When IDA Ireland went out on the road 10 years ago to drum up vital foreign investment, they had a good story to tell. The Republic had an abundant supply of cheap, well-educated labour.

It had the lowest corporate tax rate in the European Union and a regulatory regime that was unambiguously pro-business. Dublin was an uncongested city offering a quality of life that would be hard for another European capital to equal. The political system was stable and the population English-speaking, with strong links to the US - the primary source of inward investment into Europe.

As they wander the streets of New York and Tokyo this week, IDA officials will be singing a different song. The workforce remains well-educated - better educated it can be argued - but employees are no longer cheap, nor plentiful. The number of people at work in the Republic has risen from 1.1 million in 1990 to 1.7 million in 2000, while unemployment fell from 15 per cent to less than 4 per cent. Even with the wind of recession approaching storm force, unemployment is not expected to rise above 4.2 per cent next year, according to the ESRI.

Dublin is now congested and its transport infrastructure is creaking at the seams. The regulatory regime has tightened up, particularly in the sensitive area of the environmental impact of industrial development. Big grants are only available for businesses that locate outside of urban areas, and go instead to parts of the State where telecommunications and other aspects of the infrastructure are below standard.

Some of the core attractions of the Republic as a location for inward investment are still relevant. Corporation tax in the Republic is still very low and is set to remain amongst the lowest in Europe. Higher taxation states can, however, be expected to march down their corporation tax rates in key sectors where they compete for inwards investment.

Similarly, the various eastern European states queuing up to join the European Union will also ensure that they come on board with competitive corporation tax structures.

The events of September 11th have served to accelerate a process that was already well under way, according to the IDA. The fundamental changes in the economy that have taken place over the past 10 years have already forced a rethink by the agency.

The result is a new mission statement unveiled this year. "We will win for Ireland, its people and its regions, the best in international innovation and investment, so as to contribute to the continued transformation of Ireland to a world-leading society which is rich in creativity, learning, and personal and social well being."

The rather vague and somewhat "touchy-feely" nature of the statement reflects the debate about the IDA that has taken place sporadically over the past couple of years. It was part of a wider debate about what sort of strategy was appropriate for the fastest-growing economy in the developed world.

The events of the past few months have put paid to that particular debate, and some in the IDA will no doubt take satisfaction from the agency's return to its primary job creation function.

It is not - at this stage - planning to return to its original strategy of grabbing every bit of inward investment going to grow the industrial base. The theory then was that if you could get some part of an international company's operations established in the Republic - no matter how low down the value chain - you could pull in the higher-value elements.

The new strategy is to make the Republic the top location in the world in two or three sectors. In the words of Mr Sean Dorgan, IDA chief executive, the aim is that "Ireland would be, in areas we have not yet clearly identified, the equivalent of Silicon Valley for information, communications and technology (ICT), the Nordic countries for mobile telephony, Hollywood for films, Minnesota for medical technology".

The IDA will achieve this by "working to win synergies from mixing the best of inward investment with the best of Irish talents - including our creativity - and capabilities", Mr Dorgan said last month in a keynote speech. The organisation says it will not be deflected from this ambitious, long-term strategy but, in the short term, the focus is likely to return to job creation as an end in itself.

Although the number of jobs created by the IDA each year is relatively small, they prime the rest of the economy. IDA-sponsored companies account for three-quarters of the Republic's exports in terms of value, and support thousands of jobs in other sectors.

The agency is optimistic that it will hit its target of between 10,000 and 12,000 new jobs in 2001. This is down from the 21,717 seen in 2000, but not that far away from the levels seen in the mid 1990s. The target for 2002 will not be set until next month but the expectation is that it will be in the region of 10,000 jobs.

No new telecoms investment is in the pipeline, but projects are on the way in medical, healthcare and financial services. The PC sector is expected to be the first component of the ICT sector to recover.

The IDA's prediction is that it could come back to life in late 2002 and could start to generate jobs in 2003. The rest of the sector is expected to take longer to bounce but it will be a while before the agency unveils another jumbo project such as Hewlett-Packard, Xerox or IBM.