2018 Index of Economic Freedom

Ireland

overall score80.4
world rank6
Rule of Law

Property Rights87.7

Government Integrity79.0

Judicial Effectiveness79.0

Government Size

Government Spending69.6

Tax Burden76.1

Fiscal Health80.8

Regulatory Efficiency

Business Freedom81.8

Labor Freedom76.4

Monetary Freedom87.4

Open Markets

Trade Freedom86.9

Investment Freedom90.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 4.7 million
  • GDP (PPP):
    • $324.9 billion
    • 7.8% growth
    • 8.0% 5-year compound annual growth
    • $69,231 per capita
  • Unemployment:
    • 8.1%
  • Inflation (CPI):
    • -0.2%
  • FDI Inflow:
    • $22.3 billion
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Ireland rejoins the elite group of economically “free” countries with an economic freedom score of 80.4, making its economy the 6th freest in the 2018 Index. Its overall score has increased by 3.7 points, led by dramatically higher scores for fiscal health and government spending and improved tax burden and labor freedom indicators. Ireland is ranked 2nd among 44 countries in the Europe region, and its overall score is well above the regional and world averages.

Although public debt remains high, deficit-reduction measures and banking-related debt refinancing have stimulated economic recovery. Low corporate taxes and a talented high-technology labor pool attract foreign multinationals. The government opposes a September 2017 European Commission proposal to increase the corporate tax rate and screen foreign direct investment in the bloc. Ireland’s strong economic fundamentals are undergirded by solid protection of property rights and an independent judiciary that safeguards the rule of law.

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Background

Leo Varadkar succeeded Enda Kenny in June 2017 as leader of the center-right Fine Gael party and became the youngest prime minister in Irish history. Because Fine Gael lost its parliamentary majority in 2016, however, he heads a minority government. Ireland’s small, modern, and trade-dependent economy has performed extraordinarily well for decades and has recovered from the crisis precipitated by the bursting of a speculative housing bubble in 2008. The export sector, led by machinery and equipment, computers, chemicals, medical devices, pharmaceuticals, foodstuffs, and animal products, is dominated by foreign multinationals and is an important component of the economy. Widening economic disparities between Dublin and the rest of the country have become a source of political debate.

Rule of LawView Methodology

Property Rights 87.7 Create a Graph using this measurement

Government Integrity 79.0 Create a Graph using this measurement

Judicial Effectiveness 79.0 Create a Graph using this measurement

Secured interests in property, both chattel and real estate, are recognized and enforced. Contracts are secure, and expropriation is rare. Ireland’s legal system is based on common law, and the judiciary is independent. The law provides criminal penalties for corruption by officials, and the government generally implements the laws effectively. Cronyism continues to affect all levels of politics.

Government SizeView Methodology

The top personal income tax rate is 41 percent, and the top corporate tax rate is 12.5 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 23.6 percent of total domestic income. Over the past three years, government spending has amounted to 31.9 percent of total output (GDP), and budget deficits have averaged 2.2 percent of GDP. Public debt is equivalent to 76.4 percent of GDP.

Regulatory EfficiencyView Methodology

Ireland’s regulatory process, political stability, and pro-business policies can make productivity-enhancing business decisions lucrative. The labor force is less regulated than those of most continental EU countries. The well-educated workforce is flexible and mobile. Farmers worry that they will lose subsidies post-Brexit because the U.K. pays more into the EU subsidy fund than it withdraws. Irish government subsidies fuel a two-tier rental market.

Open MarketsView Methodology

Trade is extremely important to Ireland’s economy; the combined value of exports and imports equals 217 percent of GDP. The average applied tariff rate is 1.6 percent. Nontariff barriers impede some trade. In general, government policies do not significantly interfere with foreign investment. Recapitalization and restructuring have helped to restore banking-sector soundness. The state retains its ownership in banks, but there has been some divestment.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.70.2
2Ireland80.43.7
3Estonia78.8-0.3
4United Kingdom781.6
5Iceland772.6
6Denmark76.61.5
7Luxembourg76.40.5
8Sweden76.31.4
9Georgia76.20.2
10Netherlands76.20.4
11Lithuania75.3-0.5
12Norway74.30.3
13Czech Republic74.20.9
14Germany74.20.4
15Finland74.10.1
16Latvia73.6-1.2
17Austria71.8-0.5
18Macedonia71.30.6
19Romania69.4-0.3
20Armenia68.7-1.6
21Poland68.50.2
22Malta68.50.8
23Bulgaria68.30.4
24Cyprus67.8-0.1
25Belgium67.5-0.3
26Hungary 66.70.9
27Kosovo66.6-1.3
28Turkey65.40.2
29Slovakia65.3-0.4
30Spain65.11.5
31Slovenia64.85.6
32Albania64.50.1
33Montenegro64.32.3
34France63.90.6
35Portugal63.40.8
36Italy62.50.0
37Serbia 62.53.6
38Bosnia and Herzegovina61.41.2
39Croatia611.6
40Moldova58.40.4
41Russia58.21.1
42Belarus58.1-0.5
43Greece57.32.3
44Ukraine51.93.8
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