The Tanaiste, Ms Harney, said yesterday she believed it would be "unrealistic" for the IDA to set definite job creation targets for the western region because no such targets exist for the State as a whole.

Ms Harney was speaking after formally introducing a report "Promoting Foreign Direct Investment in the West" compiled by the Western Development Commission, which recommends a minimum target of an additional 2,100 jobs from foreign investment each year until 2006 in the seven western counties.

The report calls for a fairer share of foreign industrial development for the west and says incentives should be biased in favour of smaller towns, and abolished or significantly reduced for towns and cities with populations of more than 40,000. This would apply to small to medium-sized overseas firms, as it is accepted that large-scale investments would need to locate in cities.

It is also argued that certain towns throughout the west already have most of the basic requirements foreign investors look for, and that it is now a question of marketing these towns.

In compiling the report, the Ballaghadereen-based commission identified the key factors that influence foreign investors and assessed more than 90 possible locations across the seven counties from Donegal to Clare. From this, it identified "a premier group" of 10 towns which satisfy the bulk of the criteria.

These are Castlebar/Westport, Ballina, Tuam, Roscommon, Carrick-on-Shannon, Sligo, Ballinasloe, Letterkenny, Buncrana, and Ennis/Shannon. A number of smaller towns which satisfied some of the criteria were also identified.

The chief executive of the commission, Mr Liam Scollan, said that "for too long, the positive benefits of the region have not been promoted to investors". These benefits, according to the report, include an industrial land bank of almost 2,000 acres, higher Objective One grant aid, special tax incentives in part of the region, an educated workforce, as well as the potential to attract back emigrants and encourage women back into the labour market and a high quality of life.

The regional imbalance in foreign investment that has existed up until now is also illustrated. Of the 102 new industrial projects announced in 1997-98, with a potential of 24,000 new jobs, only 12 were located in the seven western counties. Of these, only one promised in excess of 200 jobs, while 41 per cent of IDA announcements in the rest of the State but outside of Dublin were for more than 200 jobs.

Mr Scollan said that in 1996 foreign-owned firms accounted for 75 per cent of total net output and 47 per cent of all employment in manufacturing industry. If the Government's commitment to balanced regional development was to have any meaning, then foreign investment had to be dispersed more evenly.

He said this would require "a co-ordinated policy approach" on such issues as incentives, infrastructure and human resources.

"Our priority in the Commission now will be to mobilise all the relevant bodies to achieve the various targets set out in this report," Mr Scollan said.

The only target set by the IDA as part of its new strategy of focusing on the regions, is to locate half of all greenfield investment in the 13-county Objective One region (comprising the west, Border and midlands regions).

Mr Scollan said he believed the IDA was "heading down the road towards targets" and that he would encourage the agency to be "more ambitious".

Ms Harney said she believed the IDA target of 50 per cent of all new investment going to the Objective One region was "very high, given the population base and the structure of the population".

She added: "If we can achieve those kind of levels, we'll have made enormous progress. It is not going to be easy to achieve anything like that. To get a project for a regional location is always more difficult."

The Tanaiste said a substantial amount of the 14,000 new IDA jobs per year were from expansions at companies' existing locations. "What we need to do is target the region and target projects for the region. It is not a numbers game, it is also about quality employment."