A Roaring Tiger

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Economic Boom

At the start of the 1990's, Ireland's economic future looked bright and promising. By opening it's doors to foreign investors, Ireland made the shift from an agriculturally lead economy to one lead by industry. It seemed that Ireland was finally catching up in the game of industrialization. The Celtic Tiger is said to have begun in 1993. At this point, Ireland quickly became one of the leading software exporters in the world. Large software companies such as Dell, Intel, and Gateway saw Ireland as ripe land for investing where they could expand their companies abroad. In 1997, foreign owned software companies accounted for 88% of industry revenues and 91% of Irelands software exports [1]. A particularly beneficial outcome of Ireland's efforts to attract foreign investment was an outward shift in the demand curve for Irish labor, which increased the wage rate in Ireland. American companies became particularly interested in Ireland due to its young, well-educated, English speaking labor force. American companies also favored the Irish time zone as it is compatible with the US time zone (Ireland is 5 hours ahead of the U.S). This means that when workers in the U.S. are sleeping, their Irish counterparts are working. This fact was of particular importance to companies with large legal and financial departments. Also, the fact that there was little government intervention was important because it allowed for a stable operating environment for companies. What was also very attractive to foreign investors was Ireland's membership in the European Union. Investors, especially American firms, saw Ireland as a way of gaining access to the large European markets. Ireland benefited from it's membership in the EU as its economy experienced low wages, low tax rates, and received government grants. Government surveys have found that almost 70% of the gains in employment during the 90's was accounted for by foreign-owned companies and that 51% of the new employment opportunities occurred in internationally traded and financial servies [2]. It is clear that Ireland benefited from the substantial investments in computer, software, and telecommunications industries made by U.S and foreign investors.

Economic Results

Some of the key results of Ireland's economic boom include:

• Unemployment fell from 18% in the late 80's to 4.9% by year 2000
• From 1996 through 2000, GDP growth averaged more than 9%
• Average industrial wages grew at one of the highest rates in Europe
• Growth rates increased by 5 to 6 percent annually which dramatically increased the standards of living in Ireland, so much that they equaled and even surpassed the living standards of other Western European countries
• Public debt was significantly reduced, reaching 34% of GDP by the end of 2001 which made it one of the lowest in Europe
• There was a large investment in Ireland’s infrastructure in an effort to modernize the country and attract tourists. The appearance enhancing process included the creation of new monuments, better roads, and more trees, etc.

Social Effects

The Celtic Tiger had inevitable and undeniable effects at the social level:

• Ireland’s trademark trend of emigration was halted and even reversed. Immigration lead to an expansion of multiculturalism, which mainly occured in the Dublin area
• 47,5000 immigrants arrived in Ireland from 1997 to 1998, which is the most immigrants Ireland had recorded up to that time [11]
• From 1996 to 1999, the average annyual increase in population was 1.1%, which was higher than the population growth rate of any other EU country during that time [11]
• There was an increase in the urbanization: many people left the countryside and came to live and work in the cities.
• There was a rise in crime level, especially among youth due to alcohol related violence, which was a result of increased spending power
• Older generations felt that the modernization that was created by the boom was overshadowing and drowning out the culture of Ireland
• For decades Ireland had suffered from a lack of confidence, but as the economy flourished, people became quick and eager to engage in economic activity, including starting new businesses.
• The Celtic Tiger has even helped ease the troubles in Northern Ireland, as an increase in trading across the border has brought people together. Now the end to the conflict is closer than it was in the 1980's.

Government Criticisms

Although many of the results of the Celtic Tiger were positive, there are still criticisms of how the government seemed to neglect certain responsibilities. For example:

• health services received very little reform since long waiting lists, bed shortages, and understaffing were not unusual. Despite the fact that the health budget was doubled, there was little noticeable change to health service facilities.
• There was no reform of transportation systems. The main airline company, Aer Rianta, the main bus company, Bus Eireann, and the main railway company, Iarnrod Eireann monopolized the transportation sector.
• Roadways also suffered as they became congested due to large amounts of commuters. In the early 2000's, there was construction of new roads, but it was more expensive than what had been expected.
• The telecommunications industry was slow to upgrade Ireland's network

Current Economic Makeup

The Irish economy today is made up of three sectors, the primary, secondary, and tertiary.

• The primary sector, which accounts for 5% of Irish GDP and only 8% of Irish employment, is primarily made up of cattle grazing, dairy production, fishing, tillage farming, and forestry and accounts for the mining of zinc and lead as well as natural gas exploration. Peat exploitation is also a source of large employment opportunities and is a valuable contribution to energy needs.
• The secondary sector accounts for 46% of Irish GDP and 29% of Irish employment. This sector is comprised of high-tech companies such as Dell, Intel, Pfizer, and IBM. This sector manufactures products such as computers, computer parts, confectionary, beer, high quality glass and crystal, software, and machinery. Unfortunately, there is now large competition from Eastern Europe and Asian countries in the lower skill levels of manufacturing, such as confectionery manufacturing.
• The tertiary sector is the largest driver of Ireland’s modernized economic growth, accounting for 49% of Irish GDP and 64% of Irish employment. Its industries include accountancy, legal sector, call centers and customer service operations, finance and stock broking, catering, and tourism. Many U.S. companies establish their customer service operations in Ireland because employees are young, English speaking, and are well-educated. Tourism is very important to the Irish economy since it attracts five million people annually and employs over 100,000 individuals [7].

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• Did you know? In 2004, Ireland was named the best place to live in the world! To learn more, click here

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