`This study is conducted to assess the effects of the information and communication technology sector of the Irish nation to its foreign direct investments. This study is conducted in consideration of the
THE BENEFITS OF THE STUDY
This study shall be able to benefit the ICT sectors in general. This is because the study provides the course of action undertaken by the Irish ICT sector to be at par, or even superior, to highly industrialized countries such as the
Moreover, the ICT sector of
More importantly, this study would benefit the Irish population. The ensuing effects of the rise of the country's GNP and GDP brought about by the contributions from the FDIs from the ICT sector, begets a sort of assurance for the proper rendering of government services.
ANALYSING THE EFFECTS OF THE FDI
In an attempt to analyse the effects of FDI to the ICT sector of
Firm Specific Advantages
In terms of technological capabilities, companies that has invested in the country could be described as belonging to one of four different types, particularly, research performers operating with a specific R&D budget and typically having a formal R&D department; technological competents performing some element of product and process development; minimum capability companies adopting and implementing package solutions; and low technology companies with no meaningful technological capability. (Walsh, 2000) Moreover, most companies in
Aside, from the presence of foreign direct investments, a strong culture of innovation is an essential source of industrial competitiveness. (Walsh, 2000)
Location Specific Advantages
Government-supported Programmes in Advanced Technology in the areas of software, power electronics, optoelectronics and telecommunications, as well as the National Microelectronics Research Centre, carry out research and provide postgraduate opportunities in the ICT field. (Walsh, 2000) However, the level of existing funding for these organisations does not permit them to generate the scale and activity necessary to build up and maintain world-class centres of expertise. Whether from public or private or both sources, support at a higher order of magnitude is needed. In the context of
In addition, the Information and Communications Technologies have made a major contribution to recent economic growth in all developed countries.
In order to carry this out, the industry will need a cadre of world class professional researchers in the ICT disciplines – people who can contribute original marketable ideas, who can form the nucleus of new, world class companies, and who can attract a new kind of multinational investment. (Walsh, 2000) The current output of postgraduates (approximately 60 per annum with pertinent skills) is quite inadequate for this kind of development. Likewise, state investment in research is significantly lower than in most developed economies. As we move from an economy based on relatively low skill levels to one based on knowledge and expertise, our continued prosperity depends on substantially increasing this investment. Moreover, the efforts of the PATs (Programmes in Advanced Technology) and other RTI (research, technology and innovation) programmes have led to measurable benefits, but the current structures are incapable of developing teams with 'world class' scale or expertise. They are therefore unable to conduct the type of research that will attract international attention, bring in significant industrial investment, or routinely spin off high technology, market-leading enterprises.
The development impact of ICT has two distinctive aspects. The first is the benefits of enhancement of the infrastructure and applications to users of information and communication services, who can be distinguished according to whether they use these services for production, distribution or consumption activities. The second is the benefits derived by the economy from changes in the supply of communications network infrastructure and applications.
Furthermore, improvements in ICT lower the cost of information, the cost of dealing with others in the market (such as suppliers and customers) and the cost of business start-ups. Through both of these processes, transaction costs in society drop, which improves overall efficiency and growth. Complementing this, the ability to transmit data on communications networks contribute to increases in the quantity and quality of information available to service and productive enterprises, which opens up new opportunities and enables more thorough evaluation of the risks and returns associated with these opportunities. In many instances, the additional information that becomes accessible will contribute to the spatial expansion of markets, assisting producers to move from local into regional or national markets, and from domestic into international markets. Access (or the lack of it) to cheap and sufficient information is an important determinant of firms', sectors' and countries' competitive advantage.
Evidence suggests that countries that have invested in communications network infrastructure have attracted high levels of foreign direct investment as well as domestic investors into other sectors. The value of the infrastructure is in the linkage effects to other sectors, more than in the infrastructure per se. Economic benefits also arise from changes in the supply of communications network infrastructure, which contributes to the emergence and growth of specialist firms, or new branches of existing firms, in a range of service sectors to take advantage of new market opportunities in the production and distribution of information itself. On one hand, these will include software production firms and Internet service providers, who provide essential pieces of machinery for information production and distribution. On the other hand, there are firms who provide the content of the information, such as web marketing agencies, electronic news media and so on. The changes in information and communications technology have broken down barriers between different manufacturing and service sectors in the economy, and opened up competition between them. This enhances efficiency in these sectors, and contributes to overall growth.
Much of existing economic data point to a high correlation between ICT and economic growth. And in the past several decades this has been confirmed by the revolutionary impact of ICT on country economic performance, particularly in the areas of production, trade & market access, employment, and public and corporate governance. Converging and emerging technologies have allowed countries to accelerate economic growth, empower people and alleviate poverty through expansion in private and public business opportunities, extend services to socially disadvantaged groups, and pervasively use and develop ICT for revenue and income generation purposes.
Foreign direct investments increased the productivity rate of the Irish ICT sector. One of its effects is the provision of higher standards on the ICT industry. The government recognized that the capabilities in information and communication technologies must be developed in order that Irish society can participate in economic, cultural and educational activities and that Irish business can take advantage of the opportunities arising in this field. (Walsh, 2000) Information and communication technologies impact on society and the economy in a number of different ways. First, ICT is an underlying and necessary technology for society in general and for business in particular. ICT also functions as an enabler/facilitator for industry, for example, in electronic commerce, logistics and telematics. Secondly, looking outward, organisations will increasingly use ICT to link their stock of tacit knowledge to that of other organisations so as to develop cross-discipline solutions in areas of emergent need e.g. in bio-informatics, smart products, supply chain management. Thirdly, in recent times the ICT sector has been the engine of growth for all developed countries.
The encouragement of foreign direct investments is as well subjected to a stiff level of competition among
According to Dorgan (2002), the surge of FDIs provided major contributions in the country. First, it provided a very strong export-led contribution to economic growth. Moreover, unlike other decades, the investments provided the employment sector an intensive growth. It has been a key driver of business friendly infrastructure, human resource development and regulatory change, which has benefited the economy as a whole. Concurrently, FDIs has both forced and sustained flexibilities in the economy, which might otherwise have gone the way of much of