In just over a
generation, Ireland has evolved from one of the poorest countries
in Western Europe to one of the most successful. It has reversed
the persistent emigration of its best and brightest and achieved an
enviable reputation as a thriving, knowledge-driven
economy.
As a result of
sustained efforts over many years, the past of declining
population, poor living standards, and economic stagnation has been
left behind. Ireland now has the second highest gross domestic
product (GDP) per capita within the European Union (after
Luxembourg), one-third higher than the EU-25 average, and has
achieved exceptional growth.
One of the biggest
successes of the Irish economy has been new job creation. From 1990
to 2005, employment soared from 1.1 million to 1.9 million.
Economic growth, more jobs, and rising living standards meant
the resolution of the emigration problem, which had bedeviled
Ireland for generations.
The population
increased by almost 15 percent from 1996 to 2005 in a striking
reversal of previous trends. In one year alone (July 2004-June
2005), employment increased by 5 percent. Ireland is now seen as
the land of opportunity by many workers from the 10 newest EU
member states. Its unemployment rate of 4.4 percent is less
than half the EU average. Public budgets are in balance, and
foreign investment was equivalent to 17 percent of GDP in
2003.
Good Sense and
Pragmatism. Ireland achieved
success through a combination of sensible policies and pragmatism.
At the heart of these policies was a belief in economic openness to
global markets, low tax rates, and investment in education. While
economic success over the past 15 years can be ascribed to a range
of domestic and international factors, it was not a fluke. Ireland
has long had, and intends to sustain, low tax rates to attract
investment. Its current 12.5 percent corporate tax rate
evolved from the zero rate on export sales in the 1950s and the 10
percent rate on manufacturing and some internationally traded
services introduced in 1980.
Investment in
education has held a central position since the 1960s and has
produced a high output of graduates, particularly in science,
engineering, and business studies. The creation of an international
financial services center in Dublin involved the cooperation
between business interests and all parts of the state system
that is so characteristic of Ireland. The promotion of
com-petition and good economic management have also been features
of public policy in the past two decades. Foreign investment has
been universally welcomed and supported by benign policy.
Intangible factors, such as creativity and agility, also play
a positive role.
Ireland's transformation
was national in scope, with individuals, businesses, institutions,
and government sharing the same ambition. It involved parents
deciding that their children would have choices that they did not
have and would not be forced to leave their home communities
because of economic necessity. Political decisions were driven and
sustained by the public will for success. There were some
deviations from sensible policies at times, but through the many
difficult years, the threads of consistent development can be
seen.
Future
Challenges. Recent success gives
no assurance for the future, and Ireland does not intend to rest on
its laurels. The global forces that Ireland has tamed and turned to
its advantage in the past decade continue to drive changes in
global businesses. Business models and structures are
changing. Ireland has experienced these changes through the
leading-edge companies with which it has worked, but each year new
companies- some of them virtual-threaten to undermine established
activities. As businesses have to reinvent themselves at an
accelerating rate, so do countries.
Ireland faces the future
with considerable confidence, based on its recent success and
the coherence and responsiveness that it has displayed in
meeting the needs of international business. It remains ambitious,
and it wants to move to ever-higher levels of expertise and
performance; hence its rapidly growing and focused investments in
research activities.
Conclusion.
According to
the Organisation for Economic Co-operation and Development (OECD),
Ireland has outperformed all other industrialized economies over
the past decade, with an average annual growth two to three times
that of EU and OECD countries. Independent commentators project
that this growth over the next few years will continue to exceed
that of other OECD countries, maintaining Ireland's position as one
of the world's growth leaders.
Ireland is a trading nation
with a global perspective. The Globalization Index study,
compiled by international consultants from A. T. Kearney, named
Ireland as the most globalized country in the world from 2002 to
2004 and commented that it has the highest degree of economic
integration among the developed economies.
This economic
openness, combined with low taxes, pragmatism and ambition, further
investment in education, and a continuing eye to the future,
will be critical to maintaining the momentum for success.
Ireland's experience shows that hard work and good policy can bring
rewards.
Sean Dorgan has
been Chief Executive of IDA Ireland since January 1999. Before
joining the IDA, he was Secretary General of Ireland's Department
of Industry and Commerce and Department of Tourism and Trade, as
well as Chief Executive of the Institute of Chartered Accountants
in Ireland. He is also Chairman of the Governing Body of
Dublin Institute of Technology and a member of several other
government-appointed boards.