Foreign Direct Investment in Ireland 2017

Source Publication: Foreign Direct Investment Annual 2017

Get the data: StatBank BPA34, StatBank BPA37

The significant dip from 2014 to 2015 in Figure 2.1 can be attributed to the large growth in FDI positions (the denominator in the return on investment equation) during that period.

FDI in Ireland by Location of Investor

Figure 2.2 shows Ireland’s main FDI partner countries by the immediate location of the investor. It is important to note the difference between the presentation of FDI by immediate partner country in comparison to the ultimate controlling parent (UCP) presentation. When Figure 2.2 is compared to Figure 1.6 (for 2017), the stock of investment from the US as ultimate investor, at €519bn, is €340bn greater than the stock of US investment presented by immediate owner (€179bn). This is to say that some of the investment had an origin in the US, but entered Ireland from a different country. Notably, significant portions of investment from the Netherlands, Luxembourg and Bermuda are evident when viewed by immediate investor, which are much smaller when analysed by the ultimate investor (Figure 1.6).

Source Publication: Foreign Direct Investment Annual 2017

Get the data: Statbank BPA34

From the graph we can see the significant portions of investment from The Netherlands, Luxembourg and offshore financial centres. This reflects the Benchmark Definition of FDI, which reports the immediate investing country as the location from which the investment came.² The 2017 Foreign Direct Investment Annual also details FDI statistics by location of the ultimate controlling parent.

The rate of return on FDI in Ireland by geographic region is shown in Figure 2.3. The figure shows that until 2015, investors from the Americas were earning a higher rate of return on their Irish investments than those from Europe and the rest of the world. 

Figure 2.4 shows the rate of return on FDI in Ireland by the country of the investor. Bermuda enjoys a premium over other investor nations as illustrated. 

Source Publication: Foreign Direct Investment Annual 2017

Get the data: StatBank BPA34, StatBank BPA37

By activity of resident enterprise

Figure 2.5 shows the activities in which the enterprises in Ireland which receive significant amounts of FDI engage. The activity sectors below account for over 90% of the FDI into Ireland.

From Figure 2.5 we can see that the substantial increase in FDI into Ireland in 2015 arose primarily in the manufacturing sector. A significant increase also occurred in the financial and insurance activity sector. The majority of the stock in this sector is attributable to financial transactions. Since 2015, the levels in both of these sectors have been decreasing. In 2017, both the retail sector's and information and communications sector's FDI doubled.

Source Publication: Foreign Direct Investment Annual 2017

The rate of return on FDI in Ireland by activity of resident enterprise is shown in Figure 2.6. The figure shows that information and communications has earned a far higher rate of return than any of the other sectors, including the retail sector, which also has a similarly small FDI stock denominator (as shown in Figure 2.5). Manufacturing has also earned a higher return than financial and insurance activities, even though the former’s stock became larger than the latter’s in 2015.

FDI Abroad by Location of Investment

Figure 2.7 shows the counterpart countries which receive a large proportion of the Foreign Direct Investment from Ireland. In 2017 more than €250bn from investors in Ireland went to enterprises in Luxembourg.

Source Publication: Foreign Direct Investment Annual 2017

Get the data: StatBank BPA34

The rate of return on FDI abroad by geographic region is shown in Figure 2.8. Returns on Irish investments abroad for Europe and the rest of the world have been quite steady during the period described while investments from the Americas have undergone a decline from 2012-2017 of about 7.9%. 

Figure 2.9 shows the rate of return on FDI abroad by the country of investment. In 2017, Bermuda enjoyed a significant premium for investment returns over other Irish investment partners shown.

Source Publication: Foreign Direct Investment Annual 2017

Get the data: StatBank BPA34, StatBank BPA37

By activity of resident investor

Figure 2.10 shows the FDI positions abroad for the same sectors as displayed in Figure 2.5 (FDI positions inward).  

Source Publication: Foreign Direct Investment Annual 2017

The majority of the FDI out of Ireland is owned by a number of companies who redomiciled to Ireland. Their share of FDI abroad is shown in Figure 1.5. The vast majority of investment by these companies abroad falls into the scientific and technical activities sector.

Much like in Figure 2.5, the large stock of investment by the financial and insurance sector is attributable to financial transactions.

Figure 2.11 shows returns which are lower and less variable than those in Figure 2.6. The manufacturing sector experienced a significant loss in 2015, its investment returns have been negative since, albeit on an upward trend.   

¹This differs from the definition prescribed in BD4 by including FDI income on debt.

²See Background Notes.