US Transnationals and the Irish Software Industry

Abstract

The attraction of foreign direct investment (FDI) is increasingly a key economic development strategy for many countries in the EU. With FDI becoming more prevalent in producer service sectors, this article considers the example of non-market based investment in the computer services and, in particular, the software sector. Although the emergence of offshore data processing and programming are well chronicled, as software becomes increasingly standardized, international divisions of labour are also developing within the leading producers of standardized software packages. By the judicious targeting of FDI since the mid-1980s, Ireland, and in particular Dublin County, has developed into one of the leading centres for software package production in Europe. Many of the market-leading US companies have now established plants in Ireland, from which they manufacture and localize their products for the various European markets. This article will critically examine the role and nature of the overseas software sector in Ireland, with particular emphasis on the quality and stability of these investments. It would appear that while the promotional evidence and data may exaggerate the strategic importance of the Irish software industry, the nature of FDI in this sector is of a higher quality than previous rounds of manufacturing investment in Ireland.