US investment in Ireland in 2003 was more than 2½ times greater than American investment in China, and profits of US companies in Ireland in the same year surged by 45 per cent. Conor O'Clery, North America Editor, reports from New York
These are among the findings of a report on the transatlantic economy, which concludes that despite political differences over Iraq, 2003 was a year of "economic boom" in US-European relations.
The most significant winners were Ireland and Sweden, where more liberal and investor-friendly investment policies helped bolster investment flows, according to the report "Partners in Prosperity" by Mr Daniel Hamilton and Mr Joseph Quinlan, of Johns Hopkins University in Washington.
The authors cite the higher level of US investment in Ireland ($4.7 billion or €3.9 billion), compared to $1.7 billion in China, as an example of how US firms remain committed to Europe.
They point out that nearly 65 per cent of all US foreign direct investment in 2003 went to European countries.
"For transatlantic relations, 2003 was a year of political bust and economic boom," they state. "Even as transatlantic bickering engendered by America's war with Iraq plunged transatlantic political relations to one of their lowest points in six decades, the economic ties that bind the United States and Europe together only grew stronger in 2003."
Despite Washington's war-related frustrations with Europe, corporate America pumped over $87 billion in foreign direct investment into Europe in 2003, a jump of 30.5 per cent over 2002.
In a year when a US House of Representatives canteen changed "French fries" to "Freedom fries", and French champagne was poured down the drain in publicity stunts, US investment flows to France rose by more than 10 per cent to $2.3 billion and US affiliates in France more than doubled their profits.
Altogether, European firms invested $36.9 billion in the US last year, compared to $26 billion the previous year.
Ireland is listed as one of 12 European markets where US affiliate earnings reached record highs. With the help of a declining US dollar, profits earned in Ireland surged by 45 per cent, Italy by 40 per cent and the Netherlands by 24.5 per cent.
US imports from Ireland, Germany, Italy and Spain all reached record levels.
Ireland is the second-most exposed European country to the North American market, deriving 32.5 per cent of total revenues from North America, behind the Netherlands at 41.8 per cent.
Ireland has become a favourite of US technology firms on account of its large English-speaking labour force, favourable tax rates and preferential access to the European Union, the report says.
Roughly two-thirds of Ireland's top 100 exporters are foreign affiliates, mostly American. US investment in Ireland totalled $4.2 billion in 2001, versus $2.6 billion of Ireland's investment in the US, making Ireland the ninth largest foreign investor in the US that year.