The Tangible Contribution of R&D Spending Foreign-Owned Plants to a Host Region: a Plant Level Study of the Irish Manufacturing Sector (1980-1996)



I Introduction

Following a period of recession, the Irish economy has enjoyed
significant growth over the past decade, earning Ireland its “Celtic Tiger”
nickname. This growth, both in employment and output terms, is most
marked in the manufacturing sector. The contrast in employment growth is
primarily with EU countries, which have seen employment in
manufacturing rise by 0.51 per cent since 1986, while employment in the
Irish manufacturing sector during the same period has risen by 5.4 per
cent. A key feature of Ireland’s growth has been the expansion of foreign-
owned plants which now account for 12 per cent of total manufacturing
firms in the country and 45.5 per cent of manufacturing employment.2 The
growth in employment has been concentrated in the high-tech sectors,
where employment has more than doubled since 1986; these sectors in
1996 account for 62 per cent and 17.4 per cent of total manufacturing
employment in foreign and Irish-owned firms respectively.3 The latest
output data available (1995), show that output of foreign-owned
manufacturing firms accounts for 65.2 per cent of total gross
manufacturing output (CSO, 1997). In 1995, 65 per cent of national
business expenditure on research and development (BERD) in Ireland was
accounted for by subsidiaries of foreign multinational firms (Forfas, 1997).
This contrasts sharply with estimates for other European countries: 37 per
cent for Great Britain, 16 per cent for Germany and less than 10 per cent
for Greece (OECD, 1998).

1 Eurostat (1997) Eurostatistics, 6/1997, Eurostat (1991) Eurostatistics, 12/1991.

2 Unless stated otherwise, all reported figures are based on own calculations of Forfas Employment
Survey Data.

3 Employment growth rates in the US and Canadian manufacturing sectors in the same period were
6.2 per cent and 7.5 per cent respectively. (OECD, 1996)



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