Foreign firms and firm survival: A look at Ireland in crisis

See this Vox article.

4 replies on “Foreign firms and firm survival: A look at Ireland in crisis”

This article is surrealistic :it draws conclusions on the comportment of foreign firms in countries enduring “negative shocks” from the Irish example without mentioning once why many of those firms came to Ireland ,namely the corporate tax rate . The “negative shocks” did not affect this rate and most of the foreign firms did not experience any effect from the contraction of the domestic demand because they did not sell anything there anyhow. This paper is a nice example of useless ,pedantic academic research.

Ah come now, Overseas Commentator. You are being excessively harsh. Most of the economists in these parts would be unemployed if you were successful in banning this type of stuff. It is, quite simply, ‘interesting’. It doesn’t have to be ‘useful’ – in the sense of critiquing or informing public policy. And if it is to have a ‘use’, it should burnish the reputation of the authors and not present any criticism of the optical illusion that the ‘power-that-be’ is projecting and wishes to sustain. That’s what’s considered ‘useful’ in this era.

I thought the article was interesting. A few points.
1. I was rather surprised at the low level of failure in both categories, Irish and foreign. A 1% failure rate pre crisi seem slow and a 3% failure rate post crisis does not appear horrific.
2. In relation to the finding that the rate of failure in foreign firms has surpassed Irish ones during the crisis, this is probably due to the fact that Irish firms are ‘hanging on’ in extremis rather than being due to a more inherent profitability in the Irish companies.
3. I hope the researchers will extend their research to include employment retention for both categories. That may be a better indication of relative impact of both on the national economy.

I’m curious as to the level of data available on Irish companies on the Amadeus database, which is operated by Bureau Van Dijk, a Dutch firm.

There is no official mortality/survival data available on Irish firms and recently a Dutch economics consultancy commissioned by the European Commission, produced a study on the growth and death of SMEs.

It did not include Ireland as there was no credible survival data available.

I get the impression here that the economists hadn’t much to work on.

The survival rate depends on the age of the firm – – but size and age didn’t seem to matter.

Maybe I missed it but it seems they don’t provide information on the sample sizes.

There were about 5,300 company collapses in 2008-2011.

I would think that most of them were indigenous firms.

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