Foreign Direct Investment in Ireland 2018

In Figure 9.1 greenfield FDI transactions, termed 'narrow greenfield', are shown between 2014 and 2018. The term 'narrow greenfield' is used to draw a distinction between narrow and broad greenfield under the new method for measuring greenfield investment detailed below. There is a spike in 2015 which coincides with a significant increase in inward FDI. The negative figure in 2017 is as a result of disinvestment of funds from some firms that began operating in 2015 and 2016.

Figure 9.2 displays the contribution which narrow greenfield has made to the level of overall inward FDI transactions in Ireland.

Figure 9.3 shows the components of greenfield FDI under the broader definition applied to our data for years 2014-2018. In 2018, greenfield FDI was €80bn, of which €6bn was made of FDI flows in foreign multinationals no more than three years old and €74bn was comprised of follow-up investments within existing enterprises that were used to acquire capital assets. The extension of capital component is large in recent years due to the on-shoring of intellectual property (IP) and aircraft.

It is important to highlight a key assumption made in order to apply this broader greenfield definition to our data. Since extension of capital refers to an additional investment made in an affiliate which results in the extension of capacity of that affiliate, all capital asset transactions were used as a proxy for follow-up investment that increased the capacity of the enterprise. It is assumed therefore that the additional direct investment is equal to the transactions in capital assets. However, due to how the CSO classifies firms in the aircraft leasing sector, not all their investments are financed as FDI. Therefore, only capital assets which are financed by FDI in this sector are included in the extension of capital component in Figure 9.3. This meant excluding some of the sector’s fixed assets from the analysis. The excluded tangible fixed assets in these firms are financed by other investments and therefore are not relevant to this experimental FDI analysis.

Figure 9.4 shows the same new method used to calculate greenfield FDI but with some features of MNE activity, unique to Ireland, removed. Namely, the FDI financing of intangible assets, intellectual property, and tangible fixed assets in the aircraft leasing sector. These features have been removed from the extension of capital component; recognizing that this activity in Ireland can result in the figures for greenfield FDI being difficult to interpret. Only investments used to acquire tangible fixed assets are included in the extension of capital component in this modified broad greenfield analysis. In 2018, modified broad greenfield was €17bn.

Figure 9.5 compares the figures for broad and narrow greenfield.

Figure 9.6 displays the contribution which modified broad greenfield has made to the overall level of FDI transactions. In 2018, disinvestment of existing enterprises resulted in a negative figure for non-greenfield FDI transactions of -€40bn. However, this was offset by €17bn of modified broad greenfield FDI, resulting in an overall figure for FDI transactions of -€23.8bn in 2018.