Foreign direct investment (FDI) has made a significant contribution to economic development of different countries. Japan and Ireland’s policy continues to provide a reasonable welcome for new FDI, but it is far from the wide-open door that it once was. Both countries encourage investment, and there is even incentive for competition among the states to attract new ventures from abroad. According to statistical results, in 2003 inward FDI accounted for some 78% of the gross fixed capital formation in Ireland, but only 0.6% in Japan. The different is primarily caused by economic development of both countries since 1980s-1990s and geographical location. Also, it is possible to distinguish different economic policies and attractiveness of both countries for foreign companies. Economic development of Ireland and Japan are the main factors of FDI difference. In contrast to Japan, Ireland has experienced economic stagnation and poor economic development of the main industries. Unlike most of its near neighbors, Ireland is a newly industrializing country (NIC) bearing marked similarities to the development trajectory of East Asian and Latin American countries (Allen 24). The uniqueness of Ireland was caused by different various phases of Ireland’s development up to the advent of the Celtic Tiger; distinctive features of Irish industrialization such as its dualism and its employment intensity; the distributional impact of economic growth, it examines the extent of poverty and social inequality prior to the Celtic Tiger phase (Allen 24). Irish economic development has followed a path very different to that of the main capitalist economies – either large or small – geographically contiguous to Ireland, the experiences of which tend to inform mainstream economic theories. The only exception was the north-east of the island which became an industrial growth pole within the British economy. For Irish industrialization has been extremely reliant on foreign direct investment with the result that foreign-owned industry controlled 77 per cent of net manufacturing output in 1995 with 52 per cent of that coming from the high-tech sector which employed only 29 406 workers out of a manufacturing labour force of 220 578 workers (Allen 34). Up until the early 1990s, Ireland’s dual-type industrial structure was seen to have resulted in a capital-intensive form of industrialization in which high productivity growth in its most dynamic industries failed to translate into high levels of employment growth (Allen 72). The conclusion that dependence on FDI can have the effect of fostering a more capital-intensive rather than labor-intensive form of industrialization was seen as consistent with the findings of the international development literature and was supported by evidence produced by Frank Barry and Hannan showing Ireland to have a ‘revealed comparative disadvantage in labour-intensive goods’ (1995, 1–3; emphasis added). This was to change dramatically in the second half of the 1990s (Bradfield 321). Critics (Allen 82) admit that unlike Japan, Ireland’s development trajectory in the twentieth century is closer to that of a group of East Asian and Latin American newly industrialized countries (NICs) than it is to Ireland’s nearest neighbors. For this reason, Ireland’s industrializat