(i) An active policy of attracting FDI came into operation initially in the
1950s. Before this time FDI had been legislatively prohibited.8 The
objectives of embracing a pro-FDI policy were to generate a viable
manufacturing sector and to provide employment. Export-orientated
foreign-owned projects in all sectors of manufacturing were eligible for
fiscal and financial support, on the same basis as indigenous projects, if
they located in Ireland.9
(ii) The second step occurred in the 1970s. The national industrial
development agency, the IDA, became increasingly selective about the
industries in which potential FDI projects should be sought. The
electronics and pharmaceutical sectors were singled out as having the best
global prospects for fast and sustained growth. In particular US companies
were targeted as sources of these projects.
(iii) The third step involved the promotion of linkages between foreign and
indigenous industry in these key sectors, and the promotion of Ireland as
the European base for head-quarter and R&D functions of MNCs. Those
plants which locate these functions locally are believed to have a higher
commitment to Ireland, reflected in the generation of a higher quantity and
quality of employment relative to plants which locate only their production
facilities in Ireland. Global companies operating in the higher technology
sectors were perceived as having a larger probability of undertaking
significant R&D activities relative to companies operating in the lower
8 This prohibition was supported by the public perception of a link between economic dependence and
the country's colonial past.
9 For a discussion of policy development see White (1972) and Killeen (1975).