Foreign-Owned Companies

A prolonged surge in FDI became the main driver of the boom, especially in the 1990s. Initially, this mainly involved high-tech manufacturing, with services becoming increasingly prominent later. The high-tech manufacturing sectors were less important in terms of net foreign earnings than they appeared to be in terms of exports, while the reverse was true for services. The purchasing linkages and R&D intensity of foreign-owned firms did not develop strongly during the boom, but they did increase their skill levels as more advanced activities were introduced. The overall effect was probably to make them more embedded in the Irish economy and more capable of sustaining higher pay levels, although less integrated than they would be in their home countries. The surge in FDI was not primarily caused by new policies in Ireland. Rather, it was mainly a result of new developments outside Ireland, particularly the introduction of the single European market and the rise of new fast-growing high-tech industries. At the same time, however, existing tax and grant incentives and other conditions in Ireland were very well suited to taking advantage of the new opportunities to attract FDI.