Ireland's economy has experienced tremendous growth over the last decade. Inward investment has been hugely beneficial to Ireland by providing a source of employment, both direct and indirect, and has brought state-of-the-art technology, skills and a global outlook on business. Ireland has, for a long time, recieved a far higher proportion of investment into the EU than our 1% of the population would suggest.

Despite the recent slowdown, the last year shows a rise of almost 44% in the number of overseas companies operating in Ireland, and an increase of over 75% in permanent employment. This indicates that not only was growth very strong, the growth came From both a stream of new companies and importantly the expansion of existing ones.

from years of experience, IDA Ireland identified and exploited new industry sectors, trends and activities. Particular examples were the software developments of the 1980's, call centers and shared service centers in the early 1990's, and e-business in 1999. And From this experience, we determined that our future success would lie in the ability to create an environment where research and knowledge, high level skills and expertise, high quality inFrastructure and business services, could be combined to be the best way to achieve the next wave of success.

Only economic activities with these characteristics can justify high wage levels and so allow us to maintain economic growth in the absence of the strong labor surplus we had up until recently. This means not only increasing higher value added activities in the Irish manufacturing operations but also adding corporate level innovation such as R&D, shared services; logistics and supply chain management functions alongside manufacturing.

In recent years IDA Ireland as an organization realized that, with virtually Full employment, and rises in the cost base (especially wage rates), we needed to change our strategy to meet a new set of challenges and circumstances. We had to recognize that if low cost countries posed a serious competitive threat to us, it would indicate that Ireland is just not moving fast enough to a higher level in the value chain. The global business environment is changing ond to remain successful we have to change with it.

It is worth noting that, despite the worst downturn in the history of the IT sector, the five leading companies in Ireland in this sector (Intel, Dell, IBM, HP and Microsoft) continue to employ between them as many people in Ireland as they ever did. At the end of 1999, these companies between them employed just over 13,000 people in Ireland; and by the end of 2002 they employed just over 16,000 people.

There is a much brighter future ahead in 2003 than there has been for the past two years. 30 companies undertook to invest nearly 120 million Euro in R&D activities in their Irish operations during 2002 and IDA committed nearly 30 million Euro to these projects.

This indicates a very strong commitment to adding higher value activity to existing operations in ireland and raises the caliber and status of these companies significantly

In the meantime, we need to continue winning foreign investment at higher value levels with our newer offerings, both in skills and the 12.5% corporate tax rate and by using some of the advantages and tools that have been so successful for us to date.

The transformation will not be instant, but it will need to progress quickly so that we are recognizably different, yet again, by 2010.