Selling global, buying local?: What determines the sourcing patterns of multinational plants in Ireland?

Multinational enterprises (MNEs) have played all important, if not crucial, role in the recent development of the economy of Ireland, both North and South. This paper compares the extent to which MNE plants, North and South, are integrated into their host economies through local sourcing. This is important both in terms of the direct effect on local demand and because local trading relationships provide a medium for technology transfer and supplier development. Levels of local sourcing, North and South, have diverged sharply over the last 15 years. In the South, local supply chains have grown stronger with MNE plants now purchasing around 21% of their material inputs from within the country. In the North, by contrast, local supply chain linkages have become weaker with only around 11% of MNE inputs now sourced from within the region. Strong asymmetries ire also identified in cross-border sourcing. Northern MNE plants spend an average of 2.4 pound million per annuum in the South, while Southern M NE plants spend all average of only 0.4 pound million per annuum in the North. Differences in the characteristics of MNE plants, North and South, account for only one-quarter of the difference between the Southern and Northern levels of local sourcing. Supply-side issues - related primarily to availability - seem likely to explain the majority of the remainder.