Foreign Direct Investment in Ireland 2023

FDI can be broken down by certain characteristics into further components which allow for additional analysis. A distinction is often drawn between greenfield FDI and other types of FDI transactions (mergers & acquisitions, extension of capital and financial restructuring). The rationale behind drawing this distinction is that the transfer of ownership (merger & acquisition investment) will usually have a significantly different economic impact than the purchase or sale of new shares (greenfield investment), the extension of capital or financial restructuring.

Greenfield FDI can be described as ex nihilo investment: the establishment of a subsidiary “out of nothing”. As recommended by Eurostat, greenfield statistics in this chapter are compiled using FDI transactions data; recognizing that the intent of an FDI transaction relates more closely with greenfield investment than FDI stock data. Specifically, transactions of FDI equity other than reinvestment of earnings have been used to compute the figures for greenfield FDI in this new method. Furthermore, under the transactions approach, an enterprise would also be classified as “greenfield” for 3 years after the initial investment to reflect the average time involved in establishing new functioning fixed capital in the host economy.

In Figure 5.1 greenfield FDI transactions are shown between 2013 and 2023. There is a spike in 2015 which coincides with a significant increase in Irish FDI inward. The negative figures in 2017, 2019, 2020 and 2022 are the result of disinvestment of funds in the pharmaceutical sector. The increase in 2023 is seen mostly in pharmaceuticals and medical equipment.

Source Publications: Foreign Direct Investment Annual 2023

Broader Definition

A broader definition of greenfield FDI proposed by Eurostat¹ would be to say that greenfield FDI is both investment in new FDI enterprises and new capital injections into existing enterprises. The rationale for including extension of capital into the greenfield definition is that a capital injection which is used to extend the capacity of an existing direct investment enterprise would have a similar effect on the host economy as a traditional greenfield investment would have.

The figure for “Broad Greenfield” is comprised of:

1) FDI equity transactions in enterprises that are no more than 3 years old

    and

2) Any follow-up direct investment transactions in existing foreign direct enterprises that are used to acquire fixed assets

Figure 3.3 shows the components of greenfield FDI under the broader definition applied to our data for years 2013 to 2023. In 2023, greenfield FDI was €72.7 billion, of which €27.8 billion was made of FDI flows in foreign multinationals no more than 3 years old and €44.9 billion was comprised of follow-up investments within existing enterprises that were used to acquire fixed assets. The extension of capital component is large in several years due to the onshoring of IP and aircraft.