The stock of foreign direct investment (FDI) in Ireland exceeded €1 trillion for the first time in 2019, according to the Central Statistics Office (CSO).
In a new report on Irish direct investment trends, the CSO said the value of foreign investment has risen to €1.03 trillion this year – equivalent to 288 per cent of Ireland’s gross domestic product (GDP).
This is extraordinarily high by international standards – the EU average is 62 per cent – and reflects what the CSO described as “the highly globalized nature of the Irish economy”.
More than a third of foreign direct investment in 2019, equivalent to 314 billion euros, was so-called “phantom” capital, which flowed through the jurisdiction to fund operations elsewhere. Many multinational subsidiaries here acted as treasuries for parent companies, distributing funds through their global supply chains.
If pass-through investments, reverse investments (with repayments from subsidiaries to the parent company), intellectual property (IP) and aircraft leasing assets are removed, “residual foreign direct investment” accounted for 261 billion euros in 2019.
This number represents the foreign investments that are linked to the specific local economic activity here.
The US was the largest investor in Ireland, accounting for nearly three quarters of total FDI, or €734 billion.
The CSO report also pointed out that 15 billion euros of foreign direct investment in 2019 could be classified as brand new or “green field” investments, while about 6 percent consists of so-called “special purpose vehicles”, companies set up for reasons that go beyond production of goods and services; often formed for financing purposes or to hold specific assets or liabilities.
The data also shows how highly concentrated Irish FDI is here. They show that the first group of 25 companies account for 71 per cent of foreign direct investment directed to Ireland.
Figures also show that almost half of Ireland’s outbound investment comes from so-called redomiciled PLCs. From 2008, in response to proposed changes to UK and US corporate tax rates, a number of multinational companies relocated their group headquarters to Ireland for tax purposes.
“The report shows that of the €1,026 billion in FDI in Ireland, 31 per cent is due to investment flowing through Ireland en route to other affiliates abroad, underscoring the nature of global investment,” said CSO statistician John Sheridan .