Michael E. Burke: Creating Ireland’s Future Economy
The twenty-fifth anniversary of the Good Friday Agreement is the right time to imagine what the island of Ireland’s economy could look like twenty-five years from now, writes Michael E. Burke, Partner, Arnall Golden Gregory
The twenty-fifth anniversary of the Good Friday Agreement is the right time to imagine what the island of Ireland’s economy could look like twenty-five years from now. Most of the companies listed in the Ireland INC US 250 Index will lead the way into that future, but not exclusively. It’s probable that an Irish company that has not yet been formed could be the largest Irish business in the United States in 2048. The U.S. market should not be the sole growth target for Irish businesses over the next twenty-five years; companies across the island of Ireland must become more comfortable with, and confident of, the fact that many of them are, or will be, globally competitive (if not dominant) businesses.
The future Irish economy will be knowledge-based. With outstanding universities, dynamic entrepreneurial hubs, and a supportive ecosystem, innovation across the island of Ireland will impact sectors like pharmaceuticals, food, medical devices, agricultural technology, healthcare information technology, and others. However, to maximize this opportunity, real business links must be forged between Northern Ireland and the Republic. Businesses should be incentivized or encouraged to operate in both jurisdictions, leveraging a larger talent pool among other benefits.
Businesses on the island face a challenging investment landscape. While Irish venture capitalists are making excellent investments, there needs to be more money in the system—especially money to deploy between a seed round and a formal Series A round. Based on experience, it seems too many Irish businesses fail in that interregnum. One suggestion would be for Ireland to modify its capital gains rates and structure so that they are no longer an impediment to U.S. investors.
The United States will be a primary market for businesses across the island of Ireland: Irish foreign direct investment in the United States was approximately $343.5 billion in 2019 and supported 336,400 U.S.-based jobs. Both numbers will increase dramatically over the next twenty-five years.
In fact, Irish businesses, emerging and established, should look to the U.S. as their first export market. Brexit, coupled with related political and economic instability, make the United Kingdom a challenging market. More stringent regulation, higher taxes, and differing legal systems in other E.U. member states can be difficult to navigate.
The U.S. is a relatively simple and easy market for Irish business expansion. The U.S.-Ireland Tax Treaty injects predictability into treasury management. A similar legal system based on the common law–that includes concepts shielding company shareholders from company debts and obligations—reduces operational risk. Effective state regulators who can form a corporation or other business entity in as little as one hour creates efficiency.
In order to succeed in the U.S., however, businesses across the island of Ireland must invest in a consistent presence in the U.S.–for market research, due diligence, meeting customers or for any similar reason. That can mean detailing someone from the home office to work in the U.S. or the hiring of a U.S. person. The lower the time investment in the U.S., the greater the risk of failure, Irish businesses should exercise caution when it comes to ‘helpers.’ Some in the U.S. claim expertise or high-level contacts that they don’t have, and these ‘helpers’ try to forge a relationship (sometimes based on common heritage) with Irish companies. Every company should conduct thorough due diligence on ‘helpers’ before engaging them, and then only engage them through a written contract. A thoroughly vetted ‘helper’ can be a tremendous benefit; a poorly chosen ‘helper’ can cost more than just the lost money and time investment.
Businesses across the island of Ireland have to start U.S. expansion with a mindset that they will be wildly successful, not one where they think that they might be successful. Companies should think about the best-case scenario for what their U.S. presence and market would look like in twenty-five years, and then make a deliberate and intentional plan to realize such scenario. To paraphrase the opening of the U.S. TV franchise Star Trek¸ Irish businesses should go boldly in the direction of their dreams.
Over the next twenty-five years, more and more Irish companies will excel on the U.S. market, and there will be many more Irish business success stories. All it takes is a purposeful first step.