The economic development of a host country may benefit from overseas investment in a number of ways. Directly, the gains may occur through the provision of employment or indirectly through spill-over effects. Using both the theory o f foreign investment, in particular Dunning’s eclectic paradigm, and the theory of multinational behaviour the expectations of the operating characteristics of investing firms may be determined. Following the determination of the motivation for overseas investment this study applies these theories to the Irish electronics industry and examines both the direct and indirect contribution of these firms to the Irish economy. It discusses various aspects of the trends of employment and examines the grow th potential of the industry in the context of the Single European Market and other stimuli which may affect future overseas investment. The contribution of the electronics industry to Irish export earnings is also discussed, as are the implications of the manipulation of transfer prices which effectively switch profits to Ireland. A survey of all electronics firms operating in Ireland was also conducted and the results analysed and compared with the expectations of both multinational and indigenous firm behaviour. The survey was also used as a basis for an examination of firms formed through either entrepreneurial spin-offs or the management buy-out of a multinational firm which had previously invested in Ireland. An overview of the electronics ind ustry complete with conclusions and recommendations for policy changes are outlined in the final section.