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Ireland's Economics

From “Sick Man“ to “Tiger State“, or: What in the fifties was still one of the poorest countries in Europe has developed to a strong economy others are looking at.

Historical background:
As Ireland in 1922 seceded from England, its backbone of economy only was the agricultural-sector. The whole industry and with it much possible economic potential had to be left behind in Northern Ireland which didn’t become a part of the new Irish State but remained under English superiority. Ireland was underdeveloped and had a very low living-standard, for a long time there was almost no service-sector so that people being dismissed from agriculture didn't find any employment and public programmes to fix the situation didn't work. The consequence was a high unemployment-rate and immigration.
In the fifties the governemt changed its strategies: Instead of cutting off Ireland from the international economy by high tariffs, low taxes and other advantages like subsidies opened up the country to foreign groups. For this reason a new public organisation was founded, the IDA (Ireland Development Agency), which had the aim to foster new industrial settlements.
In these circumstances Ireland especially for companies from over the big oceans (America, Japan) became an important place to invest because from here they got access to the European home market. Until 1970 270 companies had settled and reduced immigration and poverty massively. Also joining the EU in 1973 had positive effects on Irelands economy: Still one of the poorest countries it profited from the programs being launched to develop infrastructure and the level of education.
Ireland had changed its economic face, particularly fast-growing exportbranches had come into the country, when at the beginning of the eighties an economic crisis stopped the development: The unemployment-rate again had risen, inflation reached twenty percent and also the public indebtness increased. In this situation, government, trade unions and employers' associations came together and formed the ”Program for National Recovery” in which the employees gave up their demands on higher wages and strengthened Ireland's ability to compete for investors. Until now every three years a convention of this sort has been held in which all sides discuss their problems and together try to solve them. In 1993 the turn was complete.

Today's situation:
Irelands's government still keeps holding on to the strategy of low taxes and subsidies. The wages are still on a low level (20 percent under England's wages) and the qualifications of the employees are good. Besides Ireland has high birthrates and a young population so that enough workers are available and plenty of former immigrants who have returned to Ireland have taken much know-how into the country. Ireland all in all meets all requirements recommended by the economy and has meanwhile established its good reputation.
Modern high-tech industries have settled, among them big international groups from Japan, America and Germany. Especially the EDP-sector is Ireland's backbone of industries and still companies like IBM or Cisco Systems invest, but also chemical, pharmaceutical and metalworking industries have found their centres in Ireland.
Beside the industries the service-sector plays a big role. Especially tourism has increased its importance and still does: One of twelve people in 1995 worked in the tourist-sector and today it's even more.
Agriculture has lost its leading position. Its importance has shrunk massively since 1922 and now it doesn't play a bigger role than in other European countries.

The results are…:
From 1993 Ireland has improved its economic statistics intensively.
From the eighties until 1994 the rate of unemployment was between fifteen and eighteen percent but meanwhile it has fallen to five percent in the summer of 2000.
The growth of economy in 1999 was 7.5 percent with an increasing tendency.
In 1998 the Governernment didn't have to get into debt to finance their expenses for a long time and in 1999 the surplus was 1.1 Billion Irish Pound.

Outlook:
Ireland has made the turn from one of the poorest countries in Europe to an inventive, strong and profitable economy and also in the future will strengthen its position – the boom is going to hold on if Ireland considers a few aspects that could stop the upswing:
There are the subsidies from which the country still profits - but not for long any more. In a few years all payments will be stopped and Ireland has to be ready for this.
There is the high inflation (6.5 percent in 2000) that has to be dropped to a lower level if Ireland doesn't want to lose its advantages of low wages.
There is the fast growth of economy that in a few years will overstretch capacity of infrastructure. The rate of growth has to be dropped on a level that lets the government follow.
There is the dependence on the international market because of Ireland's strong exporting-industry. This dependence means to be very susceptible for international influences, good, as well as bad.

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