Conclusion

Foreign direct investment was a major part of the explanation for the boom. A substantial surge in FDI coming into the EU was brought on by the Single European Market and by the rise of new high-tech industries. Ireland’s share of FDI in the EU was increased by Ireland’s existing tax incentives being particularly attractive for the type of companies that predominated in those rising new industries, and by a focus in Irish education on preparing graduates for those industries. It was possible for FDI to have a major impact on the overall economy because the Irish economy was relatively small and open. Increased growth in Irish indigenous companies, assisted by new industrial policy measures, also played a part. Strong growth in demand in export markets, the EU structural funds and social partnership all helped to boost growth. Heavy reliance on FDI may be a strategy that could work out well for Ireland in some periods, but it is a strategy with significant risks. To achieve more sustainable results, Ireland needs to put greater emphasis on the development of indigenous companies.