The decision to divide the Republic into two regions for EU funding purposes has raised questions for Shannon Development, currently the only dedicated regional development company in the State.

The agency, set up in 1959 to promote Shannon International Airport in the post-jet era, is charged with developing industry, tourism and the rural economy in the Shannon region. It has exclusive responsibility for direct investment in the Shannon Free Zone, an area of around 700 acres around the airport, while it works in conjunction with the IDA in promoting the rest of the region.

This covers an area of some 10,000 square kilometres, spanning Clare, Limerick, North Tipperary, South Offaly and North Kerry and while small pockets of it are in the Objective 1 area, some 95 per cent of the region lies beyond the limits.

As a result, counties like Clare and Tipperary will have to compete for inward investment with neighbouring areas in Galway and Offaly which can offer much higher grants to would-be investors.

However, observers believe that the supply of skilled graduates from the University of Limerick and good regional infrastructure, particularly the easy air access provided by Shannon airport, should help the area to remain competitive when it comes to attracting foreign investors.

Mr John King, head of corporate services and communications with Shannon Development, says the agency is confident that what it is doing on the ground will be enough to ensure that counties like Clare do not lose out to Galway.

Shannon Development has succeeded in attracting a number of high profile firms to the area in recent years. Among them are Dell Computer Corporation, which operates from the Raheen Industrial Estate outside Limerick. Shannon Free Zone and its associated World Aviation Park have also attracted hitech companies such as Tellabs and Cabletron.