Topic 3: How Ireland transformed itself from “the poorest of the rich” in the 8O’s to “Europe shinning light” in the 90’s?
Nowadays, even Ireland haves the highest GDP per capita oh Europe, this country is also affected by the international economic recession. In effect, Ireland is with the same economic statistics than twenty year ago: the GDP declines by 7.1%,the unemployment is 13.4% and the government Debt/GDP Ratio increases.
However, it isn’t the first time that Ireland knows this situation and Ireland have proved that the country can go out of recession’s time.
In effect, after a really bad period caused by the national political divergences and the government economic policy, Ireland has been the “Europe shinning light”. But how can explainthe fact of this country transformed itself from “the poorest of rich” in the 80’s to “Europe shinning light” in the 90’s?
In the 90’s, Ireland known an Economic Boom with all economic statistics in impressive increase: the GDP increased of 470%, the merchandise export increased of 477% and the total Debt/GDP was the lowest of the world. This time of economics’ health can be divided in threeparts: the Take-off (1987 to 1993), the Celtic Tiger (1994 to 2000) and the Domestic boom (2001 to 2007).
The first period, named the Take-off was the beginning of the good time. The government changed the economic policy to prepare the future. In effect, lot of house and building was created and the government reduces the Debt/GDP to cut the fending.
The second period, named the Celtic Tiger, inreference of the Asian’s tigers during the 8O’s, started in 1994. This period is also AKA “the Boom” or “the Economic Miracle”. But, what caused the Celtic Tiger?
The first reason is the change of the government policy in the end of the 8O’s. In effect, the government changes the economic policy and adopts a free trade policy. With this policy the country opened to international market and in1987, the government made a Political consensus knows like the “Tallaght Strategy”. The Tallaght Strategy was born in Dublin and appointed the fact of the leader of the opposition support the government to say “I am agreeing with you to take a difficult decision”. This difficult decision was to cut spending to reduce debt. In this period, the government also changed of bank to reduce interest. Withall this decisions, Ireland became a confident country and a good place to do business with low taxes.
The second reason is the Social Partnership. In effect, the tree partners (government, trade union and employers) made an arrangement about the salary and taxes. The aim of this arrangement was to reduce strike. In exchange for small pay increases, the taxes were cut and the number of strike’sday decreased. With these elements, Ireland became more competitive and the employers were happy because the strike decreased.
Other reason was a demographics reason. In effect, in the 90’s, there is a big increase in supply of labor: more women work, there was a “Baby Boom” and there was lot of immigration from European Union and others countries. In more, there was a big fall of dependency.The Irish Boom can also be explaining by the FDI. The taxes was reduced to 12.5% to the foreign companies come in Ireland. The Ireland benefits also of the international language and take in place subsidies to foreign company (ex: Dell). This entire element made that Ireland became the place to be to the foreign company.
This Boom could be also explained by the investment in education andtraining. The government knows of the fact that a well educated workforce is the key to economic growth. So the government expended the capacity of schools and the third-level education became free. The investment in human capital increased since the 60’s.
The economic development of Ireland can also explain by external reason. Even the economic environment was critical and the recession in other...