Tax incentives to attract foreign direct investment (FDI) have been the main tool of industrial policy in Ireland for over 50 years. As a result, Ireland has attracted large inflows of FDI, and is the European headquarters for many US digital-based firms, such as Facebook and Google. The paper argues that a tax-based industrial policy has become more risky, because of changes to international tax rules in response to criticism of low-tax strategies. The risk is that resulting changes will mean the Irish tax regime is far less attractive, and will result in an outflow of FDI.
The article argues that a tax-based industrial policy is not likely to result in an innovative, research-led economy, rather there is a need for new policies.
The full article is available here: http://www.fondazionebrodolini.it/en/pubblicazioni/economia-lavoro/2018-3
Dr Jim Stewart is Adjunct Associate Professor at Trinity College Dublin. His research interests include Corporate Finance and Taxation, Pension Funds and financial products, Financial Systems and Economic Development.
He is widely published and his titles include Mutuals and Alternative Banking: A Solution to the Financial and Economic Crisis in Ireland (2013), Choosing Your Future: How to Reform Ireland's Pension System (co-author, 2007) and For Richer, For Poorer: An Investigation of the Irish pension system (2005).