Select Committee on Northern Ireland Affairs Fifth Report


II. WHAT IS INWARD INVESTMENT?

11. IDB defines[15] inward investment as including two distinct elements: first-time investors to Northern Ireland and expansions and further investment by externally owned companies. Companies making the decision to establish in Northern Ireland are defined as first time investors.[16] 'Inward investment' includes investors coming from other parts of the United Kingdom as well as investors from outside the United Kingdom. The level of activity is measured by reference to IDB client companies and assistance usually involves financial incentives. However, as John Simpson pointed out in his evidence, [17] much inward investment lies outside this field, particularly in the retail sector, but also in the manufacturing and tradeable services sectors. Such investment is determined principally by market forces and occurs largely without formal Government assistance. It was John Simpson's view that such inward investment takes place on a significant scale, with retailing accounting for between a quarter and a third of total recent overall inward investment.[18]

12. We note the existence of this commercially-driven inward investment, of which Mr Simpson quoted a number of examples.[19] For the purposes of this Report, however, we concentrate on inward investment supported by IDB or other support agencies. Much of this investment is aimed at attracting new and expanding manufacturing industries which are likely to broaden the industrial base in Northern Ireland and enhance employment opportunities. Unlike commercial investment, significant levels of public funds are expended both in attracting the industry and in financial incentives to the company to select Northern Ireland as the preferred location for mobile projects.

13. In a number of cases, the initial inward investment is a prelude to further investment in due course. From the data given earlier, it will be clear that both the extent and the value of expansion and competitiveness projects generally exceed the corresponding figures for new inward investment. Such projects also play a particularly significant part in safeguarding existing jobs.[20]


15  Ev. p. 2. Back

16  Q 2. Back

17  Ev. p. 82- 83; Q 175. Back

18  Q 179. Back

19  Ev. p. 82-83. Back

20  In the years from 1995-96 to 1999-2000 expansions and competitiveness projects have been responsible for safeguarding a total of 10,601 jobs. (See IDB End of Year Statement, 1999-2000, p.9.) Back


 
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