1. ¹University College, Dublin, Ireland
2. ²School of Business and Institute for International Integration Studies, Trinity College, Dublin, Ireland

Correspondence: Professor C Kearney, School of Business Studies, Trinity College, Dublin 2, UK. Tel: +353 1 6082688; Fax: +353 1 6799503; E-mail: colm.kearney@tcd.ie

Received 15 June 2004; Revised 11 June 2005; Accepted 29 June 2005.

Abstract

Ireland has been very successful in attracting foreign MNEs in high-technology sectors. Although these sectors exhibit faster growth than the traditional low-technology sectors populated primarily by indigenous firms, the high-technology sectors are also more volatile. We use portfolio theory to show that Ireland's FDI strategy has led to a more diversified manufacturing sector that exhibits higher growth without a commensurate increase in volatility and risk.