The data in the OECD report refers to foreign direct investment, FDI, inflows and outflows that cover a wide variety of transactions. The flows of FDI associated with companies for which IDA Ireland has responsibility would only form a component of the OECD data. It would be incorrect to take the OECD data in isolation and infer from it that Ireland has become uncompetitive, or is losing ground, in terms of foreign direct investment in the areas in which Ireland competes, namely, manufacturing and internationally traded services.
In addition, as is the case with previous OECD reports on trends and recent developments in foreign direct investment, the data on inflows and outflows exhibit much volatility from one year to the next. This is because the data include, and appear to be dominated by, purely financial flows that move up and down in response to a wide variety of factors such as interest rate changes, repayments of inter-corporate loans, the strength of the dollar, changes in regulations and so on. The data do not, in large measure, reflect trends in financial flows associated with investment in actual facilities to produce products and services, which are the focus of IDA Ireland activities.
As noted by the report, one factor that appears to have caused a substantial shift in the flows of US investment in 2005 is the American Jobs Creation Act 2004. While this factor had a real and substantial effect on outward flows from the United States in 2005, in terms of the dynamic of trends from year to year in future, its impact can be expected to wash out of the data quickly.
As for the types of FDI that actually contribute to the development and prosperity of the Irish economy, 2005 was a remarkably good year in many respects, particularly in terms of the quality and regional spread of investments secured. For example, the projects approved included a €42 million expansion of the Bausch & Lomb plant in Waterford, a new 300 person customer service centre to be developed by Toucan in Sligo and the location by Zeus Industrial Products of its new European operations centre in Letterkenny. This success has continued in 2006 with, for example, projects such as Amgen in Cork, Northern Trust in Limerick and Servier in Waterford. This is not to forget today's announcement of the creation by Google Incorporated of 500 jobs.
The Government believes the best way to measure net investment by foreign firms in Ireland is through an assessment of overall economic activity and wealth creation. After a very strong performance up to 2000, job losses from foreign-owned firms outnumbered job gains from 2001 to 2004 as the global economic downturn following the 11 September attacks took hold and the effect of the marked slow down in the information and communications technology sector was felt. However, net job creation in foreign-owned firms was positive in 2005, which indicates that Ireland continues to be a very attractive environment for international investors. A total of 150,689 people were in permanent full-time employment with foreign-owned firms in 2005. This constitutes an increase from 149,079 in 2004.
The level of foreign direct investment in Ireland relative to the size of the economy is one of the highest in the world. Currently, more than 1,000 overseas companies have substantial international operations in Ireland. These include many of the leading companies in information technology and communications, life sciences, international services, engineering and financial services.
The challenge for IDA Ireland is to sustain, embed and grow this investment. The Government's recently-announced research and development strategy copperfastens such a focus on enhancing Ireland's competitiveness to attract foreign direct investment in future.
Additional information not given on the floor of the House.
In responding to this challenge, IDA Ireland is focusing on the development of its employment base into high technology, high value added and high skill functions, including both high-end manufacturing and areas such as high-end services and research and development. I am satisfied the strategies and interlinked programmes in place in IDA Ireland are the most appropriate ones to underpin our continued success in this area.