This article has been written by our collaborator Javier Soriano (translation by Carmen Cocina):
Ireland is one of the EU countries that was hit strongly during the last global economic crisis in the period 2007 – 2011. However, from 2013 signs of recovery have been noticed in the country and in 2014, Ireland was acknowledged as one of the fastest-growing economies in Europe. This upward trend of the Irish economy coincides in time with Ireland´s most successful story to tell. This is the consolidation of a global Tech Hub in Dublin, which made possible the attraction of both IT world-class industry firms through the policy ´industralisation by invitation´ bringing in international top talent and inward investments.
However, what makes Dublin a tech hub? Let´s start with a definition:
A Tech hub is a common place where business ideas germinate and IT companies prosper, fostering the perfect blend of skills, education and a sense of community.
Hubs have been widely celebrated by policymakers for their ability to boost creativity and collaboration. In the case of Dublin, the nascent entrepreneurship ecosystem together with the recent arrival of tech giants has resulted on an ideal atmosphere to co-create innovative products. Yet, to achieve a successful Tech Hub, some conditions are required, as we will explain later.
Factors for the success of the Irish Tech Hub
Why is Dublin considered as Europe´s Technology Hub? How did the country strengthen the innovation and the entrepreneurship ecosystem? Why Ireland has attracted so many world-class tech firms to settle the HQ for its operations in Europe?
Corporation tax is probably the first thing that comes to mind when most of us think about the Irish tech scene. Undoubtedly, low corporate taxes are a basic aspect to determine settling down in Ireland. However, if low corporate taxes (12.5%) are the main variable, then why didn’t those top companies choose Cyprus (12.5%), Liechtenstein (12.5%), Bulgaria (10%) or even the Canary Islands, Spain (from 4%)? To answer the above questions of how Dublin turned into an influencer spot, many factors should be considered:
Pro-business environment policies promoted by the government
Foreign direct investment (FDI) has been Ireland’s primary market driver, making it the fastest-growing economy in Europe for the past years. According to Forbes (2015), Ireland is the best place in the world to do business, thanks to the flexible labour laws, the technology infrastructure and also the transparent regulation for companies, such as 25% R&D tax credit and of course, the low corporate taxes. Prime Minister Mr. Varadkar, who took office in June 2017, recently committed to making Dublin the ‘tech capital of Europe’. Starting a business is part of Ireland´s DNA and the government is willing to back that up.
The vibrant startup scene
The startup ecosystem has thrived over the past years, thanks to the growing network of incubators and accelerators focused on facilitating startup growth in the country. Also bodies like Enterprise Ireland and IDA Ireland provide permanent support to startups at all stages of development, through mentoring, research, and much more. Furthermore, Dublin hosted the Dublin Tech Summit over the last years brought together global leaders in innovation.
Big players including Dell, HP, IBM, Salesforce, Oracle, Linkedin, Facebook or Google are based in Dublin, attracted by such a startup scene, skilled labour, tax incentives, with a connected infrastructure technology, and access to EU market of more than 500 million people, etc. This business network has gained the attention of worldwide multinational companies from different sectors, such as fintech, commercial banks, agritech, Artificial Intelligence (AI), etc. For instance, JP Morgan has recently announced its intention to move from London to Dublin.
Strong pool of highly skilled English-speaking workforce
Ireland is the country in the OECD with highest proportion of science & engineering graduates. Furthermore, the great multicultural wealth helps businesses achieve diversity.
Other relevant factors
Other factors that make Ireland a suitable location to build a business from scratch are the friendly regime for SMEs, the excellent flight connectivity with both the US and the EU, the kindness of Irish people and the fact of being Europe´s youngest city (50% of population under the age of 35).
Surely, all the above mentioned factors have been favored by the robust economic recovery over the last few years. Today Ireland has entered a completely new post-austerity economic cycle powered by strong growth. However, Brexit poses a risk for this rising trend. During the last months Brexit talks are in the spotlight in Irish media. Several are the question that people are asking themselves: What are the real consequences for Ireland if Brexit talks evolve towards the worst-case scenario? Will this have positive or negative impacts on Ireland? Is the Tech Hub in Dublin at stake due to Brexit? Only time will tell.
About the author:
Javier Soriano is an international development consultant. He has been working for the past years at The World Bank and the IFC based in Lima (Peru) and Washington DC, where he supports projects related to Telecom and Entrepreneurship in several countries. Prior to join The World Bank, he worked in the business sector at Deloitte in Madrid, Spain. He holds a Bachelor degree in Business Management at Universidad Complutense de Madrid and a Master in International Business.