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Irish-Owned Exporting Companies: Looking East, Looking South but Still Going West

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Abstract

The Irish authorities believe that Irish-owned firms can make a significant contribution to the country’s economic recovery and future growth. The objective of the Irish government is to help boost the value of exports of indigenous exporters. At present, the USA, the UK, and the European Union (EU) are Ireland’s main trading partners, but Dublin deems that it is now necessary to find additional economic partners among high growth economies. Groutel highlights the rationale behind the Irish government’s strategy. She then considers why, despite the existence of tantalizing opportunities in fast-growing economies and the Irish authorities’ diplomatic endeavors to help them gain a foothold in those markets, many indigenous companies are hesitant to take the leap and prefer to tap the culturally closer US market that they view as less risky.

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Notes

  1. 1.

    Houses of the Oireachtas (HO), Joint Committee on Foreign Affairs debates (2010) Report: Irelands Foreign Trade Promotion Policy: Developing International Markets for Irish Exports, March, p. 19. It is worth noting that between 2001 and 2010, the share of total export sales attributed to foreign-owned firms amounted to 90 %. This percentage, which has remained remarkably stable, was 89 % in 2013. GOI, Department of Jobs, Enterprise and Innovation (DJEI) (n.a.) Annual Business Survey of Economic Impact 2013 (ABSEI), p. 5.

  2. 2.

    The Economist (2013) ‘The Irish Economy: Fitter Yet Fragile’, 5 January; The Economist (2013) ‘Ireland and the Euro Crisis’, 5 January.

  3. 3.

    GOI, DJEI (2012) Action Plan for Jobs 2012, p. 3. Unemployment reached a peak at 14.8 % in December 2010, Central Statistics Office (Ireland) (CSO) (2010) Quarterly National Household Survey, quarter 4.

  4. 4.

    GOI, Department of Enterprise, Trade and Innovation (DETI) (2010) Trading and Investing in a Smart Economy, a Strategy and Action Plan for Irish Trade, Tourism and Investment, p. v.

  5. 5.

    J. P. Quinlan (2015) Irish-US Economic Relationship 2015, p. 13.

  6. 6.

    GOI, Department of Foreign Affairs (2009) Ireland and America: Challenges and Opportunities in a New Context, March, p. 6.

  7. 7.

    D. O’Hearn’s book on Ireland’s economic dependence on Britain and on American multinationals makes for interesting reading and contrasts with mainstream economic literature. D. O’Hearn (2001) The Atlantic Economy: Britain, the US and Ireland (Manchester: Manchester University Press).

  8. 8.

    See for example Craig Barrett, former Intel’s CEO, quoted in D. Coyle (2010) ‘Invest in Education and RD—Barrett’, Irish Times, 9 February.

  9. 9.

    GOI, DETI Trading and Investing in a Smart Economy, pp. 1–4.

  10. 10.

    This agency focuses on helping Irish-owned business expand and deliver new export sales.

  11. 11.

    Enterprise Ireland (EI) (n.a.) Driving Enterprise—Delivering Jobs—Strategy to 2016, p. 20.

  12. 12.

    See for example: S. Kinsella and A. Leddin (eds) (2010) Understanding Irelands Economic Crisis, Prospects for Recovery (Blackrock: Blackhall Publishing).

  13. 13.

    This document is based on the recommendations of a report issued previously by Forfás, the national policy advisory board for enterprise, trade, science, technology and innovation in Ireland. Forfás (2010) Making it Happen, Growing Enterprise for Ireland, Dublin: Forfás, September.

  14. 14.

    GOI, DETI Trading and Investing in a Smart Economy, p. v.

  15. 15.

    GOI, DETI Trading and Investing in a Smart Economy, p. 1.

  16. 16.

    HO, Seanad Éireann debates (2011) 211, 9, col. 518, 17 November.; Eamon Gilmore, Tánaiste and Minister for Foreign Affairs and Trade (2012) speech, ACCA Ireland Business Leaders’ Forum Breakfast, 22 February. The strategy was reviewed in January 2014 but the substance and the quantified objectives have remained the same except for tourism and jobs associated with exporting indigenous companies whose targets were lowered. Interestingly, education has been added to the list of sectors that can help boost the Irish economy. From €682 million in 2010, its contribution is expected to rise to €900 by 2015. GOI, Department of Foreign Affairs and Trade (DFAT) (2014) Review of the Government Trade, Tourism and Investment Strategy 2010–2015, January, p. 6.

  17. 17.

    GOI, DJEI (2012) Action Plan for Jobs 2012, p. 15.

  18. 18.

    P. Freyne (2009) ‘A Lean, Keen Enterprise Machine’, Business & Finance, 21 May, p. 31.

  19. 19.

    In contrast, foreign multinationals purchased locally only 14.5 % of the materials and services necessary to their activity. GOI, DJEI (2015b) ABSEI 2013, aggregated data 2000–13.

  20. 20.

    Indigenous exports increased by 8.6 % between 2012 and 2013. This figure was only 2.8 % for foreign-owned firms during the same period. This trend has been observed since 2009. GOI, DJEI (2015a) ABSEI 2013.

  21. 21.

    GOI, DJEI, (2015b) ABSEI 2013.

  22. 22.

    Ireland’s total exports amounted to €143.1 billion in 2013. GOI, DJEI, (2015b) ABSEI 2013.

  23. 23.

    In Ireland, 150,000 people are involved in exports. HO (2009) Joint Committee on Foreign Trade debates, 14 October.

  24. 24.

    GOI, DETI Trading and Investing in a Smart Economy, p. 41.

  25. 25.

    In 2008, chemicals, ICT services and business services accounted for 60 % of Ireland’s total exports which amounted to 156 billion euros. GOI, DETI Trading and Investing in a Smart Economy, p. 7.

  26. 26.

    The US is Ireland’s main source of inward investment. CSO (2015) statistical release, foreign direct investment, 12 February.

  27. 27.

    J. P. Quinlan (2015) Irish-US Economic Relationship 2015. From January to June 2015, Irish exports to the United States amounted to 12.6 billion euros. CSO (2015) statistical release, goods exports and imports, 14 August. These are the most recent figures released by the CSO.

  28. 28.

    A study carried out by the Irish Exporters Association reveals that 43 % of the Irish-owned SMEs it surveyed export exclusively to the UK. 27 % of these companies exported to the US. Irish Exporters Association (2014) Outlook Exports, June, p. 3. Some target figures set by the Irish government are mentioned in the Review of the Trade, Tourism and Investment Strategy such as a 6 % increase in the share of food and drink indigenous exports to countries outside the UK from 56 % to 62 %. Exports to China in this sector should increase from 4.3 % to 7 %. GOI, DFAT (2014) Review of the Government Trade, p. 6.

  29. 29.

    Glanbia plc. is an international nutritional solutions and cheese group.

  30. 30.

    Kerry Group is a global leader in the food processing industry.

  31. 31.

    Glen Dimplex is a consumer electrical goods firm. It is the world’s largest electrical heating business and holds significant market positions in the domestic appliance industry worldwide.

  32. 32.

    Irish Exporters Association (2014) Outlook Exports, p. 16.

  33. 33.

    PM Group is a world leading provider of professional services in project and construction management, engineering design, architecture and technical consultancy.

  34. 34.

    EI (2015) Press Release, 12 February.

  35. 35.

    The food-processing industry exports 85 % of its output. GOI, DETI Trading and Investing in a Smart Economy, p. 35. Between 2002 and 2007, the value of exports of this sector increased by more than 40 %. In 2013 alone, Irish food and drink exports, which represent 50 % of indigenous exports, amounted to almost €10 billion, their highest ever level. GOI, DFAT (2014) Review of the Government Trade, p. 9.

  36. 36.

    C.Taylor (2010) ‘Irish Firms Seal €36 in Deals on Trips’, Irish Times, 5 November.

  37. 37.

    Irish Exporters Association (2014) Outlook Exports, p. 16.

  38. 38.

    GOI, DFAT (2012) Press Release, 16 September.

  39. 39.

    Over 180 EI’s client companies are now exporting to South Africa, while 30 Irish companies have a presence on the ground employing over 13,000 locally. GOI, DFAT (2012) Press Release, 11 November.

  40. 40.

    GOI, DFAT (2011) Press Release, 6 November.

  41. 41.

    GOI, DFAT (2014) Press Release, 30 October.

  42. 42.

    D. O’Brien ‘Opportunities Beckon in the East for Irish’, Irish Independent, 24 April.

  43. 43.

    GOI, DETI Trading and Investing in a Smart Economy, p. 48.

  44. 44.

    GOI, DFAT (2014) Press Releases, 28 March and 21 January.

  45. 45.

    Joint economic commissions are formal intergovernmental bodies that provide a forum where issues related to bi-lateral trade can be discussed. They are aimed at promoting business, economic, scientific and technological cooperation and contribute to guaranteeing the continuity of contacts between governments.

  46. 46.

    GOI, DFAT (2011) Press Release, 6 November.

  47. 47.

    HO, Joint Committee on Foreign Affairs and Trade debates, 20 June 2012.

  48. 48.

    Xi Jinping is the President of the People’s Republic of China.

  49. 49.

    GOI, DFAT (2014) Press Release, 9 December.

  50. 50.

    GOI, DFAT (2011) Ireland and Africa: Our Partnership with a Changing Continent—an Africa Strategy for the Department of Foreign Affairs and Trade.

  51. 51.

    This forum was attended by 20 African countries and 140 Irish businesses. HO, Seanad Éireann debates (2011) 211, 9, col. 522, 17 November.

  52. 52.

    GOI, DFAT (2014) Press Release, 30 October.

  53. 53.

    300 delegates attended the first Arab-Irish Business Forum in March 2015. EI (2015) Press Release, 11 March.

  54. 54.

    Irish Examiner (2012) ‘China Mission Cost Over €120 k’, Irish Examiner, 4 May.

  55. 55.

    GOI, DFAT (2011) Press Release, 19 October.

  56. 56.

    GOI, DFAT (2011) Press Release, 6 November.

  57. 57.

    C. Coonan (2011) ‘As Europe and US Grapple with Crises Ireland Turns Eastwards for Support’, Irish Times, 17 October.

  58. 58.

    The organization aims to increase Irish exports to Asia from 4 % of total exports to 10 %. Irish Exporters Association (2011) Trading with the Asia Pacific Region 2011–2015, p. 2. According to this organization, exports to Africa have the potential to reach €24 billion by the end of the decade, which is much greater than its forecast for China. B. Corcoran (2012) ‘Exporters Advised to Focus on Africa’, Irish Times, 12 November.

  59. 59.

    GOI, DJEI ABSEI 2013, p. 15.

  60. 60.

    During the 2000–2011 period, Ireland’s exports as a share of GDP declined significantly for Asia, the Middle East, Africa and Latin America. Citi (n.a.) European and Global Economic and Inflation Outlook, p. 6. In 2012, exports (of indigenous and foreign companies combined) to high-growth markets only accounted for 4 % of the country’s total exports. Between 2010 and 2012, Ireland’s exports to China actually fell and only represented 2 % of the total in June 2015. Irish Exporters Association (2012) End of the Year 2012 Review, p. 9; Allied Irish Bank (2015) Export Review: Industry Half-Year 2015, 14 August, p. 13.

  61. 61.

    In 2009, 44 % of the goods and services of indigenous companies (assisted by Enterprise Ireland) were exported to the UK, 18 % to the rest of Western Europe and 11 % to North America. GOI, DETI Trading and Investing in a Smart Economy, p. 10.

  62. 62.

    EI (2014) Annual Report and Accounts 2014, p. 17.

  63. 63.

    Irish Exporters Association, End of the Year 2012 Review, p. 9.

  64. 64.

    Author’s calculations based on data from Enterprise Ireland’s annual reports. EI (2010) Annual Report and Accounts 2010; EI (2011) Annual Report and Accounts 2011; EI (2012) Annual Report and Accounts 2012; EI (2013) Annual Report and Accounts 2013; EI (2014) Annual Report and Accounts 2014.

  65. 65.

    National Competitiveness Council (2014) Irelands Competitiveness Challenge 2014, December, pp. 40–1.

  66. 66.

    N. O’Mahony (2004) German-Irish Corporate Relationships: the Cultural Dimension, (Bern: Peter Lang), p. 58; 304.

  67. 67.

    Irish Exporters Association (2014) Export Ireland Survey and International Trade and Finance Survey 2014, pp. 30–1.

  68. 68.

    In June 2012, Simon Coveney, Minister for Agriculture, led a five-day trade mission to the US to promote exports of alcoholic beverages. Irish Examiner (2012) ‘Drinks Exports Vital to Economy, Coveney Tells US Agri-Food Leaders’, Irish Examiner, 29 June; see also GOI, DFAT (2015) Press Release, 12 March; GOI, DFAT (2014) Press Release, 26 September.

  69. 69.

    In September 2011, a trade mission took sixty Irish companies to three southern American states (Georgia, North Carolina and Florida) for the first time, with a view to widening the export footprint of Irish firms in this fast-growing area. According to Frank Ryan, the then chief executive of Enterprise Ireland, these are locations for growing sectors in which Ireland has expertise such as telecommunications, healthcare, biotechnology, logistics, financial services. EI (2011) Press Release, 21 September.

  70. 70.

    EI (2013) Press Release, 5 March.

  71. 71.

    GOI, DETI Trading and Investing in a Smart Economy, pp. 20–1.

  72. 72.

    Irish Exporters Association (2014) Outlook Exports, p. 16.

  73. 73.

    HO, Seanad Éireann debates (2011), 211, 9, col. 523, 17 November.

  74. 74.

    While 36 million people claim Irish ancestry in the US, in 2013, there were only 688 Irish citizens living in China and 1288 in Japan. C. Kenny (2015) ‘The Global Irish: Where Do They Live?’, Irish Times, 4 February.

  75. 75.

    Irish Examiner (2012) ‘US a Key Market for Irish Whiskey and Dairy Exports, Says Coveney’, Irish Examiner, 3 July.

  76. 76.

    Irish Examiner ‘Drinks Exports Vital to Economy’.

  77. 77.

    GOI, DETI Trading and Investing in a Smart Economy, p. 27.

  78. 78.

    Liam O’Mahony ran CRH, the world’s second biggest building materials company from 2000 to 2008.

  79. 79.

    Seanad Éireann debates (2010) 204, 9, 7 October.

  80. 80.

    T. Molloy (2009) ‘Execs say whole world can be handful so stick to well-established markets’, Irish Independent, 13 November.

  81. 81.

    Exports of services from Ireland to Russia grew by 32 % from €983 million in 2009 to €1300 million in 2010. In 2011, Irish exports of goods to Russia increase by 37 % to €509.7 million. The biggest export categories to Russia are: metalliferous ores and metal scrap, medical and pharmaceutical products, meat and meat preparations. Before economic sanctions against Russia were imposed, Ireland was trying to diversify its exports to this country. On 18 June 2012, Joe Costello led a multi-sector trade mission which included Irish companies from the sectors of information and communication technology, engineering, construction services, food and drink, and internationally traded services. GOI, DFAT (2012) Press Release, 18 June.

  82. 82.

    E. Burke-Kennedy (2015) ‘Irish Food Exports to Russia Grind to a Near Halt’, Irish Times, 29 August.

  83. 83.

    National Competitiveness Council (2014) Irelands Competitiveness Challenge 2014, pp. s40–1.

  84. 84.

    HSBC (2015) Global Connections Report—Ireland, May.

  85. 85.

    L. Brennan and R. Verma (2013) ‘Outward FDI in Ireland and its Policy Context’, Columbia FDI profiles, Vale Columbia Center, p. 3.

  86. 86.

    In 2014, Irish FDI outward flows reached $31 billion and Irish outward FDI stocks amounted to $628 billion. United Nations Conference on Trade and Development, World Investment Report 2015, country fact sheet: Ireland, unctad.org; GOI, DETI Trading and Investing in a Smart Economy, p. 16.

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Groutel, A. (2017). Irish-Owned Exporting Companies: Looking East, Looking South but Still Going West. In: Groutel, A., Pauwels, MC., Peyronel, V. (eds) Revisiting the UK and Ireland’s Transatlantic Economic Relationship with the United States in the 21st Century. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-58550-9_10

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