IDA Ireland chief executive Mr Sean Dorgan has a vision of the future. Over time he sees the Republic becoming the equivalent of Silicon Valley for ICT (information and communications technologies) companies, the Nordic countries for mobile telephony, Hollywood for films, Minnesota for medical technology, London for financial services or the Netherlands for flowers.

His vision is that the Republic will achieve leadership positions in a number of specific niches so that global companies in these sectors will see it as an essential location. The niches or sectors mentioned are examples of what works well elsewhere and not necessarily what will work here, he explains.

"What would work here? We are researching it, where we need to be in the future. We need to come into it at the creation stage, we need to base it on the advantages we already have. E-learning is one possibility, distributing electronic learning, building on the successful models we already have here such as the Irish company Riverdeep and the IDA-backed companies located here including NetG in Limerick and Ericsson Expertise Systems. We will target specific sectors in that strategy but we are still in the process of identifying fully the way we want to go," he says.

In the meantime, most of the IDA effort is concentrated on "winning good substantial businesses, beating the bushes to bring in quality projects at higher levels, using our skill and quality advantages now rather than the cost and labour surplus advantages of the past".

Inward investment will continue to be hugely important to the growth of the Irish economy for at least the next 10 years but it will need to be higher value and skills and knowledge based, according to Mr Dorgan.

But 2001 has been a tough year, he admits, and the outlook is not expected to brighten much before next summer.

Job creation in 2001 has fallen well short of the record levels of the past five years. Some 13,145 new jobs were created in IDA-backed companies this year, just over half the 23,063 created in 2000, and with job losses over double the 8,081 recorded in 2000, there was a net fall of 3,900 in the numbers in full time employment for the first time since 1987. This compares with an increase in full-time employment of 14,982 in 2000.

The 2001 outcome reflects the downturn in the ICT sector, which started around the end of 2000 and spread into the wider US economy and then global economies, which accelerated after September 11th, he explains.

In 2000, the ICT sector accounted for about half of all inward investment in value terms, while the electronics, engineering, international and financial services sectors accounted for more than 80 per cent of the gross jobs created.

IDA has seen no greenfield investment in the ICT sector in 2001 and the 6,500 net jobs lost (10,000 jobs lost while about 4,500 jobs were created through expansions) were equivalent to the net jobs created in the sector in 2000. The 11 per cent drop in employment in the sector here to about 49,000 compares very favourably with job losses in the US, Singapore, Taiwan and even Scotland, according to Mr Dorgan.

High-profile closures included Motorola, Gateway, General Semiconductors and Shinko Microelectronics, and there were job losses at a large number of smaller companies.

But there were successes in other areas in 2001. There was growth in the healthcare sector with new jobs at Boston Scientific, Medtronic and Guidant, and significant investment by Abbott in Donegal and Sligo in biopharmaceuticals, with investments by Wyeth Medica, Genzyme and Genemedix, and in the international services area.

Biopharmaceuticals is an area the IDA is targeting for future growth."Worthwhile" investments will be announced from early 2002, Mr Dorgan says. "They will not be huge scale but they will be significant and will be mainly in the healthcare, pharmaceuticals and international services. As the year goes on we can expect to see developments in other areas. I am confident that Intel will go ahead with the deferred Fab 24 plant in Leixlip."

The previous primary criterion of job creation is no longer dominant as low unemployment and rising living standards lead to increasing emphasis on job satisfaction and quality-of-life issues, he stresses.

Mr Dorgan lists areas where improvements are needed if the IDA is to bring in the right investments. They include access to the regions, electricity supplies, cost- efficient broadband availability and a national waste-management strategy. "It is difficult to sell regional locations to potential investors when they have pains in their backs from travelling for three hours on bad roads and can see that they would not be able to get their customers or group executives into and out of the location in a day."

These and other issues lie behind the problems of achieving balanced regional development.

In the 10 years to 2000, employment in IDA-backed companies in the so-called BMW or Objective One region (Border, midlands and west) increased by 33 per cent while employment in Dublin rose by 184 per cent and by 77 per cent in the east excluding Dublin, south-east, south-west and mid-west. Urban environments are generally more attractive for mobile investments, according to Mr Dorgan.

"We need to work in a focused way to achieve balanced regional growth. It is a challenge. But decisions need to be taken on national spatial strategy.

"We need to ensure critical mass in gateway towns in each region. Cork, Galway, Limerick and Waterford have the populations to become growth centres while Sligo, Athlone and Letterkenny (when twinned with Derry) have the potential to be gateways for their regions," he suggests.

Mr Dorgan considers the term industrial development somewhat outdated because it signifies basic manufacturing/factory operations to most people. Basic manufacturing is moving to low-cost countries where labour is cheap and available. However, the balance of jobs creation here has shifted to service or knowledge-based skills and more complex manufacturing.

While he is not suggesting a name change for the IDA - the Industrial Development Authority - there has been a subtle change this year in the way the jobs agency describes itself. Officials calling on prospective investors worldwide now say they are from IDA Ireland - the Irish investment and development agency.