Irish state agencies should reconsider the cost of attracting large scale new enterprises here, a leading economist has said. Mr John FitzGerald, research professor at the ESRI, said yesterday that it may be time to change the calculation of the costs associated with attracting foreign firms.

With unemployment falling and an increasing number of jobs being taken by non-Irish immigrants, Mr FitzGerald questioned whether the old method based on large-scale unemployment is still appropriate.

The new jobs increase pressure on housing and on roads and these costs should be built into the calculations when attracting foreign firms, he said in a paper delivered to the Irish Economics Association at a seminar on migration.

However, he added that an argument for immigration can be made now that the fertility rate is lower than the death rate and said it could avoid us going through the problems associated with the greying of the population.

The seminar also highlighted the differences between the US and Canadian immigration policy.

The Canadians use a points-based system. The minister sets a quota each year, close family members of residents and refugees are given first call and after that independent immigrants who qualify on points.

The US, on the other hand, attracts far larger numbers of unskilled workers, particularly from Mexico. But because of the high earnings capacity of immigrants into the US there is little difference between the educational attainment of the Irish or Asian immigrants.

So far Irish immigration has been closer to the Canadian model, although without any formal system in place.

According to Mr Alan Barrett and Mr Fergal Trace of the ESRI, Ireland has seen an extraordinary growth in income, which makes the State far more attractive to higher earners than before.