DCU Business School academic contributes to Irish Times feature on Ireland’s economic reliance on FDI

Ireland’s reliance on foreign direct investment (FDI) is “heavy but unintended,” according to Dr Kate Hynes, Assistant Professor of Economics at Dublin City University Business School, who was featured in a recent Irish Times article exploring the future balance of Ireland’s economic model.

FDI has been central to Ireland’s growth for almost 70 years. Today, it supports around 20% of private sector jobs, accounts for more than 80% of corporation tax revenues, and dominates Irish exports. Yet with global uncertainty, deglobalisation, and changing US trade policies, policymakers and academics are questioning whether the country is overly dependent on multinationals.

Dr Hynes’ contribution to the debate highlights several key insights:

State support for local enterprise has been extensive and persistent. Ireland didn’t neglect indigenous enterprise – it pivoted strategically to FDI when domestic industry lacked the size, competitiveness and innovation to drive national industrial growth.

The challenge now is not to treat FDI and local enterprises as competing priorities, the more strategic approach is to foster deeper integration between them. The key to unlocking these benefits lies in the absorptive capacity of domestic firms – their ability to recognise, assimilate, and apply new knowledge, technologies, and organisational practices observed in multinationals, and to adapt and build upon them within their own operations.

Creating deeper supply chain integration between multinationals and local SMEs remains a complex challenge but success here could yield productivity gains, knowledge transfer, and innovation diffusion.

Long-term resilience requires sustained investment in R&D, advanced skills, and the creation of a strong pipeline of innovation-led start-ups.

Other experts in the piece, including Dr Iulia Siedschlag (ESRI), economist Jim Power, and Dr Alison Hearne (SETU), reinforced the importance of diversification, while also stressing the continuing critical role FDI plays in Ireland’s economic success.

The consensus emerging is clear: Ireland should not dismantle what has worked, but rather strengthen what has not. A more balanced model of industrial support—rooted in innovation, integration, and collaboration—will be essential to safeguarding long-term economic resilience.

Date:16.10.25