And Ireland has recovered from a 7.1% fall in gross domestic product (GDP) in 2009 to see its GDP rise by a stunning 7.8% in 2015. This ranks it fourth globally – far ahead of most developed economies, especially those in Europe. The technology, media and telecommunications sector has played a huge part in this, from start-ups like Scurri to giant corporations like Facebook. This is a global trend being embraced in a uniquely Irish way – and the sector even managed to give the country hope during the darkest days of the recession.
Ireland is a template of how a small nation can position itself to flourish in a globalised world. In fact, it has capitalised better than any other small nation on the booming technology sector. The IT and communications sector currently employs 55,000 people in Ireland and it is one of the largest contributors to the economy, generating around €35 billion per year. Accord-ing to the IDA, a body that promotes inward investment in Ireland, this means it is second only to pharmaceuticals.
The country has positioned itself brilliantly in both the international economy and in the technology sector as a halfway house between the US and Europe. It now looks east and west, attracting investments from both due to its highly educated workforce. Of course, a major part of this comes down to tax. At 12.5%, corporation tax in Ireland is the lowest in Europe, and way, way lower than countries like France and Germany, where rates are 33% and 29% respectively. And while the highly-educated, English-speaking population helps, the tax rate has been vital in attracting companies like Google, Facebook and Twitter, all of whom have their European HQs in Dublin. Overall, foreign direct investment contributes around €21 billion a year to the Irish economy, with overseas companies paying a further €2.8 billion in corporation tax, according to accountancy firm Grant Thornton. But O’Connor argues that beyond this, Ireland has positioned itself well to capitalise on the influx of investment and talent, especially in the technology sector drawn in by the tax rate. It has also adapted to the needs of these companies and learnt from them, growing a unique domestic start-up scene of its own.
“Ireland has become a unique intersection between the US and Europe,” he argues. “A lot of people here have experience in working for US companies, so when they do come here, they know they can find staff. And a lot of companies, even small companies, have a very US atmosphere about them. For companies looking to do business in Europe that makes it a great place to come. “For Silicon Valley investors it is very much on their radar, and a lot of the big venture capital firms will have some sort of presence in Dublin. But it has also been great in terms of bringing people here with the knowledge of how to market and grow companies, which has been invaluable.” O’Connor points out that post-recession, the tech sector has been able to emerge from the shadow of the property sector, which dominated the Irish economy in the years before the crash and exacerbated its impact due to a debt-fuelled investment boom. Also, he says, it is a sector which is uniquely placed to flourish when banks are in retreat.
“The banking crisis didn’t really have an impact, because banks don’t really fund start-ups anyway,” he says. “The funding tends to come from venture capital and angel investors. And more money actually came into the VC world because the guys who would previously have been investing in prop-erty started looking at it. “During and after the recession, it also became much more acceptable and necessary for young people to start their own business. The tech start-up scene gave faith back to people during the recession,” he adds. “It kept the fires burning and showed that companies could grow and create jobs – the sector didn’t really have a recession. That was very important for people.” Ireland’s economy is predicted to slow in the coming years, with the European Commission forecasting growth at 4.9% for 2016. It should then fall to a still very healthy 3.7% in 2017. And the influence of technology in the coming years is only likely to grow. Software firm Intercom is predicted to be Ireland’s first domestic ‘unicorn’ (a technology company valued at $1 billion or more) and global firms like Google, Facebook and Twitter are expanding their footprint in the country. So a sector that was a beacon during dark times will continue to be a shin-ing light, now that the good times have returned.
