Ireland's economic boom as framework for success

  • 2003-02-27
  • Andrew Bushe

As 10 countries line up to join the European Union next year, many are rubbing their hands in hope of an economic boom like that enjoyed by the Irish "Celtic Tiger" since it strengthened ties with Europe.

When Ireland first began negotiations to join the European Economic Community more than 40 years ago, it was economically and socially on its knees after decades of inward looking protectionism and economic reliance on Britain.

In a recent speech, Prime Minister Bertie Ahern hailed Ireland as a "shining example" of how EU membership can transform a country, but the foundations for the country's economic miracle also date to policies adopted prior to entry.

For former Prime Minister Jack Lynch, who signed the accession treaty along with Danish and British leaders in January 1972 to join with the original six members, not becoming part of Europe was unthinkable.

It was, he said, like "the choice faced by Robinson Crusoe when the ship came to bring him back into the world again."

When accession talks opened in Brussels in 1962 on Ireland's first application for entry, the country desperately needed a lifeline.

It was a small, peripheral, insular, conservative, underdeveloped country. It had never fully emerged from centuries of British colonial rule after gaining independence in 1922, and in fact Ireland only became a republic in 1949 when it formally freed itself of allegiance to Britain by leaving the commonwealth.

"Ireland in the late 1950s was in a dismal economic state," said Ahern. "Ireland was reaching the very limits of viability as a state. Emigration had driven the population below 3 million. This exodus, combined with low levels of economic and social investment, led to poor economic progress."

After two failed attempts to join the EEC, accession on Jan. 1, 1973, set Ireland "firmly on the right road to progress, prosperity and full employment," Ahern said.

In the years since, international companies, notably from the United States, have flocked to Ireland, using it as a springboard for trade in Europe. The country's young, English-speaking and well educated work force made it an attractive place to set up operations.

When one-time Prime Minister Sean Lemass succeeded the 77-year-old founding father Eamon de Valera in 1959, he promoted a new style of technocratic management.

Lemass pioneered economic reform and introduced tax incentives for foreign investors to boost industrial growth and create jobs to stem the population exodus.

Combined with EU membership, the incentives' blueprint began to pay impressive dividends.

Finally, in the 1990s, the so-called Celtic Tiger emerged as the economy rocketed.

Gross domestic product growth of about 1 percent in the years of the 1950s had reached 8.8 percent in 1998 and then surged to double figures. It hit a sizzling 14.8 percent peak in the fourth-quarter of 1999.

In the decade to 1964 more than 200 factories had begun production. Last year, on top of Irish-owned industries, 1,098 foreign-owned plants supported by the government's Industrial Development Agency employed 133,084 people.

Their sales totaled 65 billion euros, with exports valued at 60 billions euros.

Unemployment dropped from 15.7 percent in 1993 to a historic low of 3.7 percent in early 2001.

The huge job creation has led to major sociological changes and an end to the scourge of emigration from Ireland.

Many emigrants of previous years have returned, and workers have come from throughout the EU to share in the new prosperity.

There has also been an influx from over 100 countries and the number of legally resident non-EU people soared 200 percent to 90,000 between 1999 and 2001.