to attract new foreign investment since 2002. IBM obtain their figures from a variety of sources including investment data published by the UN, ongoing monitoring of companies' announcements to locate new operations in regions outside of their home region and the jobs created by these new operations.
The 2018 report rates Ireland 6th in relation to the estimated number of jobs per million inhabitants as a result of foreign investment and 1st in the world for average job value of investment projects. In fact, Ireland has been rated 1st in relation to average job value in each of the previous seven reports.
While the report does not provide any causation or correlation factors, it is highly probable that Ireland’s ability to attract higher job value investment is related to the country’s young (almost half under the age of 34) and highly skilled population (52% of those aged 25-34 have a 3rd level qualification, compared to the OECD average of 43%).
Forbes Best Countries For Business 2018
The 2018 report prepared by Forbes magazine gives us a greater understanding as to why Ireland is attractive to foreign investment. For this years report, Forbes have rated 153 nations on 15 different factors to discover which countries are the friendliest towards business. The categories include:
- Property Rights
- Political Risk
- Innovation
- Quality Of Life
- Taxes
- Workforce
- Technology
- Freedom (Personal, Trade And Monetary)
- Corruption
- Red Tape
- Infrastructure
- Investor Protection
- Market Size
In relation to the overall ranking, Ireland was positioned 8th for business friendliness. This high rank was obtained due to Ireland scoring top marks in relation to personal freedoms and ranking in the top 20 in ten of the categories, including ranking 4th in relation to tax burden and monetary freedom.
Out of the top 10 countries of the Forbes list, Ireland has the highest GDP growth (5.1%) and second highest GDP per capita ($61,600) during the investigation period.
IMD World Competitiveness Yearbook 2018
The IMD business school’s 2018 report ranked Ireland as the 3rd most competitive economy in the Eurozone, 5th in the European Union and 12th in the world overall.
The 2018 yearbook (the IMD’s 30th) investigated 63 economies and ranked them based on more than 300 separate criteria.
In relation to the individual criteria, Ireland ranked 1st in the world in relation to industry productivity and Ireland was also ranked 1st for flexibility and adaptability of a country’s workforce. Additionally, Ireland was ranked 2nd in relation to the tax regime competitiveness, 5th in relation to attracting and retaining talent as well as for ease of starting a business.
"Standing still is the fastest way of moving backwards in a rapidly changing world" - Lauren Bacall
These studies give a glimpse as to how Ireland has attracted business in the recent past and highlights some of the reasons how the country has bounced back so efficiently since the recession (Ireland’s unemployment rate in February 2018 was 6% - below the Eurozone average of 8.6%). However, in order to maintain or indeed improve on this position, Ireland must continue to develop and grow during the coming decades.
The country is already looking towards this future and has developed a plan to improve its infrastructure and planning moving forward. The plan is called Project Ireland 2040 and we will look at it in more detail in a future blog post.
Summary
The three studies introduced above highlight some of the factors which have allowed Ireland to prosper in the current business climate. From reviewing each study it would appear that Ireland’s appeal is multifaceted, with its various tax benefits, a highly educated and adaptive workforce and a simplistic company incorporation structure being some of the highlights.
If you have any queries in relation to Ireland as a business hub or have a specific query in relation to your company, please do not hesitate to contact us.
