Retrospective on Rebekah (Berry) Martindale, “U.S. Foreign Direct Investment in Ireland: Making the Most of Other People’s Money” from Ireland: Taking the Next Step Perspectives on Business and Economics, Volume 19, 2001 Rebekah Martindale ‘00 is director of operations and development at Main Line Classical Academy in Bryn Mawr, PA. The author argued that foreign direct investment, particularly by US companies, was key to driving Ireland’s economic growth and that low corporate taxes, labor costs, and access to EU markets made such investments attractive. Since 2001, has Ireland’s favorable tax system continued to attract foreign direct investment? Since 2001, Ireland has remained a desirable country for foreign direct investment (FDI) because of its favorable low tax rates. Although the European Monetary Union’s leveling policies were threatening Ireland's economic success at the time of this article, no tax harmonization was enacted. In 2003, Ireland adopted a 12.5% corporate tax rate on international trading profits. This rate is a central component to Ireland's success in attracting FDI. The rate is the second lowest in the EU. In 2021, Ireland signed the OECD International Tax Reform Agreement, with a new rate of 15%. “This rate will only apply to multinational companies with turnover of approximately 800 million dollars or more” (New Zealand Ministry of Foreign Affairs and Trade, 2023). The OECD’s agreements are efforts made to advance equality of business opportunities. “These taxation agreements serve to promote trade and investment between Ireland and the partner countries that would otherwise be discouraged by the possibility of double taxation” (Bureau, 2023). However, this new reform agreement is not forecasted to hinder Ireland's success in attracting FDI. Because of extremely low corporate international tax rates, a well-educated workforce, knowledge of the English language, and a probusiness government, Ireland will continue to attract foreign investments. Does the US continue to dominate FDI in Ireland? In 2001, the US was dominating Ireland’s foreign direct investments, comprising 64% of employment by foreign firms in Ireland. Because of the well-educated Irish workforce, the English language, and low taxes, the US saw an opportunity to capitalize on Ireland’s otherwise untapped economic potential. Today, American firms account for “about 59% of Ireland's FDI during 2021” (Bureau of Economic and Business Affairs, 2023). Even during the height of COVID-19, Ireland's economy continued to surpass growth forecasts. Ireland continues to find success in attracting US investors drawn by the development of the country’s high-tech services. “There are over 950 U.S. subsidiaries in Ireland operating primarily in the following sectors: chemicals, biosciences, pharmaceutical and medical devices; computer hardware and software; internet and digital media; electronics, and financial services” (Bureau of Economic and Business Affairs, 2023). Information and communications technology, as well as big pharma, account for most of these foreign direct investments. “Amazon, Facebook, Microsoft and Google are among those that have chosen to set up their European headquarters in the country, along with life sciences, financial services, engineering and business” (New Zealand Ministry of Foreign Affairs and Trade, 2023). The United States continues to be Ireland's number one foreign direct investor, as other countries begin to invest in the country. References Bureau of Economic and Business Affairs. (2023). 2023 Investment Climate Statements: Ireland. US Department of State. New Zealand Ministry of Foreign Affairs and Trade. (2023, June). Foreign direct investment in Ireland. MFAT Market Intelligence Reports. Retrospective by Randi Conroy ‘25 Finance, with mass communication minor Martindale Retrospectives 4 December 2023
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