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Thread: Where does the FDI jobs multiplier of 1:1 come from?

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    Politics.ie Member clearmurk's Avatar
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    Default Where does the FDI jobs multiplier of 1:1 come from?

    I've been listening to government recently promoting the importance of Foreign Direct Investment for jobs. After all, when it comes to corporate taxation, they'd rather not go there.

    A ratio that seems to come up again and again is 1:1 - the ratio of indirect jobs created for every FDI job. Indeed, I believe I heard Minister Richard Bruton quoting this figure again recently.

    So I thought I might look into this a little. The best I can come up with is an IDA figure from 2010 given to the Joint Committee on Enterprise, Trade and Employment of 1:0.7, that is 30% less.

    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.
    Joint Committee on Enterprise, Trade and Employment - 23/Mar/2010 Horizon 2020 Strategy: Discussion with IDA Ireland.

    Can anyone do any better?

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    Quote Originally Posted by clearmurk View Post
    I've been listening to government recently promoting the importance of Foreign Direct Investment for jobs. After all, when it comes to corporate taxation, they'd rather not go there.

    A ratio that seems to come up again and again is 1:1 - the ratio of indirect jobs created for every FDI job. Indeed, I believe I heard Minister Richard Bruton quoting this figure again recently.

    So I thought I might look into this a little. The best I can come up with is an IDA figure from 2010 given to the Joint Committee on Enterprise, Trade and Employment of 1:0.7, that is 30% less.



    Joint Committee on Enterprise, Trade and Employment - 23/Mar/2010 Horizon 2020 Strategy: Discussion with IDA Ireland.

    Can anyone do any better?
    You see, your first mistake is in your first sentence. Never listen to politicians. It's bad for your health and there is no benefit in it at all, quite the opposite.

    I have no clue of the ratio.

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    Politics.ie Member wombat's Avatar
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    Depends on the industry, pharma, it could be up to 5 to 1, no idea about IT. Its hard to measure spinoff, a lot of companies started as dependent on FDI but now export.

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    refer to 'excuses 101' for dummies;

    A)They were rounding up to the nearest '1', happens all the time.

    B)It was an 'adminstrative error' by the office temp covering for the regular secretary who is on maternity leave.

    C) etc, etc.
    Fianna Fail - The Anti Democratic Party & The Anti Constitutional Party. Traitors of Irishmen and Irishwomen.

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    I have two questions

    Even if we were to accept our politicans claim of 1:1 nonsense what has it cost the state to create these jobs - include in that cost figure - all incentatives direct and indirect, the pro rata ratio of costs for running the IDA, EI, etc that must be factored in in accessing the viablity of our FDI programme.

    What idiots thought it was financially clever idea to promote at all costs FDI while not ensuring Direct outward investment out paced FDI? -

    Every time one of our "esteemed" politicans run to the media heralding the merits of FDI without counter balancing that issue with growth in DOI - the best thing we could do for the country is never vote for that idiot again!!!!!!

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    What is "Direct Outward investment", and where does the money come from to make the investment?
    "Always do right. This will gratify some people and astonish the rest." Mark Twain

    “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” Napoléon Bonaparte

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    Quote Originally Posted by wombat View Post
    Depends on the industry, pharma, it could be up to 5 to 1, no idea about IT. Its hard to measure spinoff, a lot of companies started as dependent on FDI but now export.
    It could be? and it could be not? There are figures and its not difficult to measure. Publication of figures are "not allowed". "It could be" 1 to 5

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    Politics.ie Member storybud1's Avatar
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    Duh ? it always depends on what local materials they need to source, Google etc will not require much as their product is information, manufacturing will require a lot more local materials & services.

    On the other hand manufacturing jobs are being lost to Asia but information jobs are steady (just look at the latest)

    Zurich Insurance group to create over 100 jobs at two technology hubs - Independent.ie

    During the boom I remember the figure of 18 to one, that is you could get 18 Chinese/Vietnamese guys for the same money as one Irish guy doing similar manufacturing jobs. The Chinese know this and so do the Germans.

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    Politics.ie Member clearmurk's Avatar
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    Quote Originally Posted by storybud1 View Post
    Duh ? it always depends on what local materials they need to source, Google etc will not require much as their product is information, manufacturing will require a lot more local materials & services.

    On the other hand manufacturing jobs are being lost to Asia but information jobs are steady (just look at the latest)

    Zurich Insurance group to create over 100 jobs at two technology hubs - Independent.ie

    During the boom I remember the figure of 18 to one, that is you could get 18 Chinese/Vietnamese guys for the same money as one Irish guy doing similar manufacturing jobs. The Chinese know this and so do the Germans.
    The Zurich jobs are indeed good news - what we need now is a Foreign Direct Import measure, to assess the proportion of new jobs "created" that in fact are used to employ staff from other economies.

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    The principle isn't hard to understand, though how they arrive at specific figures is harder to justify maybe.

    At one end of the scale, FDI jobs that are pure service exporters bring money into the economy and that money is spent here, paying the wages of doctors, pharamacists, solicitors, teachers etc.

    At the other end, you have FDI jobs in manufacturing which require supporting businesses that employ more people.

    I'd have thought that 1:1 is a conservative estimate, and it could be a lot higher.

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