The sight of security staff disarming and detaining loyalist killer Michael Stone at Stormont may convince some people that little has changed in Northern Ireland in the past number of decades.

It highlights one of the problems that those promoting inward investment into Northern Ireland have been dealing with for a long time - perception.

"The reality, even in the times when we had the Troubles in the North, was that it was still a very good, stable and productive environment to do business," says Trevor Killen, director of Invest Northern Ireland's Dublin office.

"Obviously, the perception of people from the South, Britain and the US would have been a lot more negative in those days. Therefore, a lot of companies would have been less inclined to look seriously at Northern Ireland as an investment location."

Since the peace process came into being with the ceasefires by various paramilitaries, Invest Northern Ireland has been working hard to improve that perception. Last year alone it secured 14 foreign direct investment (FDI) projects that are expected to create more than 1,700 jobs.

A substantial number of investments in the past number of years have come from the Republic, supported by Invest Northern Ireland's Dublin office, one of about a dozen it has globally.

"It is a very important office," says Killen. "While it varies from year to year, generally speaking London, the US and Republic are the main sources of inward investment. Over the past five years, we have delivered 35 projects, 1,500 jobs and about €150 million worth of investment from the South."

Foreign direct investment from the Republic has been from a mix of indigenous Irish companies and multi-nationals based in the South whose managements have made the decision to locate some operations across the Border.

Among those are Diageo, Quinn Direct, Microsoft Ireland, Oracle Ireland and most recently, Imagine Telecom, which plans to create 300 jobs in Armagh.

As the Republic experiences labour constraints, Northern Ireland is proving increasingly attractive for companies that are looking to expand, according to Killen.

"The principal strength is the availability of skills," he says. "The quality of people that anyone can recruit in Ireland is fairly uniform. The difference is that in the North we still have a lot more skills available and a relative lack of competition for those skills.

"We have a lot of young people graduating. We also have hidden reserve potential in the workforce - people who are not involved at this point in the economy, principally married women returning to the workforce."

Invest Northern Ireland is concentrating on three core areas - the financial services, software and ICT and business services - where wages are a big part of costs.

"We have a much more competitive cost base. We realise that costs, including salaries, in the Republic have increased a lot in the last five years. We would offer a very significant differential in terms of labour costs."

One area however where Northern Ireland cannot compete with the Republic is in the area of corporation tax.

Britain's chancellor of the exchequer Gordon Brown recently ignored a request from various Northern Irish parties to reduce corporation tax in the North from 30 per cent to compete with the Republic where it is set at 12.5 per cent.

"The labour availability and the cost obviously outweighs the potential of any differential on corporation tax; otherwise companies like Quinn Direct, Diageo or Citigroup would not have invested in the North.

"All of these companies had an alternative of investing in the Republic or elsewhere in Europe," says Killen.

Cheaper real estate, particularly commercial property, is also attractive, he says, while the improved road and rail links between North and South make Northern Ireland a more natural hinterland for many Dublin-based companies.

"By 2007, there will be 95 per cent motorway and dual carriageway from Dublin to Belfast.

"Factors like that and the cultural proximity of the North is inclining more and more people in the Republic to see the North, not in a historic sense as a competitor for jobs which we always have been, but to provide a resource to the Irish economy to continue the very spectacular growth of the Celtic Tiger."

Back-up and support services to IFSC companies is one area that is being actively explored, he says.

Northern Ireland, however, may still have to deal with perceptions. With a lack of progress on power-sharing, many southern companies could question doing business in Northern Ireland when the parties there cannot do business with each other.

"All of the main business organisations have been lobbying local politicians for a long time to encourage them to come to a local agreement.

"Ultimately, the political stability of Northern Ireland is underpinned by the British and Irish governments, but it would obviously be very helpful from everyone's point of view of doing business in Northern Ireland to have a locally accountable administration."