Cluster effect ensures success breed success

According to the EY European Attractiveness Survey 2023, the southwest is Ireland’s most attractive region outside of Dublin for foreign direct investment (FDI), winning 15 per cent of all new projects in 2022. The midwest attracted 10 per cent of investments during the year with the mideast taking a 7 per cent share, and the west and Border regions on 5 per cent each.

The growth of significant industry clusters in sectors such as life sciences, electronics, and financial services has been a driving force for investment in the regions in recent years.

“A number of locations in Ireland have developed clusters such as biopharma in the southwest centred on Cork and medical technologies in the west, centred on Galway and Limerick,” says Martin Shanahan, partner and head of industry and FDI with Grant Thornton. “But it is increasingly the case that these sectors are spread across multiple counties as is financial services. Nascent clusters in areas like connected and autonomous vehicles are also growing centred on Shannon and the west coast. The existence of clusters and the significant installed base of enterprise in regions is a big selling point in attracting new investors.”

Cian Kelliher, management consulting partner with KPMG in Ireland, believes these clusters play a crucial role in attracting additional investments. “They create a favourable ecosystem by providing access to specialised talent, established networks, and shared resources,” he explains. “The concentration of expertise and infrastructure within these clusters generates a sense of credibility and reliability, making the regions highly appealing to investors. These clusters also foster collaboration, innovation, and knowledge sharing, further enhancing attractiveness for other investments.”

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The economic impact of those clusters is also significant. “Industry clusters have been popping up all over the regions and have been the most significant driver in Ireland regaining its title as the fastest growing economy in Europe,” says Chris Collins, country president of Schneider Electric Ireland. “The industries we’ve seen have been high-tech and world-leading including pharmaceuticals and life sciences, food information, financial, and consumer services. The wide breadth of these industries attracts new and diverse talent to Ireland, while further incentivising new businesses to make the move. We are now seeing a variety of investments from suppliers into those industries, particularly local tech start-ups that support the larger multinational companies leading in technology and innovation.”

And there are other lasting effects. “Generally, the greater the level of multinational investment, the more people come to work and then settle down — it’s a knock-on effect,” Collins adds. “This then goes on to drive investment in local infrastructure and spending, creating further incentive for both residents and businesses to put down roots.”