Research Korner: Global and Local Culture Past Paper

Reduction of Pressure Ulcers by Risk Assessment and Prevention in Hospital Setting

Introduction             Pressure ulcers continue to be a distressing medical problem. Not only do patients experience pain and discomfort but intensive wound care also incurs considerable costs to both patients and hospitals. Therefore both health care professionals and patients should consider the prevention of pressure ulcers of extreme importance. Hospital nursing teams are especially concerned with the prevention of pressure ulcers that develop during hospitalization, i.e. the nosocomial pressure ulcers.             The aim of this project is to improve pressure ulcer risk assessment and prevention through the implementation of guideline recommendations, many of which related to accurate and timely documentation of risk, adequate care planning and the provision and review of appropriate equipment. To achieve this, clinical audit will be used. The clinical areas audited provided care to patients identified anecdotally at higher risk of pressure ulcer development due to their physical condition. A quantitative form of research is applied in this project.   Background of the medical condition Pressure ulcer is most commonly known as bedsore. Other names for it include pressure sore, decubitus ulcer and trophic ulcer. It is an ischemic necrosis and ulceration of tissues overlying a bony prominence which has been subjected to prolonged pressure against an external object like a bed, wheelchair, cast or splint for example (Bickley & Szilagyi, 2003). The condition results to impaired skin integrity related to unrelieved, prolonged pressure (Potter & Perry, 2004). Such a condition is seen most frequently in patients who have diminished or absent sensation, or are debilitated, emaciated, paralyzed, or otherwise long bedridden. Any patient experiencing decreased mobility, decreased sensory perception, fecal or urinary incontinence and/or poor nutrition can therefore be at risk for pressure ulcer development. Tissues over the sacrum, ischia, greater trochanters, external malleoli, and heels are especially susceptible but other sites may be involved, depending on the patient’s position. Pressure ulcers can affect not only superficial tissues, but also muscle and bone.             Both intrinsic and extrinsic factors precipitate pressure ulcers. Intrinsic factors include loss of pain and pressure sensations that ordinarily prompt the patient to shift position and relieve the pressure, and the thinness of fat and muscle padding between bony weight-bearing prominences and the skin. Disuse atrophy, malnutrition, anemia, and infection play contributory roles. The most important of the extrinsic factors is pressure. Its force and duration directly determine the extent of the ulcer. Pressure severe enough to impair local circulation can occur within hours of an immobilized patient, causing local tissue anoxia that progresses, if unrelieved, to necrosis of the skin and subcutaneous tissues.             The best treatment for pressure ulcers is prevention. Pressure on sensitive areas must be relieved. Unless a full-flotation bed such as a water bed is used, providing even distribution of the patient’s weight. If the patient is using braces or plaster casts, a protective padding at bony prominences should be used under braces or plaster casts, and a window in the cast should be cut over potential pressure sites.             Skin inspection is also important. Pressure points should be checked for erythema or trauma at least once/day in an adequate light. Able patients, mobile or immobile, and their families must be taught a routine of daily visual inspection and palpation of sites for potential ulcer formation. Exquisite skin care for neurologically damaged parts is necessary to prevent maceration and secondary infection. Maintaining cleanliness and dryness helps to prevent maceration.             The prevention of pressure ulcers is a priority in caring for patients and is not limited to patients with restrictions in mobility. Impaired skin integrity may not be a problem in healthy, immobilized individuals but is a serious and potentially devastating problem in ill or debilitated patients. Prompt identification of the high-risk patients and their risk factors aids in prevention of pressure ulcers. A well-balanced diet, high in protein, is important in the treatment of pressure ulcers. Blood transfusions may be needed for anemia. Threatened pressure sores require energetic use of all the above mentioned prophylactic measures to prevent tissue necrosis. The area should be kept exposed, free from pressure, and dry.             The major problem in treating pressure ulcer is that the ulcer is like an iceberg, a small visible surface with an extensive unknown base, and there is no good method of determining the extent of tissue damage.             More advanced ulcers require surgical treatment. Surgical debridement and closure is required for fat and muscle involvement. Affected bone tissue requires surgical removal; disarticulation of joint may be needed. Necrotic tissue can promote pathogen growth and delay healing, so it should be removed. An exception may be eschar or necrotic tissue on a heel ulcer because an open heel wound can easily become infected and lead to osteomyelitis. Several debridement methods are available; the choice depends on the amount of necrotic tissue, absence or presence of infection, patient preferences, and economic considerations (Baranoski, 2006).   Evidence-based pressure ulcer prevention and treatment             Evidence-based practice, which is often referred to as evidence-based nursing or evidence-based medicine, is the conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients. (1) It involves integrating the individual clinical expertise of the physician or nurse with the best available external clinical evidence from systematic research and individual patient preferences. (2) Research shows that patients' outcomes are at least 28% better when clinical care is based on evidence rather than tradition or common sense (Bryan-Brown, 2006). The following paragraphs would discuss health care practices and interventions on pressure ulcers which are evidence-based and are widely used in health care settings today. A major aspect of nursing care is the maintenance of skin integrity. Consistent, planned skin care interventions are critical to ensuring high quality of care (Kozier & Erb, 2004). Nurses constantly observe their patient’s skin for breaks or impaired skin integrity. Impaired skin integrity occurs from prolonged pressure, irritation of the skin, or immobility, leading to the development of pressure ulcers. Nursing care interventions aimed at the prevention, assessment and treatment of pressure ulcers should be based on research (Potter & Perry, 2004) or evidence-based practice.             There are several instruments for assessing patients who are at high risk for developing a pressure ulcer. Patients with little risk for pressure ulcer development are spared the unnecessary and sometimes costly preventive treatments and the related risk of complications.             Prevention and treatment of pressure ulcers are major nursing priorities. The incidence of pressure ulcers in a facility or agency is an important indicator of quality of care. There is evidence that a program of prevention guided by risk assessment can simultaneously reduce the institutional incidence of pressure ulcers by as much as 60% and bring down the costs of prevention at the same time (Potter & Perry, 2004).             Evidence-based practice shows that lack of documentation of patients at risk demonstrates the need for hospitals to increase prediction and prevention strategies. Use of a risk scale can provide triggers to plan care to decrease risk factors.             As a predictive measure, individuals should be assessed for risk of pressure ulcer development upon admission to acute care and rehabilitation hospitals, nursing homes, home care programs, and other health care facilities (Kozier & Erb, 2004). Pressure ulcer risk assessment should be done systematically.             Evidence-based practice also shows that extended stays of over 7 days increase the risk of pressure ulcer development (Lyder, et al, 2001). Nurses must therefore remain vigilant in the prevention of pressure ulcers in patients with longer hospital stays.             Evidence-based practice shows that the use of care practices such as daily skin assessment, use of pressure-relief surfaces and objective risk assessment measures, such as the Braden scale, identified at risk patients and reduce evidence of pressure ulcers (Lyder, et al, 2001). The Braden scale was developed based on risk factors in a nursing home population. It is highly reliable when used to identify patients at greatest risk for pressure ulcers. It is also the most commonly used assessment scale for pressure ulcer (Potter & Perry, 2004).             Evidence-based practice also shows that the use of nutritional consultation was associated with decreased incidence of pressure ulcers, suggesting a nutritional consultation may sensitize the staff that the older adult is at risk for pressure ulcer development (Lyder, et al, 2001).             Nursing interventions for reducing and treating pressure ulcers are evaluated by determining the patient’s response to nursing therapies and by determining whether each goal was achieved. To evaluate outcomes and responses to patient care, the nurse measures the effectiveness of interventions. The optimal outcomes are to prevent injury to the skin and tissues, reduce injury to the skin and underlying tissues, and restore skin integrity (Potter & Perry, 2004). The care of a patient with a pressure ulcer requires a multidisciplinary team approach.             There is a strong relationship between nutritional status and pressure ulcer development, yet nutrition is an area often overlooked by clinicians in pressure ulcer care. Nutrition, including adequate hydration, plays an important role in pressure ulcer prevention and healing, and is critical in maintaining tissue integrity. Patients defined as malnourished at hospital admission are twice as likely to develop pressure ulcers as well-nourished patients. Therefore, nurses and dietitians should work together to assess the patient's nutritional and hydration status and ensure that these factors are addressed in the patient's care plan (Voss, 2000).             Pressure ulcers, regardless of their origin, represent negative outcomes for patients. These negative outcomes may include pain, additional treatments and surgery, longer hospital stays, disfigurement or scarring, increased morbidity; and increased costs. Although all negative outcomes are of concern, a hospital-acquired pressure ulcer can result in increased cost of treatment, patient dissatisfaction with care, and a potential litigious situation (Schultz, 2005).   The project plan   Objectives             The aim of this research is to improve pressure ulcer risk assessment and prevention to reflect the guideline recommendations. The objectives are: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Develop a dissemination and implementation strategy to accompany the guideline;</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Audit care in pressure ulcer risk assessment and prevention, using criteria based on the guideline; and</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Make recommendations for practice and future research based on the findings of the study.</li> </ul>   Defining quality In keeping with the classical audit cycle this project seeks to identify current best practice in prescribing, survey the actual practice, and then institute measures to improve prescribing up to the identified standards. The audit tool was used to collect data on length of stay, mattresses and repositioning provided to patients in each of the following hospital wards: medical, orthopedic or older patients ward, groups considered to have a higher risk of pressure ulcer development, recovery room for the postoperative stay until first ambulation. This audit tool included demographic data as well as data on the modified norton scale for evaluation of a patient's risk of developing a pressure ulcer. A score of 16 or less indicates increased risk for developing a pressure ulcer. The audit tool will also include data on accompanying medical conditions, i.e. continence, diabetes, heart insufficiency and peripheral vascular diseases. Continence means that a patient has full control on urine and feces. Inserting a Foley catheter into the bladder can bypass the problem of urine incontinence. In case of urine incontinence, continued contact between skin and urine weakens the cell wall and may alter the skin pH, making it more susceptible to breakdown (Peich & Margalit, 2004).   Recruitment of pilot sites and link nurses As the project had a short timeframe, a decision was taken with the advisory panel that four to six sites would provide sufficient patient numbers to allow improvement in practice to be detected between the audits. Sites were included if they provided tare to medical, orthopedic or older patients, groups considered to have a higher risk of pressure ulcer development. As this was an audit project, ethics committee approval will not be required, however, confirmation of this will be sought and obtained from all hospital sites involved in the project.             The audit criterion is that a practitioner with 'appropriate and adequate training' should undertake the initial risk assessment and document findings. For audit purposes, the grade of the nurse or health care professional will be recorded.   Dissemination and implementation strategy The dissemination and implementation strategy was informed by evidence and reflected the advice of site link nurses and staff from the clinical areas on possible barriers to change. This ensured the strategy reflected best evidence to bring about change, and encouraged local ownership of the guideline. Dissemination comprised the identification of a nurse from each clinical area who could support clinical staff involved in the project and assist with the audits; circulating copies of the project proposal, quarterly newsletters and summaries of the guideline recommendations to all relevant staff.   Implementation Implementation focused on the development of an evidence-based resource pack by the project team and provision of education sessions by the project manager. A resource pack was given to each senior member of staff in the clinical area to be audited, the site link nurses and directors of nursing, and included an implementation guide and copies of the audit tools.             The project manager shall lead education sessions at each site, with the assistance of the site link nurse, following audit 1. The sessions were to be attended by nursing staff from the clinical areas to be audited, senior nurses and/or ward managers. The sessions focused on a description of evidence-based practice and clinical guideline development; the development and recommendations of the RCN guideline; an outline of the project; site specific feedback and recommendations for practice from audit 1.             To ensure standardization of pressure ulcer grading for the audit, the EPUAP tool was used by the project team (Stephens, 2003). Reduction in pressure ulcer prevalence is not a study outcome due to the time constraints and need to take account of potential contributory factors. Nevertheless, it is considered important to assess prevalence to enable audit findings to be more generalizable. Each site will be asked to identify clinical areas that met inclusion criteria and arrange dates for the project manager to undertake audit 1. Audit 2 will commence at each site five to six months later.             Development of Audit Tools             Two audit tools will be developed; one for the patient and one for the clinical area. The tools are developed using recommendations for audit criteria proposed by Baker and Fraser (1995), which included the following: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Criteria should be based on evidence where possible.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Criteria should be prioritized according to the strength of the evidence and effect on patient outcome.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Criteria should be measurable and appropriate to the clinical setting.</li> </ul>   Audit criteria will then be derived from the guideline. This will be followed with a consultation with the advisory panel where and agreement will take place on what the audit would comprise.   Measuring and comparing             On the first audit and data analysis, to be included are all patients admitted to the hospital with no skin breakdown during a six-month period, but are at risk for pressure ulcer development. The nurse will collect the data, using the audit tool. The information sources are patients' records, interviews with patients and/or patients' families, and nurses. This is quantitative form of research wherein patient age range and mean will be computed both in the first and second audit. Pressure ulcer risk was elicited using clinical assessment and a tool to obtain a risk assessment score. Risk assessment scores for each patient were verified by the auditors (Stephens, 2003).             Data from audit 2 will then be compared with audit 1. Data will be coded and entered onto an Excel spreadsheet, and results collated in an anonymised form using simple descriptive statistics to enable comparative analysis to be undertaken. Each site will then receive feedback comparing results from both audits by clinical area in an anonymised form.   Taking action to improve             An intervention program will be prepared and implemented based on the results of the project. The program will be prepared as an addition to the basic health care practice that is common for bedridden patients and other patients at risk for pressure ulcer development.   Conclusion Patient safety should be the number one concern during hospital stay and also before, during and after each hospital procedure performed. A detailed knowledge of the epidemiology, based on adequate surveillance methodologies, is necessary to understand the pathophysiology and the rationale of preventive strategies that have been demonstrated to be effective in preventing and treating pressure ulcers. The principles of general preventive measures such as the implementation of standard and isolation precautions, following guidelines, and the control of antibiotic use should be reviewed. Some patients are more at risk for pressure ulcer development than others, and this should be taken into account by health care professionals. The necessity to audit is seen in the high prevalence of pressure ulcer development in hospital stays despite established clinical guidelines. There is a need to improve pressure ulcer risk assessment and prevention through the implementation of guideline recommendations, many of which related to accurate and timely documentation of risk, adequate care planning and the provision and review of appropriate equipment involved. The success of the health care professional who practices pressure ulcer prevention and control techniques is measured by determining whether the goals for reducing or preventing infection are achieved. A comparison of the patients’ response with expected outcomes determines the success of the health care interventions.   References Baker, R. & Fraser, R. 1995. Development of Review Criteria: Linking Guidelines and Assessment of Quality. British Medical Journal. 311, 7001, 370-373. Baranoski, S. 2006, Pressure Ulcers: A Renewed Awareness. Nursing. Bickley, L. and Szilagyi, P. 2003. Bates’ Guide to Physical Examination and History Taking 8th Edition. Lippincott Williams and Wilkins. Bryan-Brown, C.W. 2006, Evidence-Based Practice is Wonderful.. Sort Of. American Journal of Critical Care. Education, Training, and Research Evidence for Better Health Care. 2006. Retrieved from: http://www.york.ac.uk/healthsciences/ Franz, R.A. 2003, Pressure Ulcer Prevention and Treatment: Competency-Based Nursing Curricula. Dermatology Nursing. Kozier, B. and Erb, G. 2004. Fundamentals of Nursing: Concepts, Process, and Practice 7th Edition. Pearson Education Inc. Lyder, C.H., J. Peterson, et al. 2001. Quality of care for hospitalized medical risk for pressure ulcers. Arch Intern Med. 161(12):1549-54 Olade, R.A. 2004, Evidence-Based Practice and Research Utilization Activities Among Rural Nurses. Journal of Nursing Scholarship. Peich, S. & Calderon-Margalit, R. 2004. Reduction of Nosocomial Pressure Ulcers in Patients with Hip Fractures: A Quality Improvement Program. International Journal of Health Care Quality Assurance Vol 17, No 2. Potter, P. and Perry, A. 2004. Fundamentals of Nursing. Mosby. Schultz, A. 2005, Predicting and Preventing Pressure ulcers in Surgical Patients. AORN Journal. Stephens, F. 2003. Pressure Ulcer Risk: Audit Findings. Nursing Standard. Voss, A. 2000. Pressure Ulcer Management: The Importance of Nutrition. MedSurg Nursing.

Reduction of Pressure Ulcers by Risk Assessment and Prevention in Hospital Setting

Introduction Pressure ulcers continue to be a distressing medical problem. Not only do patients experience pain and ...

The Myth of Prosperity: Globalization and the South

The Myth of Prosperity: Globalization and the South   Introduction             During the turn of the century, the world experiences more drastic changes than before, and these include changes happening in the environment, in the people, culture, religion, information, education, economy, and technology. In comparison to the events that happened in the past centuries, everything happens today in fast-pace. With what is happening to the world right now, it can be understood that these changes are being brought about by the continuous development of knowledge and technology, and the development in such aspects led to globalization.             Globalization refers to the scurried development of economic activities, which cut across national and local peripheries (Hurrell, 1999), and has long been the subject of various political, sociological and even anthropological debates. It has been viewed from many perspectives, both positively and negatively. Many researchers hold the economist’s view that globalization, or the increase of cross-border economic, social, technological and cultural exchange, is inherently good for the welfare of all nations. Meanwhile, others are more apt to view globalization negatively ( 1996). The phenomenon some claim has been linked to humankind for hundreds of years (2000). It is certainly at a very intensive stage today, with the integration of financial services and economic activities in using information technology ( 1999). In addition, according to  (2004), although economic activities may be the prime mover behind globalization, the consequences affect all aspects of land and life, as cultural patterns, political arrangement, and social development are all undergoing widespread change. It is evident that the massive economic progress that has transpired since the dawn of the twentieth century is one of the major contributions of globalization. However, the worldwide increase in Gross Domestic Product or GDP is also coupled with the uneven distribution of economic development across nations, which further widens the gap between the rich and poor countries. As globalization flourishes, rich nations continuously grow economically and socially, while developing countries are lagging behind. This can be supported by recent findings on the disparities between the GDP increase of First World countries and that of the Third World nations (1999), wherein the increase of GDP among rich countries averages to nearly a six-fold, while poor countries have recorded less than a three-fold. This implies that income inequality has indeed amplified. This can be further proven by the condition of most countries in Africa, where GDP declines at a staggering rate relative to that of most highly industrial societies. Along with this problem, some other sources of problems can be identified, as brought about by globalization. In the case of India, globalization has also played a crucial role in the development of its society and economy. The colonization of India has brought about its primary globalization, with its effects of democracy, laws, a judiciary, a free press, 40,000 miles of railroad track, canals, harbors, and the English language (2007). However, despite these advantages, at present, India remains to be “poor and impoverished” (Wells, 2007), for material benefits for the few has not translated into a generous ‘trickle down’ for the poor masses. Because of this, the advent of globalization, though generally seen in a positive light has nonetheless posed a complex intellectual problem in analyzing its effects. Primarily, does globalization writ-large promote a greater understanding of the world or does it merely diffuse a wider array of essentialist and simplistic stereotypes? Does it propagate income disparity and exploitation or does it offer freedom of choice? Given the information at hand, the purpose of this research is to fully explore the impacts of globalization on the nations of the South, more specifically, on the inequities and imbalances in terms of the existing poverty, imbalances of trade and adverse social and environmental impacts that the globalization process furthers. In addition, this paper will be relating important concepts to the modern Dependency Theory or Neo-Dependency, in challenging the Myth of Prosperity brought about by globalization. These concepts will be given emphasis in relation to India’s globalization.   Purpose of Research The aims of this research are: <li class="MsoNormal" style="text-align: justify; line-height: 200%"> To raise issues regarding the impact of globalization on Southern nations</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> To highlight the crucial gaps in the globalization process and to channel the discourse towards a more holistic and sustainable approach</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> To effectively demonstrate the imbalances of the global system, highlighting the political, economic, social and environmental impacts that adversely affect the development of Southern nations</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> To draw pertinent theoretical lessons from the research and contribute towards a better understanding of the effects of globalization on the South</li>   Proposed Methodology             To further gather evidence of the negative effects of globalization to the Indian society, this research will be basing its findings and conclusion on the concrete proofs and testimonies of participants and use of surveys that proves the increasing incidence of poverty in India, brought about by globalization. The actual immersion of the researcher to the Indian society would be helpful, as the researcher will be given enough chance and opportunity to interact with the poor masses. In this way, the whole research will be obtaining reliable and credible sources regarding the views and conditions of the masses in the Indian society. In addition, actual immersion with the poor Indian masses would help the researcher know the needs and wants of the members of the society, thus, making it easier for the authorities and members of the government to provide for the citizens of India. Participants of the research will be chosen from the entire Indian population through random sampling. Random sampling is a process of selecting a sample or subset from a set of all sampling units, giving each sampling unit in the frame an equal chance of being included in the sample, and when a specific sample of a size of population is truly random, all samples of that size have the same chance of being selected (1978). Random sampling has four types, namely, simple, systematic, stratified, and cluster random sampling. In this proposed method, the research will be using stratified random sampling. Stratified random sampling or proportional or quota random sampling involves dividing a particular population into homogenous subgroups, called strata, and then taking a simple random sample from each subgroup (2006). This sampling strategy will be useful to guarantee that the sample will contain sufficient numbers of certain kinds of items or persons (1978). Using this type of random sampling involves a number of advantages. First, it guarantees the researcher that he or she will be able to represent not only the overall population, but also the key subgroups of the sample, especially small minority groups (2006). Second, this type of sampling allows for more comprehensive data analysis since information is provided for each stratum or subpopulation, and lastly, it is administratively convenient (1978). This type of sampling will be relevant and useful for obtaining important information from the population, because the framework of the Indian society is also composed of strata or layers, as in the caste system. The use of the stratified random sampling would enable the researchers to obtain credible and consistent data from each strata of the society. In this way, it would be easier for the researchers to classify the needs and wants of citizens belonging to different strata of the Indian society. With this, it would be simpler to classify their conditions as being brought about by globalization or some other economic, societal, political, or religious factors. Data will be collected in the residential area of the participants, wherein 50 families will represent each stratum. Each family will be asked to select a participant, who will be asked to answer surveys or questionnaires and interviews. During the visits of the researchers to each families belonging to five different classes, namely, the Brahmans or priests, Kshatriyas or rulers, warriors, and landowners, the Vaishyas or merchants, the Shudras or artisans and agriculturalists, and the Harijans or the ‘untouchables’ (2007), observations regarding their lifestyle will be made. Observations of the lifestyles of families from each class will be done in terms of the food they eat, the clothes they wear, the amount of money they obtain from their livelihood, their education, their literacy, and the other needs of their family. In addition, another aspect of observation that can be done to analyze their needs is through observation of their attitudes towards other members of their caste, and towards members of other castes. In this way, even the personal and individual effects of globalization can also be obtained.             Aside from these methods of observation in obtaining primary data, reliable and credible data can also be obtained through surveys. Surveys are relevant and useful alternatives in allowing the participants to answer questions regarding their lifestyles and opinions in relevance to their needs and wants. Through surveys or questionnaires, the researcher will be able to measure and observe the literacy rate among the participants, and their ability to answer and rate each items in the questionnaires respectively. Each questionnaire or survey will contain 15 to 20 items that corresponds to the possible conditions and opinions of the participants. Items in the questionnaires or survey would generally tackle the present condition of India’s society, regardless of the caste system that each participant belongs to. Through this, the differences from each caste or stratum will become evident.             Moreover, obtaining useful and relevant first-hand information can be done through a series of interviews. Interviews can also be useful to support the answers of the participants in the surveys or questionnaires and to explain their opinions on it. In addition, interviews serve to be a good source of information regarding the opinions of participants on the effects of globalization in India. This would also be a good avenue for reinstating their needs and wants, the changes that they would like to propose, and the current conditions they suffer from. Through interviews, the researchers will be able to effectively and efficiently interact with the participants, in order to obtain and extract adequate information from them.             Obtaining information and immersing in the society would take approximately four to six months, to completely acquire sufficient and relevant information. The researchers will be able to mingle and interact with all the members of the 50 families in each caste system. Interacting and mingling with the members of the family would mean eating the same food that they eat, wearing the clothes they wear, and doing the same chores that they do. In this way, it would be easier for the researchers to understand their situation and be able to extend their help to these citizens. Moreover, completely understanding their desolate situations would enable the researchers to effectively relay the message to the authorities and to the government.             After obtaining adequate amounts of data, the researchers must be able to compile them into one useful source of relevant information. To be able to do this, statistical analysis by using statistical methods can be used. Through statistical analysis and the use of statistical methods, such as simple mean, median and mode, it will be easier for the researchers to analyze their data and find significance from them. Several statistical methods can be used, including, T-test, chi-square test, analysis of variance or ANOVA, Mann-Whitney U test, regression analysis, correlation analysis, Pearson correlation coefficient analysis, and the Spearman’s rank correlation analysis (2007). The use of these statistical methods would enable the researchers analyze and conclude if the globalization of India really plays a role in the present condition of the citizens. These conditions include poverty, illiteracy, underdevelopment, and inefficiency in terms of governance.             The use of different statistical tools or methods would lead to the results of the research or study. The results from the gathered raw data and the combined data in using the statistical tools will be used to form the conclusion of the study. The results will be then be explained and justified using the gathered resources or evidences, written, researched, and studied by other authors and researchers. These researched sources will be used to support the arguments and results presented by the actual study or research. With these researched sources, the results of the study will be further proven, with the support of the arguments of other authors. This will be easier for the researchers of the study to make conclusions and convey their message to the citizens of India, most especially to the authorities and the members of the government. Moreover, through the results and the supporting evidences, the researchers will be able to provide their readers with necessary evidences that would further give solid testimonies for their arguments. From these, it would be easier for the readers to understand and assess their situation under the mercy of globalization. In addition, they will be able to provide themselves with solutions to the problems they encounter. This would also give them the right to demand from their government, thus, pressuring the government to give importance to the welfare of the citizens, not only to the middle-class and elites, but also to those who badly need their assistance and care.   Discussion             The main themes or issues that can be identified include the concepts of globalization and its effects to Third World countries, such as India, and its relation to the concept of modern dependency theories or neo-dependency.             As defined by the International Monetary Fund or IMF, globalization is the growing economic interdependence of countries worldwide through increasing the volume and variety of cross-border transactions in terms of goods and services, free international capital flows and more rapid and widespread diffusion of technology ( 2007). From this definition, it can be understood that globalization is related to various economic, political, cultural, and technological aspects. In terms of economics, businesses participate in globalization to increase the international flow on capital, including foreign investments, which would lead to the economic stability of the nation, to provide developments in infrastructures and establishments. It could also create international agreements among different nations, and may lead to more job opportunities in the nation. This also affects the political aspect, as more projects will be produced, locally and nationally, and will practically help the nation or country in their stability and leadership. More opportunities may also mean the boosting of confidence of each individual to become more productive and effective. Culturally, there will be an increase in the exchange of information, and multiculturalism will be achieved, having no inferior or superior races. This will lead to a boom in travel and tourism, which would totally help locals promote their products, and profit from their small businesses.             Theoretically speaking, this situation seems easy to achieve through globalization. However, although the chain of events mentioned above can be attained through it, several disadvantages are still overlooked, which entirely affects the economy and society of a nation. Primarily, as mentioned earlier, the worldwide increase in GDP is coupled with the uneven distribution of economic development across nations, which further widens the gap between the rich and the poor. In addition, globalization has four dimensions, namely, trade, movement of capital, movement of people, and the spread of knowledge and technology. Only those developing nations that are able to keep up with the pace of global trade have benefited from globalization. Asian countries like Singapore, Japan, and Taiwan have fared well from the global trade, while the entire African region has managed scantily. Another disadvantage is the increase of “brain-drain” in many Third World countries, brought about by the migration to advanced countries. These disadvantages, and many others, thus contribute to the uneven distribution of wealth in the economy of many nations.             In the case of India, since the early 1990s, the country’s economy has been liberalizing with the unanimous approval of the more affluent nations of the population, such that foreign investors that have flooded into the country are not subject to the purview of national laws, as are the domestic investors. Dependence on foreign capital has always led to the sacrificing of national policies in favor of the demands and conditions of international agencies of international finance. International lenders rarely lend without conditions and external liberalization in India, the lowering of import duties was a condition imposed by international financiers, which led to the reduction in social spending that is often disguised as a matter of improving “efficiency” and controlling “unnecessary budget deficits”. This results to providing few material benefits and has not translated into a generous “trickle down” for the poor masses.             The problem with water, roads, and electricity, contributed to the desolate conditions of the 700 million residents still living in rural India, and the 200 million that constitute the urban poor. In addition, problems in politics brought about the voting out of the ruling nationalist coalition in the midst of the most rapid expansion in years, for elections took place in the aftermath of the generous monsoons that boosted spending in much of rural India. Television is the most dominant gateway of globalization affecting the perceptions and attitudes of the younger generations. Traditional dress is increasingly displaced by Western dress seen on TV, and teenage abortions rose by 20% in a year, as teenagers feel pressure to have sex, because of the explosion of sexually explicit imagery from sources like MTV and the Indian equivalent channels ( 2007). Another disadvantage that can be pointed out is the increasing rate of Indian immigration to the United States and other countries, which is particularly related to the high-tech sectors. It has been reported that 25% of the graduates of India’s four most prestigious technology institutes immigrated to the United States, and has led to a situation, wherein more Indian technological talent is in the U.S. rather than in India ( 2007). This has led to the country’s “brain-drain”, wherein more advanced countries utilize the talents and skills of immigrants, instead of being used in their own countries. India’s intellectual elites periodically pay attention to these deficiencies but the middle classes were too much occupied by the ruling party’s mantra of “India Shining” to anticipate the recent electoral shock. In its wake, the masses’ growing urgency for basic needs has come to the forefront again. India can build dams but cannot maintain rural irrigation systems. It can launch satellites but cannot or will not build public toilets. India’s political elite has taken a long time to grasp the message from India’s poor and the “feel good” liberalized economy has yet to provide the right balance for India’s poor majority.  These conditions have led many economists and sociologists to believe that the poverty in India is partly brought about by globalization and the concept of Neo-Dependency. Neo-dependency is defined as the development of a nation, as part of an international system in which the leading powers have used their economic strength to make a nation’s development dependent on, and subordinate to, the interests of those leading powers (1999). Results of such dependence include the reliance of most countries on almost exclusively on one or two export goods, and their internal growth is arrested because they are at the mercy of the fluctuating and changing world prices for their only exports, thus, this larger market is controlled by the great powers (1999). The concept of neo-dependency is relatively simple. However, its explanation is quite complicated, if this will be associated to the decline of economies of different Third World nations. The concept can be explained as follows: poor or developing countries export primary commodities or raw materials to the developed or rich countries, which then manufacture or process these raw materials into new and innovative products. These new and combined products are then sold to the poorer countries as their imports. The “Value Added” by manufacturing a usable product always costs more than the primary products or raw materials used to manufacture those products, thus, Third World countries would never be earning enough from their export earnings to pay for their imports (1996). In essence, the concept of neo-dependency encompasses the entire operations in the economy of a nation, such that this concept explains the tendency for poor or developing countries to opt for exporting their raw materials to developed or rich countries for profit. However, because of being poor, many developing countries lack the capacity and the technology to afford technical and industrial advancements that would enable them to develop. Because of this, many developing countries use their cheap labor to produce such raw materials that would be used to produce innovative products in other countries. Unfortunately, the manufactured products are then sold to developing countries as their necessity. Because the manufactured products are expensive, the profit from selling raw materials does not compensate the expenditures in purchasing the manufactured imported products. From this, it can be understood that neo-dependency explains the reality, of what is happening currently at the economy and society of India. Aside from this explanation, the concept of neo-dependency can be perceived as one of the strategies and avenue for globalization. Through the exchange of goods of different countries, globalization is already taking place. The concept of globalization does not mean presence around the world, but means that a country must perceive global competition and global markets to prosper. “Global” means the entire world, but is made up of smaller, more individual geographic entities beginning with the market in the nation’s current state or province and extending beyond (2002). Through making effective relationships with other countries, India is able to export its products and raw materials to other countries, thus, introducing their crafts and products to the world. Due to this interaction, India is able to establish market in countries like the United States, China, and the United Kingdom.  However, because of neo-dependency, India is becoming dependent and reliant on the importation and exportation of products, which contribute to their poverty and debt as a nation. The exploitation of such avenue for the nation’s growth, development and source of income is attributed to its large scope of land that can be maximized for agriculture and other land-based businesses. It has been reported that India’s economy is diverse and encompasses agriculture, handicrafts, textile, manufacturing, and a multitude of services, with two-thirds of the country’s workforce earn directly or indirectly from agriculture and the growing sector ( 2007). Because of this, the economy of India has been reliant on the production of crops, which are used as raw materials in other countries, and this made the citizens of the nation stagnant on their role in the society. Nevertheless, the advancement of science and technology in other countries led countries, such as the United States, United Kingdom, and Japan to invent and innovate technologies that would enable them to make production of goods faster and more efficient. With this, agricultural countries lagged behind due to the high costs of those technologies. In addition, such countries like India are characterized by high levels of population, and this can help the country with an increased workforce to till the land and harvest produce, for more hands can be depended upon for agricultural advantage. In relation to the concept of neo-dependency is the theory of dependency, which can also explain the current condition of India in relation to its globalization. Dependency can be defined as an explanation of the economic development of a state in terms of the external influences, including political, economic, and cultural, on national development policies, and a historical condition, wherein the economy of a certain group of countries is conditioned by the development and expansion of another company, to which their own is subjected (1996). The Dependency Theory has three common features, where one, is that dependency characterizes the international system, having two sets of states described as the dominant and the dependent, where the dominant states are considered the advanced industrial nations and the dependent states are those from Latin America, Asia and Africa, having low per capita GNPs and rely heavily on the export of a single commodity for foreign exchange earnings. Second feature is that external forces are of significant importance to such dependent states, where external forces include multinational corporations, international commodity markets, foreign assistance, and communications. Last feature, the relationship between the dominant and the dependent states is dynamic due to the fact that their interactions are not only reinforced but also intensify the unequal patterns (Ferraro, 1996). From this, it can be understood that the Third World nations are dependent on the business and foreign resources provided by the dominant or developed countries. The explanation is similar to the concept of neo-dependency, for it also indicates that India’s economy is at the mercy of the dominant country’s economy. With this, once the developed country has already exhausted India’s resources, it will soon find new sources and leave India’s economy and industry weeping and suffering. Both concepts are related to the globalization of India, as neo-dependency and dependency indicate the operations in the economy of the country. Through the application of these concepts, India is become “globalized”, and thus, participate in the globalization of other countries also. In line with globalization is the role of the capitalist system in the application of the two concepts, which enforced a firm international division of labor that is responsible for the under-development of many nations in the world. The dependent states, such as India, supply cheap minerals, agricultural commodities, cheap labor, and serve as the repositories of surplus capital, obsolescent technologies, and manufactured goods, wherein its flow is dependent and determined by the economic interests of the dominant or developed states (Ferraro, 1996). With capitalism, division of labor is being implemented in such states, which supposedly contribute to the growth and development of the country. However, due to capitalism, the economy of India becomes dependent on the economy of the dominant states. In addition to this, despite many important advances since the “Bretton Woods” agreement, the state of Third World development remains extremely unsatisfactory. About a billion people live in extreme poverty and more than 800 million do not get adequate nutrition. Third World Debt looms large on the horizons of most underdeveloped nations and development continues to benefit the Third World elites, the developed nations, and their multinational corporations. The division between the North and the South continues to widen with very little “tricking down” to the poor majority in many nations, and one-third of the world’s poor are getting poorer. Moreover, in both rural and urban areas, the broader enabling environment does not adequately support the needs of the poor, such that rural poverty can be associated with isolation, lack of roads, poor infrastructure, and limited institutional presence, while urban poverty is generally associated with poor quality housing, over-crowded, unsanitary slum settlements, ill-health related to spread of infectious diseases, the threat of exposure to environmental hazards, and fear of evictions from illegal squatter settlements in precarious locations (2001). From these, it can be seen that the effects of globalization and the application of the concepts of neo-dependency and dependency did not bring adequate success to the economy and society of India. It can be argued that in addition to the effects mentioned brought about by these concepts is the increasing levels in the population of India. Although the high levels of population can help with the success of the country’s agriculture, the drastic increase in its population may hinder the country to adequately provide shelter, education, employment, and food for most of its population. It is a given fact that India is continually developing and obtaining resources from other richer countries, and simultaneously, the increase in its population also happens. Because of this, it can be understood that India’s sustenance does not compensate the increasing levels of its population, thus, making the majority of its population suffer from poverty. Through globalization, neo-dependency and dependency, the society of India becomes caught in between development and lagging behind, given the structure of their society. A limited number of the society are the ones given the chance to succeed and benefit from globalization, depending on their position in the society, which include businessmen, merchants and the elites, for luckily, they have the access to education and wealth. This leaves the poor to suffer the scraps of success being enjoyed by the few elites and the politicians in the country, as they do not have the chance to obtain education and employment easily. The increasing number of populations has robbed off the chance of most citizens to become employed and to become accommodated in schools and universities. Another reason to be considered also is their culture, which do not give equal opportunities to both genders, in terms of status, employment and education. Globalization has opened a portal of communication to almost all parts of the world, and this enabled interrelations even more effective and efficient to majority of individuals. However, the desolate conditions brought about by the lagging behind of the economy of India have given unequal opportunities to its citizens to enjoy such opportunities. In addition, because of the increasing incidences of “brain-drain”, many Indian talents and skills are not being utilized by its own country, thus, being used by more advanced and developed nations to their edge. This, in turn, lessens the chance of India to develop as a nation, for instead of contributing to the growth of their own country, Indian intellectuals seek employment and shelter from rich countries to compensate their capabilities with money. With this, many Indian intellectuals migrate and become citizens in developed countries such as the United States, Japan and the United Kingdom to give them the opportunity to grow individually, in terms of their career. This, in turn, contributes to the decline of the economy of India, as its intellectual citizens’ skills and talents are not utilized effectively by their own country.   Conclusion             From the above discussion, it can be deduced and understood that globalization is one important concept in the world today, which must be given enough importance and attention. With globalization and the concepts related to it, it can be seen that many countries are given the chance to grow and development in a variety of aspects. However, globalization also brings about negative effects to many citizens in different countries, due to its unequal distribution of wealth and services.             It is true that there is no direct relationship between globalization and poverty. Nevertheless, the events that happen because of globalization may lead to the ineffectiveness and the poverty of many Third World nations. In addition, several factors and aspects must be considered and given importance to be able to pinpoint the causes of such conditions. Nonetheless, this paper argues that globalization is the major cause of such conditions in India. In addition to this, assessments and additional researches must be made to further understand the conditions in India. Through several researches, many will be able to understand the true desires and needs of the citizens of India, thus, would help improve the economic and societal conditions in the country.

The Myth of Prosperity: Globalization and the South

The Myth of Prosperity: Globalization and the South Introduction During the turn of the century, the world experience...

Thesis on The main causes of the rise of foreign direct investment (FDI) in the Information, Communication and Technology Sector (ICT) of Ireland

Chapter 1 Introduction   In correspondence to the inception of a new era, the information and communications technology (ICT) sector of Ireland apparently became very dynamic. (O’Connor, 2000) This acquired personality of the said sector is among the thrusts of the Irish national government (GOI) to rank the country as a significant participant in the currently flourishing information age. Moreover, international and indigenous companies are establishing competitive positions in the hardware, software, telecommunications, e-commerce, e-business, m-commerce, and internationally tradable services segments.   Economic Profile of Ireland   In the duration of the years between 1995-2001, Ireland’s economy acquired an average growth averaging a robust 9%. The country is characterised by a minor, contemporary, and trade-dependent economy. In the history of the country, its agricultural sector has been among the most vital area of the country’s income. Nonetheless, recent accounts show that it is dwarfed by the industry sector. Today, the country’s agricultural output is depicted by 38% of its GDP, about 80% of exports, and employs 28% of the labour force. Moreover, it was allegedly the country’s exports that continue to be the fundamental machinery of its economic growth but one could not discount the fact that the economy is as well reaping its advantages from a rise in consumer spending and recovery in the construction and business investment sector.   Over the past decade, the Irish government has implemented a series of national economic programs designed to curb inflation, reduce government spending, increase labour force skills, and promote foreign investment. Ireland is among the countries that launched the euro currency system in January 1999 along with 10 other members of the European Union. Moreover, its economy encountered the global economic deceleration in 2001 specifically in their high-tech export sector. Likewise, growth rates were cut by nearly half of previous years’ indices.   The graph below summarizes the economic outline of Ireland from 1998 to 2001. The figure shows that the real GDP growth from 9.5% to 5.8%. Moreover, it also shows that the Irish economy is constantly reducing its government debt. This is also evident in the decreasing behaviour of the economy’s inflation rate. Nonetheless, the figure also shows the apparent reduction of the country’s employment rate in the said period.         Figure 1. Key figures of Ireland 1999 to 2001                         Source: European Commission, Date: 13 January 1999   Foreign Direct Investments   The UK is the second largest recipient of Foreign Direct Investment (FDI) globally. (O’Doyer, 2000) Likewise, a larger part of these investments is based on Ireland. The figure below summarizes the percentage of FDI of the United Kingdom and its specific wings. Figure 2. Foreign Direct Investments of Ireland Compared to other UK Territories Source: UK National Statistics, Regional Trends 2001       The key to understanding Ireland’s merchandise trade performance in recent years lies with foreign direct investment (FDI) flows. (O’Doyer, 2000) By 1998, foreign multinationals accounted for 88% of Irish industrial exports and three-quarters of total exports. In the period 1991-98, foreign-owned companies were responsible for 95 per cent of the growth in industrial exports. Ireland attracts a disproportionate share of FDI inflows into the EU relative to its small population and economic size. While accounting for just over one per cent of EU GDP in 1999, Ireland took in over 5.7 per cent of total inward FDI flows into the EU in that year based on Eurostat data. On a per capita basis, of the EU-15 only Sweden attracted higher FDI inflows in 1998-99 than Ireland.   Issues Covered   This paper intends to uncover the main causes of the rise of foreign direct investment (FDI) in the Information, Communication and Technology Sector (ICT) of Ireland.   Specifically, the study shall gauge the sector’s potential based on several studies previously made in relation to the topic. The research described in this document is based solely on qualitative research methods. This permits a flexible and iterative approach. During data gathering the choice and design of methods are constantly modified, based on ongoing analysis. This allows investigation of important new issues and questions as they arise, and allows the investigators to drop unproductive areas of research from the original research plan.   This study basically intends to identify and provide a description on the critical factors of FDI in the ICT in Ireland. The primary source of data will come from published articles from social science journals, theses and related studies on economics and the information and communication technology sector.             For this research design, the researcher will gather data, collate published studies from different local and foreign universities and articles from social science journals; and make a content analysis of the collected documentary and verbal material.  Afterwards, the researcher will summarize all the information and make a conclusion on the discussions dealing with the foreign direct investments of the ICT sector of Ireland.         Chapter 2   Foreign Direct Investment Theories   Product Life Cycle The Product Life Cycle (PLC) is based upon the biological life cycle. (Klepper, 1996) The cycle is divided into four parts as presented by the illustration below. The stages include the introduction, growth, maturity, decline, and withdrawal. In the Introduction stage, the need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Likewise, limited numbers of product are available in few channels of distribution. On the growth stage, competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Moreover, the market share tends to stabilize.   At maturity, the strong growth in sales diminishes. (Klepper, 1996) In this stage, the competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit. At this point, the product features may be enhanced to differentiate the product from that of competitors. Likewise, the pricing may be lower because of the new competition while the distribution becomes more intensive and incentives may be offered to encourage preference over competing products. In addition, this stage also provides emphasis on the promotion of product differentiation.   Figure 3. PRODUCT LIFE CYCLE PARADIGM     The decline stage is the last portion of the cycle. As sales decline, the firm has several options. (Klepper, 1996) A firm may maintain the product, possibly rejuvenating it by adding new features and finding new uses. Likewise it could harvest the product, specifically the company could reduce costs and continue to offer it, possibly to a loyal niche segment. A final option would be to discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product. Vernon’s (1966) product life cycle theory of investment suggests that FDI is a natural stage in the life cycle of a new product from its inception to its maturity and to its eventual decline. Here, foreign investment is seen as essentially a defensive investment designed to preserve profit margins in both export and home markets. This theory is, however, no longer wholly suitable since it is now evident that transnational corporations (TNCs) introduce products simultaneously in several markets of the world, and not just in a standardized but in a differentiated form as well. Dunning’s Eclectic Theory Dunning (1981) developed the eclectic (OLI) model in 1958 to explain why production is sometimes organized internationally. He examined the internationalisation of firms based on ownership-specific (O), location-specific (L) and internalisation-specific (I) advantages. A firm considering producing abroad will analyse each of these factors in turn, to determine their FDI strategy. The ownership Specific advantages (also called firm-specific advantages) explain why the firm in question produces the good, rather than any other firm. It also explains why that firm is better at fulfilling the needs of the market for that product, both domestic and foreign, than its competitors. The location-specific advantages explain why a firm chooses to produce in the host country.  The L advantages of the chosen host country are non-transferable and immobile. These are differences that arise from the endowment of natural resources, infrastructure, culture, production and transport costs. Moreover, these advantages can also be created artificially through government policies on trade barriers, taxation etc. On the other hand the Internalisation advantages refers to the way firms organised the generation and use of the resources and capabilities within their jurisdiction and those they could access in different location.  Dunning (1981) acknowledged that only way to fully explain the extent and pattern of the foreign value added activities of firms, one also had to explain why firms opted to generate and/or exploit their firm-specific advantages internally, rather than to acquire and/or sell these, or their rights, through the open market. Of the variables that are likely to cause firms to internalise markets, the likelihood and costs of a contractual default and the inability of a contractor to capture the external economies of any transaction are perhaps the two most important. Each of these determinants of FDI relates to an advantage of direct investment over alternative modes of serving the firm's customers abroad. It means, therefore, that a firm can only capture a foreign market through FDI if it has the capacity to exploit simultaneously all the three advantages. If for instance, it possesses only the ownership advantage without internalisation and locational advantages, then it will pursue other strategies such as licensing agreements or exporting as a means of entering the foreign market. Internalisation Traditional trade theory (Helpman and Krugman, 1985; and Krugman and Obstfeld, 1994) asserts that the direction and magnitudes of capital flows are determined by differences in factor proportions among countries, which cannot be countered by international trade. Developing on Dunning’s electric theory, Eiteman, Stonehill and Moffett (1995) emphasized the merits of internalisation. Under the internalisation theory, the key ingredient for maintaining a firm-specific competitive advantage is the possession of propriety information and control of the human capital that can generate new information through expertise in research, management, marketing and technology.   Moreover, Buckley and Casson (1976) discuss this theory of Internalisation further. Initially, they aimed to provide a theory of multinational enterprises (MNE) sufficiently powerful to afford long-term projections of the future growth and structure of MNEs. It emphasized very general forms of imperfect competition stemming from the costs of organizing markets, with a special focus on imperfections in intermediate product markets, including various types of knowledge and expertise, embodied in patents, human capital etc. They asserted that internalisation of such imperfect external markets, when this occurs across national boundaries, leads to the creation of MNEs.   Nonetheless, internalisation occurs only to the point where the benefits equal the costs. Here, it is interesting to observe that Buckley and Casson (1976) already recognized four sets of parameters relevant to the internalisation decision such as industry specific factors related to the nature of the product and the structure of the external market, region-specific factors, nation-specific factors, including government policies, and firm-specific factors, with a focus on the ability of the management to organize an internal market.     Chapter 3 Trends in the Information and Communication Technology Sector   According to the American University (www.american.edu) in Washington, the information and communications technology (ICT) sector is a key component of the Irish economy with over 1,000 companies – both international and indigenous – employing over 100,000 people and accounting for more than 25% of Irish exports.  Despite the recent ICT downturn worldwide, the projection for the $3.6 billion Irish ICT sector in 2002 remains positive.  The principal market segments includes the Telecom services with $1.5 billion, computers & peripherals garnering $1.0 billion, computer software with $0.6 billion and telecom equipment acquiring $0.3 billion.   This section shall describe the statistical profile of the Information, Communication and Technology sector of Ireland as it affects its Foreign Direct Investments. Majority of the data collated in this chapter are extracted from several business and financial journal and columns.   Macroeconomic Environment   Since the early 1990s, Ireland has benefited from double-digit economic growth, which is largely attributed to its investment in, and dividends from the ICT industry.  The table below summarizes the continuous rise of Ireland’s ICT industry through the use of the gross domestic product as its tool of measurement.                             Table 1.         Information and Communication Technology Among Countries From 1993-1997 	 		 			 			 			 			  			 			 			 			Information and Communication Technology (ICT) % GDP 			 			 			 			ECU per capita 		 		 			 			 			 			1993 			 			 			 			1994 			 			 			 			1995 			 			 			 			1996 			 			 			 			1997 			 			 			 			1997 		 		 			 			 			 			USA 			 			 			 			n/a 			 			 			 			6.1 			 			 			 			6.5 			 			 			 			6.8 			 			 			 			7.0 			 			 			 			1565 		 		 			 			 			 			Sweden 			 			 			 			5.3 			 			 			 			5.8 			 			 			 			5.9 			 			 			 			6.1 			 			 			 			6.2 			 			 			 			1427 		 		 			 			 			 			UK 			 			 			 			4.8 			 			 			 			5.5 			 			 			 			5.8 			 			 			 			6.1 			 			 			 			6.3 			 			 			 			993 		 		 			 			 			 			Switzerland 			 			 			 			n/a 			 			 			 			5.3 			 			 			 			5.5 			 			 			 			5.7 			 			 			 			6.1 			 			 			 			2012 		 		 			 			 			 			Ireland 			 			 			 			5.1 			 			 			 			5.4 			 			 			 			5.4 			 			 			 			5.8 			 			 			 			6.0 			 			 			 			920 		 		 			 			 			 			Netherlands 			 			 			 			4.9 			 			 			 			4.9 			 			 			 			5.1 			 			 			 			5.5 			 			 			 			5.8 			 			 			 			1177 		 		 			 			 			 			Denmark 			 			 			 			4.6 			 			 			 			4.7 			 			 			 			5.0 			 			 			 			5.2 			 			 			 			5.4 			 			 			 			1482 		 		 			 			 			 			Finland 			 			 			 			4.3 			 			 			 			4.6 			 			 			 			4.7 			 			 			 			5.0 			 			 			 			5.2 			 			 			 			1028 		 		 			 			 			 			Norway 			 			 			 			n/a 			 			 			 			4.5 			 			 			 			4.7 			 			 			 			4.8 			 			 			 			5.0 			 			 			 			1427 		 		 			 			 			 			France 			 			 			 			3.9 			 			 			 			4.3 			 			 			 			4.4 			 			 			 			4.5 			 			 			 			4.8 			 			 			 			1013 		 		 			 			 			 			Portugal 			 			 			 			3.8 			 			 			 			4.2 			 			 			 			4.4 			 			 			 			4.6 			 			 			 			4.9 			 			 			 			447 		 		 			 			 			 			Germany 			 			 			 			4.1 			 			 			 			4.1 			 			 			 			4.3 			 			 			 			4.2 			 			 			 			4.3 			 			 			 			1029 		 		 			 			 			 			Belgium/Luxembourg 			 			 			 			4.1 			 			 			 			4.1 			 			 			 			4.2 			 			 			 			4.5 			 			 			 			4.8 			 			 			 			1026 		 		 			 			 			 			Italy 			 			 			 			3.5 			 			 			 			3.8 			 			 			 			3.7 			 			 			 			3.7 			 			 			 			3.9 			 			 			 			698 		 		 			 			 			 			Greece 			 			 			 			3.1 			 			 			 			3.6 			 			 			 			3.7 			 			 			 			3.9 			 			 			 			4.1 			 			 			 			396 		 		 			 			 			 			Austria 			 			 			 			3.4 			 			 			 			3.5 			 			 			 			3.6 			 			 			 			3.8 			 			 			 			4.1 			 			 			 			931 		 		 			 			 			 			Spain 			 			 			 			3.5 			 			 			 			3.3 			 			 			 			3.4 			 			 			 			3.7 			 			 			 			3.8 			 			 			 			465 		 		 			 			 			 			Published: 			 			 			 			 			EITO Yearbook 1997 			and 1998 		 	   The contribution of ICT to the Irish economy is readily apparent. Based on the data above, Ireland is among the top ten countries that benefit largely from its ICT industry. The table shows a continually increasing per capita output from the year 1993 to 1997. This shows that the country is exceptionally stable in the said industry. It also shows that of all the world leaders in the industry, Ireland maximizes the potential of its information, communication and technology sector as compared to countries with greater capabilities such as the United Kingdom, Germany, and France.   According to the website ICT Ireland, the Sector employs almost 100,000 people in 980 companies up from 47,000 in 1993. Moreover, foreign owned companies provide 55,000 of these jobs. The site also stated that Ireland is the largest exporter of software in the world and seven of the worlds leading software companies having a base in Ireland. In fact, one third of all PC's sold in Europe are manufactured in Ireland. Concurrently, Ireland is the 4th most successful country in the world in attracting Foreign Direct Investment. The total exports of ICT products and services amounted to €31 billion in 2001 representing 33% of all exports. Furthermore, ICT exports grew by 23% per annum over the period 1993-2001, 1.5 times that of non-ICT export values. It also stated that Ireland ranks as the sixth fastest growing exporter, with Ireland's top three exporters (Dell, Microsoft and Intel) accounting for 18% of total exports in 2001. Thus, the output of ICT products and services was equivalent to almost 16% of Ireland's GDP in 2001. This increased by 18% per annum over the period 1993-2001 twice the rate of overall GDP growth. The GDP of Ireland and its competitor countries are summarized below. Table 2. Gross Domestic Product Growth among countries from 2001-2001 	 		 		 		 		Country 		 		 		 		Real GDP Growth 		2001 		 		 		 		2002 (F) 	 	 		 		 		 		Ireland 		 		 		 		6.8% 		 		 		 		3.6% 	 	 		 		 		 		UK 		 		 		 		2.3% 		 		 		 		1.9% 	 	 		 		 		 		France 		 		 		 		2.0% 		 		 		 		1.4% 	 	 		 		 		 		Germany 		 		 		 		0.7% 		 		 		 		0.7% 	 	 		 		 		 		Netherlands 		 		 		 		1.4% 		 		 		 		1.4% 	 	 		 		 		 		Spain 		 		 		 		2.7% 		 		 		 		2.1% 	 	 		 		 		 		Portugal 		 		 		 		1.9% 		 		 		 		1.7% 	 	 		 		 		 		USA 		 		 		 		1.1% 		 		 		 		2.5% 	 	 		 		 		 		Japan 		 		 		 		-0.7% 		 		 		 		-0.7% 	 Source: The World Competitive Yearbook 2001; OECD Economic Outlook June 2002    Employment Growth and Unemployment   According to the Investment Development Agency of Ireland (2002), Ireland has an abundance of workforce that would cater to the needs of the ICT industry. The agency projected the amount of able and competent workers in the year 2010. This data is summarized below.   Table 3. Future Availability of workforce Percentage population under 25 in the year 2010 	 		 		 		Country 		 		 		% 	 	 		 		 		Ireland 		 		 		35.5 	 	 		 		 		United 		Kingdom 		 		 		31.0 	 	 		 		 		France 		 		 		30.1 	 	 		 		 		 		Netherlands 		 		 		28.7 	 	 		 		 		Portugal 		 		 		28.6 	 	 		 		 		Germany 		 		 		24.4 	 	 		 		 		Spain 		 		 		24.3 	 	 		 		 		USA 		 		 		34.2 	 	 		 		 		Japan 		 		 		25.3 	 Source: United Nations     The data shows that thirty-five percent of Ireland’s population would be able to satisfy the requirement of the ICT industry regarding the employment of competent employees. Based on the projection, the ability of the Irish population to satisfy the need for a competent workforce in a decade’s time is far superior to countries such as the United States, France and the United Kingdom. It is also important to note that the Agency extracted the data from a study by the United Nations.   This projection is based on the emphasis made by specific countries on education. The Organization for Economic Cooperation and Development (2001) provided a comparative data regarding the expenditure of members of the European Union on public education. The top spot is acquired by Ireland incurring the highest expenditure on education as compared to the other members of the EU. The table shows that almost 10% of Ireland’s budget, compared to the other members, answers to the public education of both secondary and primary level of instruction while it allots 3.5% on its universities. The top spot is shared by Portugal and Ireland. The former takes the top spot on sustaining a 10.2% allotment on public education while the latter takes the stage in prioritising its collegiate level by allotting 3.5% of its income for the use of public education.   Table 4. Some Comparative Educational Data Public Expenditure on Education as % of total Public Expenditure by level of education. 	 		 		 		Country 		 		 		Total % 		All levels 		 		 		Primary & 		Secondary % 		 		 		Tertiary % 	 	 		 		 		Ireland 		 		 		 		13.5 		 		 		9.9 		 		 		3.5 	 	 		 		 		UK 		 		 		11.9 		 		 		8.3 		 		 		2.6 	 	 		 		 		France 		 		 		11.3 		 		 		7.9 		 		 		2.0 	 	 		 		 		Germany 		 		 		9.8 		 		 		6.3 		 		 		2.3 	 	 		 		 		 		Netherlands 		 		 		10.6 		 		 		6.8 		 		 		3.0 	 	 		 		 		Spain 		 		 		11.1 		 		 		8.1 		 		 		2.2 	 	 		 		 		Portugal 		 		 		13.5 		 		 		10.2 		 		 		2.4 	 	 		 		 		Belgium 		 		 		10.2 		 		 		6.9 		 		 		2.2 	 	 		 		 		Italy 		 		 		10.0 		 		 		7.1 		 		 		1.6 	 Source: OECD Education At A Glance 2001     Ireland produces over 34,000 graduates every year and since 1992 there has been an increase of 35% in students studying third level engineering/technology courses. (IDA, 2002) A significant number of third level students now study engineering, computer science or business studies. Combined with competitive levels of government spending and initiatives for third level education and research, Ireland is not only a first choice for high value inward investment, but also a first class location for business expansion.   Ireland also possesses one of the lowest hourly rates for workers. This is summarized in the table below. Based on the table, the lowest cheapest labour among the countries is provided by Spain having € 10.85 per hour. The second spot is acquired by Ireland providing € 12.50 per hour of service. This is one of the assets of the Irish country considering they have a high level of literacy rate with a low cost of employment.   Table 5. Total Hourly Compensation costs in (€) for workers 	 		 		 		Country 		 		 		Total 	 	 		 		 		Ireland 		 		 		12.50 	 	 		 		 		United 		Kingdom 		 		 		15.88 	 	 		 		 		France 		 		 		16.38 	 	 		 		 		Germany 		(Unified) 		 		 		22.99 	 	 		 		 		 		Netherlands 		 		 		19.08 	 	 		 		 		Spain 		 		 		10.85 	 	 		 		 		USA 		 		 		19.86 	 	 		 		 		Japan 		 		 		22.00 	 Source: US Department of Labour, 2002     Another advantage of Ireland is the attractiveness of its working conditions. The table below summarizes the working profile of several countries including Ireland.  The table states that Ireland has a maximum of 48 working hours per week. Nonetheless, a total of 39 hours is the actual time spent throughout a workweek. Moreover, the country has approximately 20-25 days considered as a holiday but only 20 are recognized by the state as non-working.   Table 6.         Working Profile 	 		 		 		Country 		 		 		Legal 		Max. Working hrs p/w 		 		 		Actual 		average working hrs p/w 		 		 		 		Statutory Holidays 		 		 		Typical 		Holidays 	 	 		 		 		 		Ireland 		 		 		 		48 		 		 		 		39 		 		 		 		20 days 		 		 		 		20-25 days 	 	 		 		 		 		UK 		 		 		 		48 		 		 		 		35-40 		 		 		 		20 days 		 		 		 		20-30 days 	 	 		 		 		 		France 		 		 		 		35-39 		 		 		 		35 		 		 		 		25 days 		 		 		 		25-30 days 	 	 		 		 		 		Germany 		 		 		 		48 		 		 		 		35-38 West 		37-40 East 		 		 		 		20 days 		 		 		 		30 days 	 	 		 		 		 		Netherlands 		 		 		 		45 		 		 		 		35-38 		 		 		 		4 x days worked p/w 		 		 		 		23-30 days 	 	 		 		 		 		Spain 		 		 		 		40 		 		 		 		34-38 		 		 		 		20 days 		 		 		 		22-25 days 	 	 		 		 		 		Portugal 		 		 		 		40 		 		 		 		35-40 		 		 		 		22 days 		 		 		 		22-25 days 	 	 		 		 		 		USA 		 		 		 		No limit 		 		 		 		30-35 hrs for union members; 		40 hrs for clerical staff 		 		 		 		Nil 		 		 		 		10 days 	 	 		 		 		 		Japan 		 		 		 		40 		 		 		 		n/a 		 		 		 		10-20 days 		 		 		 		n/a 	 Source: Incomes Data Services UK, October 2001     Inclination to ICT among the locals     Ireland has become a significant world centre for software development because of its skilled, highly educated workforce, excellent supply infrastructure, cost competitive environment, and sophisticated telecommunications network. (O’Connor, 2000) The country produces over 400 computer science graduates annually and these individuals are being employed in the local software development laboratories of major international software firms.   Moreover, software is one of Ireland's fastest growing business sectors with growth being about 15 percent every two years. (O’Connor, 2000) In 2000, the Irish computer software market should exceed $800 million. The Irish software industry is comprised of over 600 firms employing almost 19,000 people in a broad range of activities including development and customisation, localization and translation, production and distribution, and technical support. It is an export-oriented industry with over 90 percent of domestic production sold abroad. Indeed, some industry observers rank Ireland behind only the United States as a software exporter.   In addition, there is also a strong indigenous sector consisting of both small-specialized firms operating at the forefront of software development technologies and larger companies that have successfully targeted niche markets worldwide. Indeed, the small size of Ireland's domestic market has necessitated a strong focus on international markets by indigenous firms in order to achieve sustainable growth. (O’Connor, 2000) Thus, more than 80 percent of all indigenous software companies are active in international markets.   Similarly, the telecommunications sector in Ireland is extremely buoyant at present with sales within the telecommunications services segment likely to exceed $1.9 million in 2000 while the market for telecommunications equipment should exceed $425 million. (O’Connor, 2000) The driving forces behind this market demand are Ireland's strong economic performance since 1995, the emergence of new technologies and business philosophies related to e-commerce, and the liberalization of the sector by the Irish government.   Furthermore, the Irish telecommunications sector has undergone significant change over the past three years as the Irish government implemented the EU's liberalization agenda. (O’Connor, 2000) Since December 1998, the sector has been fully liberalized and there is a strong competitive presence in the market with several service providers competing for market share including Eircom, BT/Esat, MCI WorldCom, Stentor, GTS and ITL.  Since mid-1997, annual investment by market players has almost doubled to $500 million.  The acquisition of Esat by BT in January 2000 will generate increased competition throughout the entire telecommunications market in Ireland.   On the other hand, the mobile telephony sector has also experienced excellent growth in recent years with Eircell currently having over 645,000 subscribers of which about 420,000 are on the GSM network while the remainder is analogue customers. (O’Connor, 2000) The second GSM network operated by BT/Esat Digifone commenced operations in March 1997 and has over 240,000 subscribers. It has been the most successful start-up by a second GSM operator in Europe. Unfortunately, the awarding of the third mobile telephony license to Meteor Mobile Communications, a U.S./Irish consortium has been delayed because of an ongoing legal action against that decision by the unsuccessful bidder, Orange UK. The number of mobile phone subscribers is forecast to exceed one million in 2000. The frequency of utilization of ICT products by the Irish is summarized below.   Table 7. Irish Utilization of ICT Products 	 		 		 		  		 		 		1998 		 		 		1999 		 		 		2000 	 	 		 		 		Television 		licenses* 		 		 		1,015,668 		 		 		1,037,845 		 		 		964,989** 	 	 		 		 		Telephone 		lines 		 		 		1,507,470 		 		 		1,634,131 		 		 		1,737,794 	 	 		 		 		Mobile 		cellular telephones (‘000 subscribers) 		 		 		946 		 		 		1,655 		 		 		2,490 	 	 		 		 		Personal 		computers (‘000 in use) 		 		 		1,010 		 		 		1,180 		 		 		1,360 	 	 		 		 		Internet 		users (‘000) 		 		 		300 		 		 		679 		 		 		784 	 	 		 		 		Daily 		newspapers 		 		 		6 		 		 		6 		 		 		6 	 	 		 		 		 		* Sales of licenses. 		 		 		** To November 2000. 		 		 		1996:  Non-daily newspapers 77 (estimated circulation 1,561,000) 		 		 		1997:  Radio receivers 2.550,000 in domestic use; Television receivers 		1,470,000 in domestic use; Facsimile machines 100,000 (estimated number 		in use). 		 		 		Source:  UNESCO, Statistical Yearbook and International 		Telecommunication Union. 	                         CHAPTER 4   THE RATIONALE   `This study is conducted to assess the effects of the information and communication technology sector of the Irish nation to its foreign direct investments. This study is conducted in consideration of the Ireland has been reaping the fruits of the successful implementation and continuous flourishing of the economy with special attention to the ICT sector.  This study contains graphs and figures of the recent improvements in the Irish ICT section. Along with these are the specific interpretations of the said information. Using these data, the researcher shall be pinpointing the strong points of the Irish situation and specify the reasons of Ireland’s successful ICT sector. Moreover, the study shall be a potent tool in providing other countries the specific strengths of the Irish paradigm in its pursuit in ICT excellence through its foreign direct investments. This study could be used as a benchmark for other developing countries as well as other first world economies who have been struggling with the affairs of gaining its respective FDIs. This study stresses that the ICT is a potent tool in improving the level of a nation’s economic well being, thus should be regarded as one of the vital aspects of the market.     THE BENEFITS OF THE STUDY   This study shall be able to benefit the ICT sectors in general. This is because the study provides the course of action undertaken by the Irish ICT sector to be at par, or even superior, to highly industrialized countries such as the United Kingdom and the United States. These strong points could be used as a framework of both developed and developing nations in their quest for ICT supremacy. Moreover, the study also points out the shortcomings of the ICT sector, thus providing lessons for other nations in undergoing the process of strengthening of their ICT sector.   Moreover, the ICT sector of Ireland would also benefit from this inquiry. The provided analysis and recommendations would allow the sector and the national government to further encourage the entrance of foreign direct investments. This would also encourage local entrepreneurs to invest in the world of ICT. The more investments that the national government collects entail a much leaner growth in terms of the economic aspect of the Irish nation.   More importantly, this study would benefit the Irish population. The ensuing effects of the rise of the country’s GNP and GDP brought about by the contributions from the FDIs from the ICT sector, begets a sort of assurance for the proper rendering of government services.  ANALYSING THE EFFECTS OF THE FDI   In an attempt to analyse the effects of FDI to the ICT sector of Ireland, the researcher would like to utilise Dunning’s OLI theory to provide a more lucid interpretation of the study.               Firm Specific Advantages   In terms of technological capabilities, companies that has invested in the country could be described as belonging to one of four different types, particularly, research performers operating with a specific R&D budget and typically having a formal R&D department; technological competents performing some element of product and process development; minimum capability companies adopting and implementing package solutions; and low technology companies with no meaningful technological capability. (Walsh, 2000) Moreover, most companies in Ireland fall into the lower two categories. In fact, there are only 500 from a total of 4,000 companies in manufacturing and internationally traded services (with >10 employees) in the country which can be described as ‘research performers’ spending at least IR£100,000 per annum on R&D. Even within that group, the top 50 R&D spending companies – those spending a minimum of IR£1 million each per annum on R&D – account for two thirds of business sector R&D activity. Only one in five foreign owned companies could be described as a ‘research performer’. R&D, as a percentage of sales, trails behind other countries, particularly in high-tech sectors such as pharmaceuticals and office and computing machinery. Indigenous industry needs to build on national strengths in software and electronics and transform its approach to innovation. There is a low level of patenting by Irish-based companies in general and particularly in the US market. Irish industry must position itself higher up the economic chain in terms of the innovation, including R&D, and the value it adds to the products and services exported. This competitiveness shift is necessitated by the globalisation of markets and firms, the challenges faced by traditional cost-based industries, economic and monetary union, the progress towards greater tax harmonisation in Europe, and improving quality of labour supply and more cost effective manufacturing and exporting systems, particularly in Eastern Europe. The repositioning will also have to be underpinned by Government policy action in related areas as set out in the following section.   Aside, from the presence of foreign direct investments, a strong culture of innovation is an essential source of industrial competitiveness.  (Walsh, 2000) Ireland must constantly seek to improve the capability and performance of its industrial base to cope with increasing global technology-based competition. To do this, Ireland will have to put in place a durable science and technology infrastructure which will create new, technology-based indigenous firms, establish an internationally competitive research base in universities, colleges and institutes, attract the R&D activities of MNEs to locate in Ireland and provide the physical infrastructure and environment to promote innovation.               Location Specific Advantages   Ireland has built a strong reputation as a location for high quality manufacturing and internationally traded services. (Walsh, 2000) This has been achieved because of a mix of attractive fiscal arrangements, a plentiful supply of skilled and adaptable labour, the recent emergence of technology entrepreneurs, English as the main spoken language and access to European markets. However, the underlying base driving output and exports is quite narrow and the long-term performance of industry in Ireland continues to be hampered by a weak commitment to technological innovation. Exports grew from IR£15 billion in 1991 to IR£46 billion in 1998. Half of the country’s exports are accounted for by 50 companies, of which only 13 do any research and development (R&D).   Government-supported Programmes in Advanced Technology in the areas of software, power electronics, optoelectronics and telecommunications, as well as the National Microelectronics Research Centre, carry out research and provide postgraduate opportunities in the ICT field. (Walsh, 2000) However, the level of existing funding for these organisations does not permit them to generate the scale and activity necessary to build up and maintain world-class centres of expertise. Whether from public or private or both sources, support at a higher order of magnitude is needed. In the context of Ireland’s ambition to become a knowledge-based and technology driven economy an infrastructure, which develops and transcends what is already in place, must be developed to cope with the rising standards provided by FDIs.   In addition, the Information and Communications Technologies have made a major contribution to recent economic growth in all developed countries. Ireland has benefited very significantly from these technologies, in terms of employment and wealth generation. These technologies will continue to be at the core of economic and social progress in the years ahead.   Ireland is justifiably proud of its performance in the ICT area. (Walsh, 2000) It has attracted many of the world’s leading companies to establish bases in the country and have been convinced, by the quality of people and the industrial climate, to broaden the scope of their operations. The national government has built a vibrant indigenous industry and a number of indigenous companies have achieved very significant success on world markets. Nonetheless, these successes there are several weaknesses in the current industry structure that must be addressed if the industry is to prosper in the coming years and realize the potential benefits for Irish society. In general, the ICT industry in Ireland is positioned at a relatively low point on the value chain: it deals in relatively mature technology that has been developed elsewhere. In the years ahead, there will be intense competition at this end of the value chain. The main competitive factor will be cost and particularly labour cost. Ireland is unlikely to be able to compete on this basis: we need to increase the value-added component in our ICT products and services.   In order to carry this out, the industry will need a cadre of world class professional researchers in the ICT disciplines – people who can contribute original marketable ideas, who can form the nucleus of new, world class companies, and who can attract a new kind of multinational investment. (Walsh, 2000) The current output of postgraduates (approximately 60 per annum with pertinent skills) is quite inadequate for this kind of development. Likewise, state investment in research is significantly lower than in most developed economies. As we move from an economy based on relatively low skill levels to one based on knowledge and expertise, our continued prosperity depends on substantially increasing this investment.  Moreover, the efforts of the PATs (Programmes in Advanced Technology) and other RTI (research, technology and innovation) programmes have led to measurable benefits, but the current structures are incapable of developing teams with ‘world class’ scale or expertise. They are therefore unable to conduct the type of research that will attract international attention, bring in significant industrial investment, or routinely spin off high technology, market-leading enterprises.   The development impact of ICT has two distinctive aspects. The first is the benefits of enhancement of the infrastructure and applications to users of information and communication services, who can be distinguished according to whether they use these services for production, distribution or consumption activities. The second is the benefits derived by the economy from changes in the supply of communications network infrastructure and applications.     Furthermore, improvements in ICT lower the cost of information, the cost of dealing with others in the market (such as suppliers and customers) and the cost of business start-ups. Through both of these processes, transaction costs in society drop, which improves overall efficiency and growth. Complementing this, the ability to transmit data on communications networks contribute to increases in the quantity and quality of information available to service and productive enterprises, which opens up new opportunities and enables more thorough evaluation of the risks and returns associated with these opportunities. In many instances, the additional information that becomes accessible will contribute to the spatial expansion of markets, assisting producers to move from local into regional or national markets, and from domestic into international markets. Access (or the lack of it) to cheap and sufficient information is an important determinant of firms’, sectors’ and countries’ competitive advantage.   Evidence suggests that countries that have invested in communications network infrastructure have attracted high levels of foreign direct investment as well as domestic investors into other sectors. The value of the infrastructure is in the linkage effects to other sectors, more than in the infrastructure per se.  Economic benefits also arise from changes in the supply of communications network infrastructure, which contributes to the emergence and growth of specialist firms, or new branches of existing firms, in a range of service sectors to take advantage of new market opportunities in the production and distribution of information itself. On one hand, these will include software production firms and Internet service providers, who provide essential pieces of machinery for information production and distribution. On the other hand, there are firms who provide the content of the information, such as web marketing agencies, electronic news media and so on. The changes in information and communications technology have broken down barriers between different manufacturing and service sectors in the economy, and opened up competition between them. This enhances efficiency in these sectors, and contributes to overall growth.    Much of existing economic data point to a high correlation between ICT and economic growth.  And in the past several decades this has been confirmed by the revolutionary impact of ICT on country economic performance, particularly in the areas of production, trade & market access, employment, and public and corporate governance.  Converging and emerging technologies have allowed countries to accelerate economic growth, empower people and alleviate poverty through expansion in private and public business opportunities, extend services to socially disadvantaged groups, and pervasively use and develop ICT for revenue and income generation purposes.               Internalisation Advantages   Foreign direct investments increased the productivity rate of the Irish ICT sector. One of its effects is the provision of higher standards on the ICT industry. The government recognized that the capabilities in information and communication technologies must be developed in order that Irish society can participate in economic, cultural and educational activities and that Irish business can take advantage of the opportunities arising in this field. (Walsh, 2000) Information and communication technologies impact on society and the economy in a number of different ways. First, ICT is an underlying and necessary technology for society in general and for business in particular. ICT also functions as an enabler/facilitator for industry, for example, in electronic commerce, logistics and telematics. Secondly, looking outward, organisations will increasingly use ICT to link their stock of tacit knowledge to that of other organisations so as to develop cross-discipline solutions in areas of emergent need e.g. in bio-informatics, smart products, supply chain management. Thirdly, in recent times the ICT sector has been the engine of growth for all developed countries. Ireland has been particularly successful in this area both in attracting foreign direct investment and in developing a select number of companies with a global reach. Currently 40 per cent of all Irish exports come from the ICT sector and employment in this sector is forecast to double by 2003.   The encouragement of foreign direct investments is as well subjected to a stiff level of competition among Ireland’s neighbouring countries. This provided the Irish government the realization that if Ireland is to compete in an era of rapid development of ICT products and services, appropriate state-of-the-art infrastructure must be put in place.  (Walsh, 2000) Furthermore, if Ireland is to fully meet the future societal and economic challenges posed by the rapid developments in ICT, a number of general capabilities will be required. Moreover, raising the levels of IT and computer literacy in the population became the top priority action. The high potential for job creation in this area provides an opportunity to tackle the existing situation where significant numbers of young people are excluded from the job market because of lack of training and skills. The extremely high cost of research into future technological developments will place a premium on sophisticated modelling and simulation systems, which can substantially reduce the risks involved. There is an opportunity for skills to be developed in this area and tradable services commercialised. For the foreseeable future the need for top class electronic engineers and computer scientists will continue and the enhancement of mathematical and fundamental engineering principles will be critical to maintaining Ireland’s position as a global player in these industries.   According to Dorgan (2002), the surge of FDIs provided major contributions in the country. First, it provided a very strong export-led contribution to economic growth. Moreover, unlike other decades, the investments provided the employment sector an intensive growth. It has been a key driver of business friendly infrastructure, human resource development and regulatory change, which has benefited the economy as a whole. Concurrently, FDIs has both forced and sustained flexibilities in the economy, which might otherwise have gone the way of much of Europe, in developing rigidities and protections for existing economic agents. Moreover, it has been a key source of new technology, skills, management and business know-how, and a global orientation. It has also provided a breeding ground for Irish entrepreneurs, for example, in the indigenous software sector. Furthermore, it has given Ireland scale and critical mass in new technologies, far faster than that could otherwise be achieved. A good example is the advent of critical mass in the bio-pharmaceutical sector in Ireland when Wyeth decided on a major new facility in Grange Castle, Dublin. Another effect was the collection of Substantial Corporation Tax revenues (1.9bn in 2001 alone), and additional tax revenues from income tax and indirect taxes, have helped the country to be able to afford the cost of new infrastructure and human resource developments, envisaged under the National Development Plan, so important to sustaining economic growth in the future.   CHAPTER 5 CONCLUSION   Virtually all aspects of daily life are being changed by ICT. (Walsh, 2000) Whole new industries are growing up around ICT; new business models are being realised and old ways of doing business are being rapidly outmoded and made obsolete. The ICT industries themselves are changing. In particular, we note a trend towards global rationalisation, with mergers and acquisitions, both vertical and horizontal, becoming commonplace.   As the market becomes more global, even the most innovative of such companies are in danger of creating markets that are subsequently exploited by more powerful players. (Walsh, 2000) Global markets demand companies that are capable of operating globally: companies that can identify an opportunity, move fast to dominate the market niche and erect effective barriers to the entry of competitors. This implies access to the best in venture capital investment (hands-on, aggressive, with a desire for quick development and exit), strategic marketing and ready access to world-class expertise.   This is what exactly Ireland did. The country recognized its potency as well as its frailty. With the realization of the two, Ireland capitalized on its strengths and in the same time, worked on its flaws. In doing so, Ireland is currently the leading country among its co-members in the European Union that excels in the ICT industry. The study did not fall short on emphasizing the current state of ICT in the economy of Ireland. Likewise, the study also provided the effects of foreign direct investments to the said sector. It is the realization of the Irish ICT sector of the importance of external investments to achieve the level of success that it now experiences.   Ireland’s economy is very open, thus the long-term success is inextricably linked to the growth rates of the main export markets and the country’s competitive position.     Sources: Buckley, Peter J. & Mark Casson, C. (1976) The Future of the Multinational Enterprise. London: Macmillan.  Dorgan, Sean. (2002) Is FDI necessary in post Celtic Tiger Ireland? Investment Development Authority. Ireland   Dunning, J. H., (1981), International Production and The Multinational Enterprise, London, George, A. and Unwin.   Eiteman, D., Stonehill, A. and Moffett, M., (1995), Multinational Business Finance, Addison-Wesley Publishing Company.   European Telework Development. (1999) Information and market trend. Available: http://www.eto.org.uk/eustats/ict.htm. [Accessed 03/17/03]   Helpman, E., and Krugman, P., (1985), Market Structure and Foreign Trade, MIT Press.   Investment and Development Agency (2002) Industry Profile of ICT. Available: http://www.idaireland.com/facts/vitalstats.asp. [Accessed 03/18/2003]   Klepper, S. (1996) Entry, exit, growth, and innovation over the product life cycle.  American Economic Review, vol. 86 , no. 3. Knickerbocker, F., (1973), Oligopolistic Reaction and Multinational Enterprise, Boston, Harvard University Press. Krugman, P. and Obstfeld, M., (1994), International Economics, 3rd, Harper Collins.   O’Connor, Padraig. (2000) Overview of Communication Tech Sector. February 01. Available: http://www.tradeport.org/ts/countries/ireland/mrr/mark0016.html. [Accessed 03/17/03]   O’Doyer, Tom. (2000) The USA Emerging as Ireland's Largest Export Market. Forfás International Trade and Investment Report.   The Profile of Ireland. Available: http://www.cia.gov/cia/publications/factbook/geos/ei.html#top. [Accessed 003/17/03]   Vernon, Raymond. (1966) International Investment and International Trade in the Product Cycle. Quarterly Journal of Economics, May.   Walsh, Edward. (2000) Findings from Technology Foresight Ireland. Irish Council for Science, Technology and Innovation.

Thesis on The main causes of the rise of foreign direct investment (FDI) in the Information, Communication and Technology Sector (ICT) of Ireland

Chapter 1 Introduction In correspondence to the inception of a new era, the information and communications technology (ICT) sector o...