I thank the Chairman and members for the invitation to address the joint committee on the new IDA Ireland strategy, Horizon 2020. IDA Ireland's mission is to win foreign direct investment and to maximise its impact on the transformation of Ireland into a global hub for innovation and commercialisation. Clearly this brings new employment opportunities and economic benefits to all our people. In collaboration with other stakeholders, IDA Ireland will ensure that Ireland remains a uniquely attractive environment in which multinational clients can grow.
Foreign direct investment companies account for €110 billion of exports and in terms of total exports, the percentage is in the high 70s or low 80s. It provides about 240,000 jobs in total, accounting for 50% of all corporation tax, €7 billion spend on payroll and €19 billion spend in the economy. Foreign direct investment companies account for 73% of all business expenditure on research and development.
In terms of market share, foreign direct investment by the leading multinational companies of the world is very high. In the ICT sector, eight of the top ten companies in the world have a presence in Ireland. Likewise in the pharmaceutical area, we have 15 of the top 25 medical devices companies and half of all of the world's leading financial institutions.
When considering a new strategy for IDA Ireland, a number of key considerations were to the fore. The last time we looked at our strategy, unemployment was in the region of 3.8% to 4%, so clearly that was not a key priority, whereas today, with unemployment at 12.4%, it is now the number one consideration.
We also have to consider balanced regional development. Some areas have been hit badly in the current downturn. However, there have been improvements in some areas. Competitiveness has improved in terms of the cost of land, buildings, rent, labour, energy, hotels and restaurants. This improvement has made Ireland a more attractive proposition although there is more progress to be made.
Consider the relative improvement in competitiveness, particularly associated with the growth in services globally. Ten years ago, 20% of the revenue of the big IT companies pertained to services and 80% pertained to hardware. That has practically reversed now. There is considerable growth in the services sector globally. The improvement in our competitiveness should help in that regard. The developments associated with eBay yesterday serve as a good example.
Owing to the large market share of foreign companies in Ireland, we recognise fully that it is very important to keep them here and to do more to ensure they grow here. We are conscious there are new sources of foreign direct investment to be addressed in terms of new markets. A challenge arose for Ireland's reputation in the international marketplace, particularly last year. We must ensure our strategy is very much in line with the smart economy strategy. Bearing in mind how we defined "foreign direct investment" historically, we are mindful that there is a broader definition in respect of which we intend to become active.
As part of the strategy for examining the activities of the major corporations of the world, including IBM, General Electric, Siemens and United Technologies Corporation, we must ask what is influencing their investment decisions. It is very much a question of mega-trends. Urbanisation is such that practically 50% of the world's population is living in cities. By 2050, this is to rise to 70%. Siemens has set a target of having 70% of its business associated with the urbanisation drive by 2012. Similar trends arise in respect of population growth, transportation, energy, health and longevity. These factors present business opportunities for the world's largest corporations. They are all driven by technologies, on which Ireland has a strong position.
Slide No. 6, which I have shown to the members, shows the evolution and future of foreign direct investment. Ireland's success has derived from constantly evolving and changing the areas it pursues. In the 1970s and 1980s, we were involved in clothing, textiles and consumer products. When Intel set up in Ireland in the late 1980s and early 1990s, the largest foreign direct investment employer in Ireland was in the clothing and textiles sector. The International Financial Services Centre did not exist at that time.
It is important to consider the interventions in terms of training for the software industry, the 12.5% corporation tax driving the financial services area, the investments of Science Foundation Ireland driving research and development and a number of new areas, services innovation, cloud computing and convergence. The trend for the past five years alone indicates the growth of a biopharmaceuticals industry, which did not exist on any scale heretofore, and a digital media sector. The challenge is always to identify the new areas. The slide identifies new areas, such as health informatics, financial analytics, digital lifestyle management, smart buildings, and so on.
The next slide shows we target six core business areas. There is huge competition around the globe for foreign direct investment. We have carried out an exercise considering the evolution of the different sectors. Intel, for example, was basically engaged in PCB assembly and badging computers when it came to Ireland in the late 1980s. Today, having invested €7 billion, it has some of the most sophisticated manufacturing facilities in the world. It is a matter of achieving constant evolution.
We have examined in particular what we are targeting now and what we will target in the period 2010 to 2014, and we have examined what will arise in 2020. We do not intend to disclose our findings in our strategy documents because we have no intention of handing competing countries such as Singapore and Switzerland the menu of areas on which we will concentrate. I just wanted to give the members a flavour of our approach.
Arising from our approach, we have set some high-level goals for the five-year period, targeting the creation of 62,000 new jobs in foreign direct investment companies, both existing and new. The impact of this in the economy will be the creation of 105,000 jobs. Indecon has done some work for us that shows the multiplier effect is approximately 0.7 in respect of every new job created. We want to deliver half of all investments to the area outside Dublin and Cork, which have benefited most to date from foreign direct investment.
We are conscious of the emerging growth markets. While we continue to do very well from the US and European markets and want to continue in this regard, we have not made the breakthrough in areas such as Asia, Russia and Brazil. Therefore, we are setting a target of having 20% of all new greenfield investments derive from those emerging markets by 2014.
In research and development, the plan is to grow the annual spend by multinational companies to €1.7 billion. To meet this target, we must win approximately 640 investments.
The questions of how we are to do this and how our approach will differ from that adopted heretofore are best articulated by the "Ten Steps to Transformation". I do not propose to refer to them all and the members have been given a list. The transformation agenda is the most important. It is very important that the multinationals in Ireland at present, which comprise a strong base, transform their activities over the next five years. If they do not, they will be in trouble or will not be here. There are several ways of supporting company-wide initiatives to transform their operations. We will support technology uplift, skills uplift, process development, energy improvement, feasibility and research and development. The set of measures must be worked on jointly by IDA Ireland, local management and corporate management.
There are new areas of foreign direct investment that we will target in respect of convergence, cloud computing, innovation in services and cleantech. There are new forms of foreign direct investment. Bearing in mind multinationals that are only servicing the Irish market or traditional sectors such as insurance, banking and wholesale, and considering public contracts, setting up centres of excellence in terms of developing, test-bedding and internationalising on foot thereof, there is a wide range of broader areas that we will also target.
With regard to emerging companies, we have done very well in respect of the big multinationals, which have many operations here. We are focusing in particular on life sciences and technology and on companies with under 200 employees and under $20 million in revenue. We are addressing the branding of Ireland as part of the strategy to raise awareness of the country. We are running a television programme on CNBC and Bloomberg and using the major media and on-line media. We are doing live television interviews on the positive developments in Ireland, including those of last week. We will move to an open innovation organisation. In looking at the change of pace in the technology and business areas, we realise that alone we will not be able to grasp the opportunities. From a global perspective, we need to, and will be, tuned into these networks.
With regard to Ireland's value proposition, people often ask what makes Ireland attractive. There are a number of factors associated with every investment. These are the available talent, technology capability, attractive tax rate and, above all, Ireland's very successful track record with foreign direct investment, in addition to the ease of doing business here. Depending on the sector, there are usually five or six other factors of importance. In the biopharmaceuticals sector, for instance, it is a matter of having strategic sites and a good regulatory track record. One should bear in mind the investment of €57 million in a new national institute for training and research. There is a series of enhancements to the value proposition.
IDA Ireland is one organisation that will win foreign direct investment but it must be on a partnership basis within what we call "Team Ireland". There is a wide variety of stakeholders. Bearing in mind the international competition it is imperative that we have "Team Ireland" and that all organisations are working in the agreed direction in order to win the best investment for Ireland. Policy enablers are necessary to make Ireland an attractive place and to improve it from an FDI perspective. We need a constant focus on competitiveness, improvement in the tax regime, the next generations of networks, NGNs, for future business, in particular the growth in services, energy infrastructure, education, which is becoming more important, and the regulatory environment.
The sectors on which we concentrate are constantly evolving. They include digital media, for example, which did not exist approximately five years ago, and life sciences, pharmaceuticals, biopharmaceuticals and medical devices, information technology, financial services, the content industry, consumer and business services, engineering and diversified industries and cleantech. We have partnered with companies to create the message about Ireland in our advertising campaign in the United States. Google, Facebook and Boston Scientific are three of them. One will see an advertisement in airports around the United States about Google searching the planet for the perfect location for its business and it came up with Ireland. This country has the second largest global centre for endorsing Ireland as a location. While there is much negative reporting about Ireland and its competitiveness, it is important to recognise the world competitiveness report by the renowned IMD organisation in Lausanne has this country at No. 1 in the world for availability of skilled labour, financial skills and corporate tax, third for flexibility and adaptability of people, third for being open to new ideas and fourth for labour productivity. They are important factors for people making FDI decisions as distinct from other things that are going on in the economy.
It is also important to recognise that FDI is continuing even in the downturn. We had announcements from Dun & Bradstreet yesterday and from LinkedIn today. Other companies to locate in Ireland include Maxim from California, which made an announcement in December, Facebook, PayPal, Hertz, Zurich, Warner Chilcott which came to Dundalk, PPD to Athlone, Gala from Japan, and Blizzard Entertainment came to Cork with jobs for approximately 800 people. Dun & Bradstreet set up an international operations centre while the Swedish group Vattenfall is working on research and development in wave energy. Sita has located in Donegal. The strong message from brand names around the world is that they are still continuing to invest in Ireland.
Winning foreign direct investment for Ireland is a competitive business. We in our organisation strive to be the most competitive foreign direct investment agency in the world and to ensure we have the appropriate skills for that because it is a job where one is dealing at the highest level with corporations around the world. That is a flavour of the main elements of the strategy recognising that we are not going into the fine detail of the six main areas for competitive reasons. I am happy to take questions.