91. It has recently been estimated that the working
age population of Northern Ireland will grow by 67,000 over the
next 10 years. Allowing also for an increase in proportion in
employment to the current United Kingdom figure, 13,000 new jobs
will be required annually. This factor alone would require an
increase in the job creation rate in the Province, compared with
the last decade, of at least 50 per cent. This is before any account
is taken of reductions in employment in declining sectors.
Inward investment will clearly have an important part to play
in creating these jobs. The chart below superimposes the contribution
that total inward investment of the level achieved over the last
five years would make, assuming that all jobs promoted actually
materialised in that period.
92. Time and again in the course of the evidence,
oral and written, the impact of the political climate has been
mentioned as having a major bearing on the willingness of inward
investors to consider Northern Ireland as an inward investment
location, or to increase their involvement in the Province. This
clearly has a crucial bearing on the prospects of meeting the
major employment challenges the Province will face over the next
93. Several witnesses made the point that inward
investment was not a panacea; whereas some inward investors came
in, prospered and expanded, others failed or left again after
Some promised investment never materialises.
The risk of failure is not restricted to old technologies; the
recently-announced closure of IMR Software's development centre
is a case in point.
94. Although Northern Ireland came out very strongly
in the Chamber of Commerce survey as a location for inward investment,
it must be remembered that, as Mr Ingram said, competition is,
and will remain, intense for good projects, particularly knowledge-based
By definition, all new inward investment projects are mobile as,
indeed, are some 'expansion' projects. It will therefore be vitally
important to get the fundamentals right, particularly in the fields
of education and training, to ensure that there is an adequate
pool of skilled labour to attract those projects which have the
potential to make the greatest overall contribution to the long-term
prosperity of the Northern Ireland economy. Nor should the availability
of suitable sites be neglected, having due regard to the changing
needs of industry in this respect. NIEC told us inward investors
are attracted primarily by regional capabilities, in areas such
as access to research and development, skills of the work force
and education and training programmes.
If Northern Ireland is to continue to diversify its economic base,
as it needs to do, it will have to ensure that it reaches world
class in these areas. This may also bring advantages in enabling
more highly qualified people to remain in the Province, or to
return there to live having completed their studies elsewhere.
95. It is clear that some steps at least have been
taken towards changing the character of inward investment into
the Province and that the opportunities to enhance the linkages
with indigenous industry and educational institutions are now
greater than before as a result. We believe that this should be
a prime area for development, possibly along the lines of the
Regional Linkage Initiative proposed by NIEC.
96. Although the evidence we received was mixed as
to the impact of tax incentives on inward investors, and the opportunities
in Northern Ireland for flexibility in this respect are much less
than in the Republic of Ireland, we would encourage the Government
to keep this matter under review. We are aware of one case where
Northern Ireland was the preferred location for an inward investment
project on all other grounds, but that tax considerations were
decisive in the ultimate choice of location.
97. There have been numerous references also to 'Strategy
2010' as a blue-print for the economic development of the Province.
Inward investment has an important contribution to make, but this
contribution will itself be a function of the success of the Strategy.
It is therefore important that this is subjected to wide public
debate and rigorous scrutiny. We had considered doing so ourselves,
but economic development is now a responsibility of the Assembly.
98. It is clear from the number of jobs needed in
the Province over the next decade that there will continue to
be a need for positive steps to be taken to seek to induce inward
investors to locate in Northern Ireland. Our oral and written
evidence offers a wide range of perceptions from academics, industrialists,
local authorities and many others as to the key criteria for success.
We hope that Sir Reg Empey's recently announced review will look
at all these carefully. However, one thing is clear: long-term
success in getting the fundamentals right may be expected to reduce
the extent of the need for, and hence the cost of, the financial
inducements offered to prospective inward investors. Lower rates
of financial support for inward investment projects will be one
touchstone of the success of the Northern Ireland Assembly and
Executive in their inward investment policy.
220 Northern Ireland Economic Review and Prospects June
2000 (PricewaterhouseCoopers, Belfast). It is estimated that
up to 55,000 jobs in traditional industries and the voluntary
and public sectors may be at risk over the next five years. See
also Q 242. Back
for example, Q 427. Back
368. See also Q 47. Back