Dependence on multinationals leaves Ireland exposed - Collison commissioned report
Ottoline Spearman
Ireland's reliance on multinationals to drive technological progress and productivity is leaving it exposed, according to a report published on Thursday.
Commissioned by Stripe founders John and Patrick Collison, the report claims that "urgent" Government action is needed to secure economic growth.
Alan Ahearne, author of the report, former adviser to Taoiseach Micheál Martin and economics professor at the University of Galway, writes that Ireland's high level of productivity is in part due to large sectors of the economy that are “dominated by foreign-owned multinational corporations”.
The report notes that over the past 50 years, real income per person has tripled, rising from about €17,500 in 1970 to over €53,000 in 2023, with economic growth largely driven by foreign direct investment (FDI) from the United States.
However, it claims that in light of "fundamental geopolitical shifts, "increased trade protectionism" and "fragmenting globalisation", Ireland may not be able to rely on foreign direct investment to drive economic growth.
“These changes should be seen not as temporary shocks to the world economy, but rather structural upheavals that threaten to reshape patterns of global capital flows,” Ahearne warns.
The report says that the Government should look to the domestic sector to help drive growth, to "generate tax revenues to fund expanding public services, such as health and education and much-needed infrastructure spending”.
It also says that the Government should consider tax incentive schemes to attract highly-qualified people from abroad to Irish companies, giving the example of Israel and Portugal who have introduced similar regimes.
“Ireland can, and undoubtedly will, respond to these international developments and will remain an attractive location for FDI, given the country’s economic strengths,” Ahearne says.
“But to assume that productivity-rich FDI will locate in Ireland in the coming decades in the volumes experienced in the past could be a grave strategic mistake.
“Productivity growth is going to have to come from somewhere else, which calls for urgent action by Irish policymakers to boost Ireland’s start-up and scale-up landscape.”
The Collison brothers, whose payments firm Stripe is now valued at about $159 billion (€135 billion), have become more vocal in recent years about what they think the Irish economy needs.
Last October, John Collison argued in an Irish Times opinion piece that too many regulators, Government departments, public agencies and NGOs had placed constraints on large-scale infrastructure projects.
Commenting on the report, the Collison brothers said: "In an increasingly competitive and volatile world, putting in place the systems and conditions to accelerate scientific and technological progress will be critical for future living standards in Ireland.”
