1. Is Ireland getting the most from the MNC sector?
Frances Ruane, IIEA
TASC- FEPS Conference, 22 June 2018

2. Questions What did Ireland want from MNCs?
What policy approach did Ireland adopt?
What did Ireland get from MNCs?
What should Ireland want from MNCs in the future?
How can Ireland get more from MNCs?

3. What did Ireland Want from MNCs?
To help address the major economic and social problems of the mid-1950s
Emigration*, high unemployment
Negligible growth*, capital outflows, balance-of-payments deficits
High tariffs, FDI controls, trade deficit
Fiscal deficits, uncompetitive economy
Trade Policy: Open up the economy to trade starting with export promotion
Incentivize exports by existing Irish companies
Attract MNCs to use Ireland as Export Platform into Europe
FDI Policy: attract FDI to get more employment (stem emigration) through
New capital / management
New technology
New markets

4. Starting point: Century of Declining Population through Emigration

5. Starting Point: Contrasting Weak Growth in early 1950s
% Change GNP : Ireland (8%), UK (21%) OEEC (42%)

6. What policy approach did Ireland adopt?
Common Approach to FDI and Indigenous Industry
Financial incentives (capital grants to support employment)
Fiscal incentives (zero tax on profits from exports to support exports)
Adjustment to EU / WTO rules to ensure low CTR not an ‘incentive’
Removal of pro-export bias – 1980s – 10% rate introduced
Removal of pro-trade bias – 1990s – 12.5% rate introduced
Promotion of high value-added sectors
Limitation on general financial investment incentives s
Introduction of R&D grants + tax incentives (Lisbon Treaty) – 2000s*
Increased focus on quality as well as quantity of jobs – high V-A activities

7. What did Ireland get from MNCs?
Contribution to generating employment, investment?
Wide range of indicators – comparators are important
E.G. Direct Impact of US MNCs; Seamus Coffey, Chair, IFAC / UCC
How Ireland compares with EU countries in terms of relative size of
USMNC employment in business sectors - 100,000+ employees
US MNC personnel costs in business sectors – 6.5 billion euro
US MNC tangible investment flows into business sectors – 2.5 billion euro
Further indirect impacts:
4+ billion euro spend on local goods and services – policy objective
4+ billion euro in corporate taxes – by-product of policy design

8. Secondary Source: Seamus Coffey IFAC/UCC

9. Secondary Source: Seamus Coffey IFAC/UCC

10. Source: Seamus Coffey IFAC/UCC

11. What should Ireland want from MNCs in the future?
Maintenance/growth of high quality employment
Pro-Growth Sectoral composition
High growth activities in high growth sectors
High tech activities in high tech sectors
High environment quality standards and commitments
Contribution to building national skill base in economy
On the job training; CPD
Stronger linkages with Irish indigenous sector and research system
Increased real R&D activity in Ireland

12. Cost of R&D Tax Expenditures, 2015-2004

13. Number of Entities Availing of Tax Relief 2015-2004

14. How can Ireland get more from MNCs?
R&D reliefs – ensure correct use and minimal deadweight
Monitor closely and watch pattern of growth in R&D Tax Expenditures
Ensure alignment of reputations in relation to global taxation system
Adherence to OECD reforms, etc
Increase attractiveness of non-tax factors through competitiveness and consistent policies in relation to attracting/retaining talent:
Housing
Education
Health
Quality of life supports (including culture)
Reintegrate IDA Ireland and Enterprise Ireland?