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Discuss the likely impacts on the Irish economy of Pfizer locating in Ireland, if the government of Ireland had supported this decision or not. - Edexcel - A-Level Business - Question 2 - 2017 - Paper 1
Question 2
Discuss the likely impacts on the Irish economy of Pfizer locating in Ireland, if the government of Ireland had supported this decision or not.
Worked Solution & Example Answer:Discuss the likely impacts on the Irish economy of Pfizer locating in Ireland, if the government of Ireland had supported this decision or not. - Edexcel - A-Level Business - Question 2 - 2017 - Paper 1
Step 1
Decision for
Answer
Foreign owned multinationals such as Pfizer can bring skills and new technology to the economy, which may not be readily available in a host country like Ireland. This transfer of technology can lead to innovation and increased productivity among local businesses.
Increased competition among drug manufacturers in Ireland could lower price points for healthcare products, enhancing choice and affordability for Irish consumers. This environment fosters a more dynamic marketplace, thus benefiting the economy.
The presence of various multinationals in Ireland, particularly in sectors like IT and building, can create a broader employment base and diversify the economy away from depending on limited sectors. Businesses in Cork may also see an uptick in demand for local supplies due to increased operations by Pfizer, boosting local trade.
As Pfizer's operations grow, the average worker's skills may elevate, contributing to increased local spending and potentially raising Ireland's GDP. Furthermore, the Irish government could gain from increased corporation tax revenue, as Pfizer would declare substantial profits, alongside indirect benefits such as VAT and other revenues from heightened consumer spending.
Step 2
Decision against
Answer
Local Irish businesses might struggle to compete with Pfizer in wages, making it difficult to attract highly skilled scientists and healthcare professionals, which could result in skill shortages in these sectors.
Although Pfizer is primarily a US-owned company, it requires skilled employees from Ireland and could lead to difficulties if it needs to relocate abroad, diminishing the local workforce.
The Irish economy is heavily reliant on multinational corporations, elevating risks associated with such dependence. If businesses like Pfizer decide to relocate, this can have severe repercussions on Irish workers and consumers due to a sudden loss of investment and job opportunities.
Moreover, the current expertise in Ireland is focused mainly on IT and not necessarily in sectors like healthcare, which might mean Irish businesses do not adequately benefit from Pfizer's operations in the long term.