1. Presentation by: Jennifer Condon & Doreen Mc Keown

2. State involvement in Industrial Development in Ireland

3. Agenda  The “Celtic Tiger Economy”  The environment supporting Industrial Development in Ireland  Multi-National Industry in Ireland  Irish Owned Industry  Doing Business in Ireland

4. The “Celtic Tiger” Economy

5. Historical Perspective  1922: Ireland achieves independence  1920s - 1950s: primarily agricultural  Late 1950s-1960s: Policy of Direct Foreign Investment  1960s-1970s: Process of industrialisation  1973: Ireland joins EU  1980s: Stagnation  1990s: Rapid growth

6. Europe’s Fastest Growing Economy

7. Average growth in real GDP 1995-1999 Source: OECD Economic Outlook, 1999 (1999 projections)

8. GDP Growth 1994-2000 (Source: OECD)

9. Growth in Disposable Income

10. Export-led Growth

11. ExportsExportsImportsImports 1990199919901999 %% UK34224232 EU44422722 N America09161517 Other13201629 Trade Diversification

12. LABOUR FORCE DEVELOPMENT 1980-1990: lagging behind…... Population EMPLOYMENT Labour Force UNEMPLOYMENT +105,000 +62,000 -22,000 +84,000

13. LABOUR FORCE DEVELOPMENT 1990-1998: racing ahead…... Population EMPLOYMENT Labour Force UNEMPLOYMENT +202,000 +273,000 +293,000 -40,000

14. MIGRATION: the flow reverses…... INFLOW OUTFLOW 19801990 2000

15. The Environment Supporting Industrial Development in Ireland

16. Macro-Economic Policy Framework  Investment in Education  Investment in Telecommunications  Reduction in Tax Burden  Reduction of Public Debt  Partnership Process/Negotiated Governance

17. Ireland’s Demography Total Population Labour Force Full-time Education 3.66 million 1.51 million ( 41% ) 1.51 million ( 41% ) 0.95 million ( 26% ) 0.95 million ( 26% )

18. Availability of Skilled Labour  Free Education policy at second level & University  7 Universities & 13 Institutes of Technology  All primary & secondary schools have Internet connectivity  Education Technology Investment Fund – supported the development of Technical Degrees  Projected 40,000 per annum new entrants to labour force to 2006  Over 50% graduates have technical qualification  Close liaison with industry to assess skill & number requirements

19. Investment in R&D  Research & development in Universities & Institutes of Technology  National MicroElectronics Research Centre – Cork  Science Foundation Ireland Informatics Bio-Technology  Media Lab Europe

20. Major Advances in Telecommunications Infrastructure  U.S.$5bn investment in digital networks  Full liberalisation of telecoms market  Major new investment to extend Broadband access regionally

21. Current broadband capacity between main towns and cities is 2.5Gbit/s Dublin, Galway, Limerick and Cork linked with 40Gbit/s capacity Broadband backbone capacity

22. Taxation Policy  Corporate Tax Profits derived from eligible manufacturing and qualifying services are subject to a tax rate of 10% until 31 December 2002 and 12.5% from 1 January 2003.  Capital Gains Tax halved to 20% since late 1990s  Reduction of Personal Taxation (partnership agreement balance against wage restraint)

23. General Government Debt as % GDP

24. Partnership process  Five tri-partite programmes of growing sophistication since 1987  1987: “National Recovery”  1991: “Economic and Social Progress”  1994: “Competitiveness in Work”  1997: “Partnership 2000”  2000: Partnership for Prosperity & Fairness

25. Other key Factors  Legislative Framework eCommerce Bill Copyright Establishment of Independent Telecomms Regulator  Strategic deployment of EU Structural and cohesion funds through the National Development Plan  Information Society Commission Initiative  Programme for eGovernment

26. Multi-National Industry in Ireland

27. The role of IDA Ireland?  State Agency  Funded by Government  Targets Foreign Direct Investment into Ireland as a key element of Ireland’s economic development strategy  Assists existing companies to build and strengthen strategic value in Ireland  Provides incentives for foreign investors

28. IDA Strategy  Sectoral Focus (we can’t be good at everything)  Concentrate on our Strengths People Skills EU Access (Euro Adoption – English Language) 10% Corporate Tax Rate (to 31/12/2002) Excellent telecommunications Competitive costs  Focus on High Growth Sectors

29. Key Sectors  Information Technology  Pharmaceuticals/Healthcare  International Services Software Teleservices/Shared Services  Financial Services - IFSC  eBusiness

30. Information & Communications Technology  Apple Computer  3Com  Compaq  Dell  Ericsson  Fujitsu  General Electric Hewlett-Packard Hitachi IBM Intel Motorola NEC Nortel Sun Microsystems Xerox 300 companies - 67,000 employment Exports: IR£13 billion

31. Pharmaceuticals & Healthcare  Abbott  American Home Products  Bausch & Lomb  Baxter  Boston Scientific  Bristol- Myers Squibb  Elan  Eli Lilly  Johnson & Johnson Leo Laboratories Medtronic Merck Pfizer Pharmacia & Upjohn Roche Schering-Plough Glaxo SmithKline Yamanouchi No. 1 location in Europe 155 companies - 19,000 employment Exports: IR£12 billion

32. International Services – including Software Gateway 2000 Hitachi IBM KAO Infosystems Lotus Merrill Lynch Microsoft Motorola Oracle Philips Sun Microsystems UPS Whirlpool  DEC  Dell  Ericsson  DEC  Dell  Ericsson  SAP  Computer Associates  Accenture

33. Financial Services - IFSC  AGF  American Airlines  AOL Bertelsmann  Apple  Bankers Trust  Bear Stearns  Chase Manhattan  Citibank  Compaq  Credito Italiano

34. Source of Foreign Investment

35. Unique Importance of FDI  1,200 IDA-assisted companies  > 140,000 employed  > 50% of manufactured output  > 80% of manufactured exports  > 35% of GDP  €15.1b Irish Economy Expenditure  €1,650m corporate tax paid  Technology and management skills

36. Future Focus – eBusiness & Digital Media  Most competitive infrastructure/deregulation  Legislation Non-discrimination between electronic/paper transactions Copyright/Intellectual Property  Business-friendly environment  Digital Media District  Excellent connectivity  National Digital Park

37. The Development of Irish Owned Industry

38. The role of Enterprise Ireland  Semi-State Agency - funded by Government  Focused on Irish Owned Companies  Identify and assist High Potential Companies in the process of their business development  Emphasis on companies with potential for Internationalisation and exports  Foster innovation in companies

39. Enterprise Ireland Strategy £ To help client companies develop a Sustainable Competitive Advantage leading to increased profitable sales, exports and employment £ The client base of Enterprise Ireland will be comprised of companies which are Irish based and whose growth and development can be enhanced through working with Enterprise Ireland

40. Over 90% of Irish Owned Companies are SMEs EmployingCompaniesSalesJobsExports TOTAL100% Under 1019%2% 3% 10-5063%25%33%21% 50-25016%35% 250 +2%38%30%41%

41. Current Structure by Sector SALES

42. Current Structure by Sector EXPORTS

43. Current Structure by Sector EMPLOYMENT International Services 11%

44. Exports by Market Region (Growth) 2000 UKEUROPEUSROW £3.5B (+10%) £2.3B (+17%) £1.2B (+25%) £1.0B (+18%) TOTAL

45. Sectoral Trends Emergence & Growth Decline Software I.T Prepared Consumer Foods Textile & ClothingCommodity Foods Selected Sectors

46. Sectors  Software and International Services (700+ companies)  Healthcare, Pharmaceuticals, Chemical, Print & Packaging, Construction (700 companies)  Electronics and Precision Components (350 companies)  Engineering (350 companies)

47. Irish Owned Software Companies  Over 640 Irish owned companies  40-50 new high potential start-ups annually  Revenue Over £1 Billion  Revenue growth 20% + per annum (95-00)  Export growth 25% + per annum (95-00)  Exports represent 75% + of production (‘00)  USA largest market for Irish software companies - 36% of exports

48. Irish owned Healthcare Companies  75 companies  Includes 10 of the top 15 Medical Device companies Medical Disposables Opthalmic Products Orthopaedic implants Medical Electronics Diagnostics Kits  Niche companies in Medical Devices, Components, Pharmaceuticals, Diagnostics, Chemicals and Biotechnology  Small Players internationally/no strong proprietory technology  Employment 12,500  Annual Exports US $2bn

49. Irish owned Biotech Sector  18 companies / total of 348 people employed  Key players are Trinity Biotech, Biotrin, Megazyme and Plant Technology - collectively employ 248  Trinity Biotech and Megazyme had their origins overseas  All companies were established over the past 10 years  Growth in employment has averaged 26.5% over the period 1995-1999

50. Electronics  Company Focus  Electronics  Subsupply  Telecommunications  Process Control – particular growth  Instrumentation  Proprietary Technologies  Niche Markets  Suppliers to MNCs  Sub-contract manufacture

51.  Software  Electronics  Localisation  Shared Services  Call Centres  Financial Services  Medical & Healthcare Future focus – Internationally Traded Services

52. Future Key Opportunity Sectors  Informatics including software  Digital Media  eBusiness – transition & new businesses  Healthsciences – including Bio-informatics

53. IR£m Exports Imports 199711.508 1.997 1998 7.348 4.328 1999 6.302 5.155 2000 9.48611.332 Ireland - Lithuania Trade

54. Doing Business in Ireland

55. Why companies choose Ireland Unique Return on Investment Unique Return on Investment Competitive Cost Environment Highly educated and flexible workforce EI / IDA Assistance Low Corporation Tax Low Corporation Tax Telecommunications Infrastructure Supportive Business Environment Supportive Business Environment

56. Ireland – a key location in the EU EU: 370m Single Market EURO implementation English Speaking Export orientation Business friendly environment Equal treatment for foreign/Irish businesses

57. Doing Business in Ireland  Think Partnership – mutual benefit  Remember the size of the Irish Market  Many Irish Companies are focussed on opportunities in markets outside of Ireland  High tech companies are particularly export oriented  Agencies can help – BUT they need to be clear about your requirements!