Ireland has been one of the most globalised states in the world over recent years, according to indices published by Foreign Policy magazine in Washington.
This is in large part because of the extent of foreign direct investment (FDI) here, but it is also because of Irish investment abroad.
The picture is confirmed by official statistics published yesterday in Dublin, the first in a new series on Ireland's FDI. The figures for 2001 and 2002 fully reflect the distinctive political, economic and currency events of these years, such as the September 11th atrocities and their international impact; but they also describe the accumulated investments which have fuelled this State's strong economic growth over the last decade.
Much the highest cumulative investment here originates in the United States, whether directly or channelled through the Netherlands, the conduit for an extraordinary, but unspecified, proportion of it. Next in line are the United Kingdom, Belgium and Luxembourg (also presumably conduits for US capital), Germany, Canada and Italy. The total of €176 billion in 2002 also includes substantial sums from other world regions, reflecting the increasing internationalisation of the Irish economy.
The figures usefully quantify levels of profitability and reinvestment among those who invest in Ireland. Last year's profitability is estimated at some €32 billion, of which slightly more than half was reinvested here and the remainder repatriated. Ireland remains a favoured destination for investment because of favourable laws on corporate taxation. But it is well known that these flows distort the normal relationships between gross national product, which excludes profit expatriation, and gross domestic product, which includes it. Publication of these statistics should make it easier to analyse and publicise these differences.
Ireland would not have scored as strongly in the globalisation index had it not been for the strong flows of investment abroad from Ireland as a result of the Celtic Tiger boom. The figures show that such investments are concentrated in many of the same states which invest in Ireland. The UK, the US, Canada and the Netherlands figure prominently, although figures are not given for several other important locations because of confidentiality provisions.
These flows reflect real economic activity as well as speculative or tax break investments. The precise balance between them within the €33 billion total deserves more scrutiny, reportage and public discussion.