Ireland’s Economic Development

By Mathilde Thorup and Andreas Nielsen

April 14 2010

After the entry into the EU, Ireland has experienced a tremendous economic progress. A progress that now has ended.

When Ireland joined the European Union in 1973, it was among the poorest countries in Europe. 35 years later that changed and suddenly Ireland was one of the richest countries in Europe. The financial progress was caused by EU-support, massive investments in education plus an incredible ability to draw foreign investments through, among other things, tax stimulus. Another contributing factor to the economic boom is that many multinational concerns, such as Google, Intel and Microsoft, placed their regional and global headquarters in Ireland. It was at this point in time when Ireland got its nickname; The Celtic Tiger.

The term refers to the East Asian Tigers, the East Asian countries, which also experienced a rapid economic growth. However, that time has passed. Ireland’s open economy has shown to be extremely vulnerable towards the financial crisis and Ireland is now in a big financial trouble. Actually the GNP has dropped from 4.4 % in 2007 to -2.8 % in 2008 and the recession is expected to culminate with a drop to

8.5 % in GNP in 2009. Positive growth is not expected until 2011.  In recent years the growth has been based on loan financed domestic demands, a historical low rent level, a helpful fiscal policy and a defective control with the banks loan policy.

Not quite a dream situation for the Irish people and the good times seem to be no more than a fading memory. The Celtic Tiger is indeed dead.