State Government and Government & Economic Development and Government

Ireland and Indiana share low-tax strategy

May 17, 2014

Richard Bruton, Ireland’s minister for jobs, enterprise and innovation, visited Indianapolis this month to check in with companies that have operations in his country, which uses its business-friendly tax climate to compete for the European headquarters of global firms.

Sound familiar? Like Ireland, Indiana has emphasized landing the local operations of overseas firms, known as “foreign direct investment,” and creating a business-friendly tax climate.

Ireland ranked 11th in the world last year for foreign direct investment, with $46 billion. Not too shabby for a country whose total economic output is about the same as Indiana’s.

Working at the FDI game for about 40 years now, Ireland has moved beyond luring factories to growing research-and-development operations, Bruton told IBJ in an interview.

Over the decades, the government also made its education system relevant to industry (something that again sounds similar to Indiana’s strategy with Gov. Mike Pence’s Indiana Works Councils). Now, Ireland boasts the highest per-capita rate of participation in post-secondary education in the European Union.

Bruton, who is sort of a combined commerce and labor secretary, has another tool at his disposal.

“I fund … a lot of the innovation in Ireland,” he said. “We prioritize research around areas where we have critical needs.”

Irish universities can compete for about $200 million a year from Bruton’s ministry for business-relevant research.

Indiana, of course, never can behave like an independent nation, but its pot of research money is much smaller. According to the National Science Foundation, Indiana colleges and universities received $75 million from state and local sources in 2012.

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