|
One
of the particularities of the Northern Ireland economy
is that it is heavily dependent on foreign direct
investment (FDI). There are currently 243 foreign
owned companies employing over 53 000 people in the
North.
Why
do foreign companies invest here? It is certainly
not for the 'craic' or because they particularly like
the natives. They invest over here because it is profitable
to do so. If they find somewhere else more profitable,
they will have no qualms about leaving Belfast to
go to Bengalore for example. It is only if they are
really convinced that it will add value to their operations
and turnover that foreign companies will invest in
Northern Ireland.
The
vast majority of foreign investment comes form the
USA. American investment over here is larger than
twice the size of European and Asian investments combined.
Investments from the Britain and the Republic of Ireland
are also very important.
Foreign
investors rarely consider Northern Ireland as an investment
location spontaneously. Northern Ireland is not a
country, but a peripheral region of the British and
Irish states on the western margins of Europe. In
the British Isles, the Province has to compete with
Scotland, Wales, England and the Republic of Ireland.
Selling Northern Ireland as an investment location
is generally made more difficult by the fact that
is has a bad image. Invest Northern Ireland, the semi-governmental
body whose task is to attract foreign investment into
the region, has a hard time trying to convince international
companies to consider the North as a potential investment
location.
What
arguments does Invest Northern Ireland put forward
to convince potential investors that Northern Ireland
is the right place to invest? The main argument is
that the province has 'the right people', that is
a young, English speaking, flexible and skilled workforce.
Secondly, property and operating costs are relatively
lower than in the rest of the UK and the Republic
of Ireland, and thirdly there are interesting financial
incentives for investors. Whatever the value of those
arguments in the absolute, these indicators will always
be judged by potential investors relatively to other
locations. To convince foreign investors, Invest Northern
Ireland will put strong emphasis upon reports (whether
they are reliable or not is another question) that
conclude that Northern Ireland is the best place to
invest. For example, the MITAL report concluded that
Belfast was the best city in the British Isles to
open a call centre.
Invest
Northern Ireland seeks to attract foreign investment
from specific sectors. Those strategic sectors are
software development, call centres, biotechnology,
and more recently shared services centres. It is not
an easy job to convince foreign companies to invest
in the North. Why is it difficult to do so? And why
is it difficult to attract them beyond the greater
Belfast area? Some of it has to do with global economic
downturn, since 2001, every country has found it difficult
to attract mobile foreign investment projects. But
the main reasons are local obstacles. For example,
software companies require often very specific skills
(knowledge of java, cobol, html, c++ etc), and there
are not enough people with those particular skills.
The further out of Belfast, the more true this is.
Unless they are hiding somewhere behind hedges, it
is difficult to find 25 cobol engineers in Fivemiletown!
Or if a potential investor was considering opening
a call centre, Moyle District Council could hardly
provide this company with 200 French speakers.
The
idea of a shared services centre is even more utopian.
Where are we going to find 80 German accountants and
their 200 legal secretaries for example? Another problem
is the abscence of a proper infrastructure (for example
buildings fit to host a call centre), and the fact
that the province is not in the Euro zone and has
a tax regime less attractive than the South.
Foreign
investment can have a more sinister side. Invest Northern
Ireland, and its predecessor, the Industrial Development
Board, have been sometimes harshly criticised for
giving huge financial grants to companies that later
fail to deliver their promises, like the famous De
Lorean case, or the dodgy Huanlon company. There is
always the danger that some foreign companies come
not to invest, but to take the grants and then 'fly
by night'. Unethical investments is another problem.
Raytheon is an American ICT company that set up an
operation in Derry. It was hailed for creating jobs
and thus boosting the peace process. Raytheon is presented
as a 'model company'. But Raytheon manufactures military
material, deadly weapons used today in Iraq by US
and British troops. So, paradoxally the war in Iraq
is supported in order to help the peace over here!
Perhaps less newsworthly, is the fact that flexible
labour legislation and lower wages are sold as intrinsic
qualities of the 'Northern Ireland buisiness solution'.
As opposed to countries like France, Belgium or Germany
for example, people can be easily fired from their
jobs. Weak trade unions are also an advantage, especially
in places like call centres -sometimes called the
'sweatshops of the 21st century'. Basically foreign
investors are implicity told that over here they can
get away with 'flexible work practices' - an euphemism
for exploiting the work force.
For
those foreign investors present in the North, their
experience has generally been satisfying. Nearly three-quarters
of companies that have invested in the past are gearing
up to invest more. Are the people of Northern Ireland
happy with existing foreign investors? They certainly
have created jobs. But as the major strike at the
Montupet factory in Dunmurry showed a few years ago,
their fundamental interests can clash. The relation
between foreign investors and the people of the North
is one of economic cooperation, but with latent conflicts
waiting to explode.
Index: Current Articles + Latest News and Views + Book Reviews +
Letters + Archives
|
