Bernard Durkan (Kildare North, Fine Gael)
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Question 116: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to manufacturing and service job relocation to more competitive economies in the course of the past five years; the action taken to address such issues; the effect of any such action; and if she will make a statement on the matter. [44991/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 120: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the extent to which she has identified the cost factors affecting industries proposing to relocate to lower wage economies; and if she will make a statement on the matter. [44995/09]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 116 and 120 together.

There are many factors which influence a firm's decision to relocate. Firms adjust their plant location and utilisation strategies to address matters such as accessing new markets, moving production nearer to customers, meeting firm or market specific customer relationship issues, accessing technology or other competitive considerations. The result is flows of investment and employment across borders. Ireland has been successful in managing this process, while winning many prestigious and value added investments.

As a small, open, export-led economy, our best response to the realities of globalisation is to ensure that Ireland remains attractive for investment and enterprise growth. Our enterprise support policies have consistently evolved to meet the needs of both foreign direct investment (FDI) and growth-orientated indigenous firms. Ireland has consistently been ranked highly as an economy in which it is easy to do business.

According to the World Bank, Ireland is perceived as lightly regulated, which in itself, lowers costs for business. Ireland also has the third lowest rate in the EU of corporation tax, which lightens the tax burden on business and gives them an advantage over competitor countries. However, current operating conditions for companies are difficult and challenging due to a number of factors including the weakness of sterling, tough competition, and the global recession. Some issues are outside the control of Government as a whole, but where possible we are addressing Ireland's cost competitiveness as an essential element of our economic recovery. Recently published indicators are in our favour with inflation, commodity and other prices falling. Both the NCB Manufacturing and Services Purchasing Managers' Indices have shown a sustained and deep period of declining input costs for businesses in Ireland, driven, in part, by lower wage and energy costs. This is matched by a decline in Irish inflation that reached minus 6.6 per cent in the year to October 2009 - the sharpest fall in Ireland since the 1920s. At the same time, EU inflation as a whole was minus 0.1% for the same period, and is expected to be rise by 0.6% in November.

We have ensured that Ireland can offer the skills, education, research and innovation capabilities that modern mobile and indigenous firms need to be competitive in world markets. In recent years, Ireland has undergone a transformation from a low wage/low cost economy towards a high value and knowledge-based one. Arising from this transformation, the nature of FDI has changed and Ireland is now successfully competing for premium mobile investments against the most advanced countries in the world.

Low wage costs are no longer an enticement but have been replaced by other attractions such as a benign tax and regulatory environment, a highly educated workforce, an improving infrastructure and a commitment to world-class standards of research, development and innovation. These, combined with our can-do, responsive and open attitude, ensure that we remain a location of choice. By utilizing these competitive strengths, our policies have been successful as many foreign companies continue to make significant investment in Ireland and in the skills of our labour force.

The most objective indicator of a competitive economy is the rate of investment by the FDI sector in our country. We have a firm focus on ensuring that we win for Ireland the leading companies that are at the forefront of global products and services. Last year despite the global turmoil, 2008 saw Ireland win a total of 130 foreign direct investment projects (60% of which will be located outside of Dublin), worth circa €2 billion and also saw the creation of over 8,800 new jobs. To date in 2009 there already have been over 40 IDA announcements with the potential to create in excess of 2,500 of new jobs. The IBM Global Location Trends Annual Report 2009 in October 2009, ranks Ireland as the top performer per 100,000 population for attracting FDI and rising from 19th to 11th place overall in attracting jobs in R&D.