Local Multipliers: IDA Supported Companies in the Irish Regions

Abstract

Global trends in foreign direct investment and trade have seen the Irish economy move from a high-tech manufacturing to a high-tech service driven foreign direct investment (FDI) model over recent decades. The nature of this investment has inevitably led to greater concentration of Industrial Development Authority (IDA) supported employment in a smaller number of urban cores. In this paper, we estimate the causal impact of local employment growth in IDA supported firms on local employment in firms in other sectors. To do so, we use a well-established instrumental variables method. In line with similar studies elsewhere this paper finds that the multiplier is significant. The results suggest that there are around three additional jobs created in a county for each job created in an IDA supported business in the same county. This suggests ongoing concentration of IDA supported employment will have significant implications for regional development.