Foreign direct investment (FDI)into the Republic plummeted by 60 per cent last year and the downward trend has continued in 2002, according to Forfás.
Inward investment fell to $10 billion in 2001 from $24 billion (€24.77 billion) a year earlier, according to the latest World Investment Report. The report was published yesterday by Forfás in conjunction with the United Nations Conference on Trade and Development (UNCTAD).
The report said the sharp decrease in the levels of investment coming into Ireland in 2001 resulted from a sharp contraction around the world as multinational companies faced a much more difficult economic environment.
The report follows news earlier this year that employment in firms in the Republic supported by IDA Ireland fell by almost 3 per cent last year. That was the first such decrease in employment at IDA-backed companies for 15 years.
When IFSC investment is stripped out of the equation, the overall value of inflows into Ireland in 2001 measured €8.2 billion, down from €11.4 billion in 2000.
In contrast, foreign direct investment flowing out of the State was up sharply on the previous year.
The Forfás-UNCTAD report noted that the increase in flows from Ireland reflected the emergence of a growing cohort of Irish-based multinational companies.
Investment flows out of the country increased to €5.4 billion in 2001 up from €4 billion in 2000. In 1997, FDI outflows from Ireland were just €1 billion.
Ireland was ranked sixth out of the 20 economies studied in the new report for largest gains in export market share between 1985 and 2000. Ireland's top three exporters - Intel, Dell and Microsoft - accounted for 22 per cent of Irish manufactured goods exports and 18 per cent of total exports in 1998.
Globally, foreign direct investment fell sharply in 2001 to $735 billion from $1.5 trillion in 2000.
Last year represented the first time in a decade that the levels of global foreign investment dropped.
Despite the weaker levels of foreign direct investment worldwide, the report said the role of multinational companies in the world economy had expanded rapidly over the past 10 years.
It said "international production" - defined as overseas production by the foreign affiliates of multinationals - had grown faster than global trade in that period.
Sales by foreign affiliates worldwide increased from $5.5 trillion in 1990 to $18.5 trillion in 2001 and were now more than twice as high as world exports.
UNCTAD is a UN body established in 1964 which focuses on the links between trade, investment and development.
The UNCTAD World Investment Report is published annually to examine global trends in foreign direct investment flows.
