MNEs and industrial structure in host countries: A portfolio analysis of Irish manufacturing

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.