Ireland can afford to be more selective in terms of the inward investment projects it seeks to capture and should choose projects that work in tandem with Irish industry, ISME says.

"Ideally, they should be projects with a large local spin-off in terms of sub-supply opportunities, not just job creation, and projects where the main business functions would be located in Ireland, namely research and development and marketing," according to the association, which represents small and medium-sized firms.

It acknowledges that foreign direct investment is one of the cornerstones on which the current economic boom is founded but says that IDA Ireland's success has also brought problems such as labour and skill shortages, cross-sectoral wage inflation, inflationary rent increases and factory unit shortages.

Multinational companies are monopolising many of the factors of production at the expense of the indigenous sector, ISME says, adding that IDA Ireland should choose projects which work with Irish industry rather than compete with it for increasingly scarce resources.