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)

technology sectors¹⁰, where R&D activities are not perceived as being as
important globally.¹¹

These refinements to FDI policy over time have manifested
themselves in (i) a concentration of current FDI in high-tech sectors and
(ii) an increased propensity for foreign-owned plants to undertake R&D
activities in Ireland. We now turn to look at one explanation for the
increasing concentration of FDI in high-tech sectors, namely, the higher
rate of entry of foreign-owned plants into the high-tech sector.

(A) Plant Entry into High-tech Sectors

As we can see from Table 1, there was an increase of over 50 per
cent in the number of foreign-owned manufacturing plants in Ireland over
the period 1980-1996. This increase disguises the extensive net change in
plant numbers in different sectors; ranging from over 150 per cent in the
high-tech sector to less than 10 per cent in the low-tech sector. In terms of
net job creation, this change in plant numbers accompanied a net increase
of 22,505 (32.5%) jobs in the foreign-owned plants. Mirroring the
experience in plant numbers, this net increase resulted from a combination
of 27,683 jobs created in both higher-tech sectors with a loss of 5,358 in
both lower-tech sectors. In terms of the number of employees, the period
1980-1996 saw FDI in the higher technology sectors become the dominant
form of FDI in Ireland, as the share of employment in high-tech MNCs
rose from almost 15 per cent to over 30 per cent.

¹⁰ One exception here is the food sector, which although classified by the OECD as a relatively low-
tech sector, has a high level of R&D expenditure in Ireland.

¹¹ de Arcos et al (1997) summarise step one as dependent FDI (an emphasis on assembly plants) and
the following two steps as an evolution towards developmental FDI (an emphasis on plants which can
forge linkages with indigenous industry and create high skilled employment).

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