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Ireland’s economic boom
Ireland, like the United States, is another place where times have been good. In fact, its average annual growth of 7.3% in 1990-98 was the highest in the OECD. Inflation is low and unemployment has fallen. Ireland has avoided some of the dips experienced by many other OECD economies too over the last decade. Its small open economy seems nicely balanced between the different business cycles of the United States on the one hand and the EU core on the other; whenever one has ailed, Ireland has been buoyed by the strength of the other. But this favourable disposition of the Irish economy does not explain the remarkable growth record of recent years. The OECD’s latest country survey (http://www.oecd.org/eco/surv/esu.htm) on Ireland does. It cites favourable demographic factors, and a sharp improvement in skills and education. EU structural funds have also made a significant contribution, as has integration in the EU market. There have been important policy improvements too, not just on the fiscal and monetary side, but in industrial policy, regulation and financing. These factors, as well as the English language, have made Ireland attractive to high value-added foreign investors, especially from the United States. The export-oriented, highly skilled economy is now strong in areas such as technology, pharmaceuticals and traded services. Though most of the investment and employment is in US owned firms, German and UK firms are present. And the future? Before Ireland was the “sick man” of Europe; today the worry is how to avoid the real risk of overheating, especially as interest rates are held down by the European central bank. Also, it has to remain attractive to investors, but guard against a “dependency culture”. Still, Ireland’s growth remains strong. As long as the varying economic tides between Europe and North America remain favourable, its good times may last a little while yet.
Bibliography
Ireland, Economic Survey, (http://www.oecd.org/eco/surv/esu-ire.htm) OECD, 1999.