A debate has broken out on the extent of the economy's reliance on multinational firms after a report from the National Competitiveness Council highlighted the topic.
Much of the argument is based on interpreting our exports figures, notoriously complicated by the activities of multinationals. However, a paper by the National Treasury Management Agency during the week had some other interesting perspectives. It looked at how US companies here are at the heart of the global supply chains of their parents, but also at our financial reliance on US cash.
Looking at employment, for example, the NTMA analysis suggests that the figure from the American Chamber of Commerce Ireland, estimating that there are 155,000 people employed in US-owned companies here, was plausible. This suggested that 7 per cent of the Irish workforce is directly employed in US companies, the highest percentage in the EU.
US companies are likely to have paid between €6 billion and €9 billion in wages in 2017, it estimates, with several billions of this going to the exchequer via income tax and related spending taxes.
The NTMA estimates that more than one in 10 Irish people employed by US firms work for just four companies. Facebook, Amazon, Apple and Google (the fifth FAANG company –Netflix – does not have a presence here).These companies are also big players in the commercial property market, accounting for six out of the top 10 deals in 2017. So we are particularly exposed to the fortunes of these players.
And US financial investment here is also significant, driven by the search for yield as US interest rates hit the floor. All of the Reits floated here in recent years have significant US cash, typically in the 30 per cent to 45 per cent region, while US firms such as Hines, Cerberus and Kennedy Wilson have also snapped up assets here. Listed property firms Cairn Homes and Glenveagh have US investors accounting for ownership of 36 per cent and 43 per cent respectively.
Strong FDI from the US and cash investment has been a vital part of our recovery. At least recognising this exposure as we plan future policy would seem wise.
