IRELAND

… in the economic sphere, Ireland is moving from being one of Europe’s ‘poor cousins’ to a position of equality… even relative affluence… such a prospect after Independence in a rural, resource-poor and farm based, non-industrial economy would have seemed unimaginable

(William Crotty, 1998)

Post Lisbon Treaty analysis

He must now tackle two large problems from a weakened position. A once-booming economy is slowing sharply: a property bust has cut growth, raised unemployment, depressed tax revenues and pushed the budget deficit close to the euro-area limit of 3% of GDP. And Mr Cowen faces several nerve-wracking months of uncertain negotiations over Ireland's position in the European Union.

Brian Cowen, Taoiseach

Ireland is easily the best country in the world to inhabit, according to a quality of life survey which relegates the United Kingdom to a second-division ranking.

Ireland leads world for quality of life

Or…

… ungehobelter Ort, …. Ein Land mit einer traurigen Geschichte, dessen Bewohner vom Geld besessen sind

IRELAND

Geography History Economic overview 1960-2007 Emigration/immigration Political culture Ireland - “at peace”? – post Good Friday

Agreement, 1998, devolved government Post so called Tiger era 2000 - 2007 Ireland: a comparative perspective

IRELAND: ITS OWN SENSE OF PLACE

the island- made up of .4 historical provinces .32 counties

a ring of highlands surround the central lowland basin - here lots of Bog and Lakes

Partition:

Ireland -geographical realities ‘une ile derriere une ile’? a bigger and more dominant

neighbour bequeathing us: language ,culture .social practices .political vocabulary .concepts and institutions

Ireland – a pocket history

in modern times dominated:

the Planters were the last settlers, coming from the UK -

Famine Emigration In Orbit of UK Civil war - partition Free State 1922 Conservative Protectionist

IRL - Population/social indicators

Population and social indicators 1841 -1996 - for The Republic of Ireland

YEAR Population Urban Pop. Dublin pop. Males in Catholics Other denom- Irish agriculture inations speak.

million % % %% % % %1841 6.5 16.7 3.7 74.31851 5.1 22 5.8 68.31861 4.4 22.2 6.7 64.6 89.3 10.7 24.51881 3.8 23.9 8.4 62.6 89.5 10.5 23.9

1901 3.2 28 11.2 61.7 89.3 10.7 19.21911 3.1 29.7 12.3 59.5 89.6 10.4 17.61926 2.97 31.8 13.7 58.9 92.6 7.4 19.31936 2.96 35.5 15.9 55.9 93.4 6.6 23.7

1961 2.8 46.4 19.1 43.1 94.9 4.9 27.21971 2.98 52.2 26.9 31.9 93.9 4.3 28.31981 3.4 55.6 29.1 21.7 93.1 3.7 31.61991 3.5 57 26.4 19 32.51996 3.6 58 26.3 13.12001 3.92005 4.13

Measuring Ireland's Progress 2004

STATISTICS: 2004

The population in Ireland increased:

the second highest rate of increase in the EU and was

significantly higher than the EU 25 growth of just 2.2%. The fertility rate in Ireland remained the highest in the EU 25 in

2003,

Ireland 1920s-1960ssocial and economic backwardness

‘peripheral location’ a small open economy protectionism - of agricultural industry Civil War, economic war and the Emergency lack of mineral resources

Professor Joe Lee rebuts the above: “It is at the human level that the solution to the mystery

of the mediocrity of Irish socio-economic performance is likely to be”

Modern Ireland: modest beginnngs and reaping results

1960 - new approach to industrial policy

opt for export -led growth so market access an issue

FDI actively sought out since the 60s

Development of a two track industrial base - foreign firms and native industry

Significant results

strong growth dramatic structural

adjustment - 1960: Agriculture:

1995: Agriculture: modernisation - increase in living standards and better access to education

80s Ireland

Economist, special edition, 1988 – a special edition on Ireland referred in its headline to the ‘poorest of the rich nations’

Emigration Inflation Scandal – GUBU era Abortion referendum ( 1983) EU – ‘begging bowl’ approach

FOREIGN DIRECT INVESTMENT?

a long history -since 60s self-sustaining cluster of

related firms concentration on firms in

few high-tech industries english language, very pro-

European outlook well-educated work force demographic shift

Origins of overseas Capital Investment 1960-83:

1. USA 3,775.3 m 2. UIK 769.8 m 3. Germany 641.7 m 4. Canada 436.0 m 5. Neth’lands378.6 m 6. Japan 323.0 m 7. France 1 91.1 m 8. Other 857.5 m

GDP 1960 - 1990s

Ireland has in fact been playing ‘catch-up’ since the 60s

Expansion has been at about 4% per year.

Ireland and the EU

Ireland joined the EEC in 1973 ‘ given Ireland’s peripheral location,and poor socio-economic position

relative to the industrial heartlands of the EU, Dublin governments consistently advocated:

The Irish economic performance: ‘a virtuous circle’: . . . . .

Role of EU in Irish development 1. Being in the EU made Ireland :

. Part of the richest market in the world 2. Structural Funds: since 1992 significant

funding available through the Cohesion Funds for : . Infrastructure, education

3. Social partnership: this was a ‘new’ way of doing business. . First Agreement in 1987 . The most recent agreed last week, Sept 2008

EU Transfers!

late 70s to early 90s these have been equivalent to 4% - 7% of Irish GDP

in the 90s, less funding as Irish growth accelearted

other ‘cohesion’ economies have received similar amounts.

From basket case to emerald tiger - the 90s

Growth: at East Asian pace

Borrowing: fallen to almost nothing

GDP: per head exceeded UK in 1996; Irish output per person 97.5% of EU average!

Inflation: 1%- 11/2 % Jobs: 1000 jobs per

week

The Result

1995 – 2000:average GDP growth was 9.9%

Continued dominance of high-tech multinationals producing for export markets in Europe, UK and US

Volume of Irish exports of goods and services rose dramatically with average annual growth of 16.9%

Share of ag., forestry and fishing in Ireland’s total economic activity, fallen from 9.4% to 4.7% in 2000

Comparative economic indicators, 2000

Ireland UK US Germany France

GDP (US$bn) 95.3 1,414.60 9,872.90 1,877.50 1,298.90GDP per head ( US$) 25,343 23,792 35,032 22,845 21,863Consumer price inflation ( av%) 5.6 0.8 3.4 2 1.7Current-account balance ( US$bn) -0.6 -24.5 -435.4 -21.2 20.5% of GDP -0.6 -1.7 -4.4 -1.1 1.6Export of goods fob (US$ bn) 90.2 283.2 775.7 548.6 295.5Import of goods fob ( US$ bn) -76.7 -326.8 -1,222.80 -502.8 -294.4

GDP per head

2000 - 2006 not likely to quality for Objective 1 status in

EU better standards of living linked to high

dependency on exports

Skeletons out of the closet 1995 - 2007 the growing up of a society.

the church’s influence on daily life

previously unspoken acts such as sexual abuse political corruption

Beef Processing Industry24/5/1991

29/5/9131/5/91

Hepatitis C Scandal17/10/1996

17/10/96

 

Alleged Payments by Dunnes Stores (McCracken Tribunal)06/02/1997

6/2/97  

New Tribunal to deal with matters arising from Dunnes Tribunal (Payments to Haughey and Lowry) ( Moriarty Tribunal)

11/09/1997

18/09/1997

 

Planning Matters (including rezoning by Dublin local authorities)(Mahon Tribunal, formerly known as the Flood Tribunal)

7/10/1997

8/10/1997

 

Amendment to terms of reference

01/07/199805/07/2001

02/07/199805/07/2001

 

Tribunal of Inquiry into HIV and Hepatitis C ( Lindsay Tribunal)Infection of Haemophiliacs

02/06/1999

02/06/

2000 – 2005 fall out from our affluent times Inequality: gap between richest and poorest

has widened Services: child-care is a burning issue Social Capital – concern that the social

bonds within communities are disintegrating – pressures due to commuting times, family breakdown

From ‘mono’ to ‘multi’-cultural

‘no more Celtic tiger’

Construction Industry – local … a ‘sharp correction’ is now occurring in the housing market…Irish house prices were at risk of falls of around 50 per cent in real terms (IT

Financial Services – global - local Irish banks very exposed to Irish property market

Very difficult budgetary situation – budget now brought forward to October 12, 2008

Ireland is a small, modern, trade-dependent economy with growth averaging 6% in 1995-2007. Agriculture, once the most important sector, is now dwarfed by industry and services. Although the exports sector, dominated by foreign multinationals, remains a key component of Ireland's economy, construction has most recently fueled economic growth along with strong consumer spending and business investment. Property prices have risen more rapidly in Ireland in the decade up to 2006 than in any other developed world economy. Per capita GDP is 40% above that of the four big European economies and the second highest in the EU behind Luxembourg, and in 2007 surpassed that of the United States. The Irish Government has implemented a series of national economic programs designed to curb price and wage inflation, invest in infrastructure, increase labor force skills, and promote foreign investment. A slowdown in the property market, more intense global competition, and increased costs, however, have compelled government economists to lower Ireland's growth forecast slightly for 2008. Ireland joined in circulating the euro on 1 January 2002 along with 11 other EU nations

Business Costs:Dublin is expensive relative to competitor cities. Ireland’s regional cities are relatively more cost competitive. Propertycosts, utility costs and a range of domestic services are weakening our price competitiveness performance.

•Pay Costs:Irish wage inflation is growing by more than double the Eurozone average in a range of domestically trading sectors, including utilities, construction and other services sectors.

•Consumer goods and services: Irish price levels are almost 20% higher than EU-15 average while inflation has also been growing faster than the EU-15 average. When oil and housing costs are taken out, domestically trading services sectors which are not exposed to international competition are driving inflation.

Ireland’s growth has shifted from export-led and productivity-led growth to domestically driven growth, dependent on new jobs in construction and public services for increases in GDP. A symptom ofthis is Ireland’s increasing deficit on its current account with the rest of the world

Ireland’s price and cost environment remains distinctly unfavourable both to firms and to households.General cost levels are among the highest in the EU-15 and this situation is worsening, with inflation ratesstill among the highest in the EU-15 also.

physical infrastructure in Ireland remains poor and despite high levels of investment, Ireland’sinternational rankings have not improved significantly since 2000. Ireland’s transport, energy and ICTinfrastructures in particular – upon which so many of our exporting sectors depend – appear to lagcounterparts across the OECD.

Reform of the Public Service:Millions of euro of taxpayers' money has been lost by state bodies and agencies, the report from spending watchdog, the Comptroller and Auditor General (C&AG) said

GNP: EUR 157.9bn) (2007) GNP per head: EUR 31,600 (2005) Annual Growth: 5.0% (March 2006 - OECD) Inflation: 4.9% (September 2006) Government Debt (% GDP): 25.1% (2007) Major Industries: Computer software, information technology, food and drink, pharmaceuticals, tourism Major trading partners: The UK is Ireland's largest single trading partner, along with the US, Germany and France

ireland

Between 2003 and early 2007 the Irish economy continued to expand at a steady 3-6% per annum.

The drivers of the expansion were primarily construction and consumer spending. Construction in particular experienced phenomenal growth in those years with house prices in parts of Dublin regularly going up by 25% year-on-year.

The influx of migrant workers from the EU accession states helped provide a ready workforce for the construction sector.  It also boosted the residential property market as more .

people needed homes.

Ireland’s wage rates are high and rising quicker than the EU average however migrant workers occupying jobs in the construction and services sector have helped to temper wage growth.

Ireland’s overall competitiveness faces other challenges as it updates its infrastructure – particularly in transport and telecommunications.

The Irish economy has now entered a new phase of development and structural change. The shift from dependence on growth in the manufacturing/construction sector to growth in business and financial services as the driver of the economy presents policy challenges for industrial, research and development and human capital

Ireland is the most expensive European Union country for alcoholic beverages and the second-most expensive for food and tobacco.(July 2007, finafacts team)

The Irish ‘No’ to Lisbon

Less than 1% of the EU's 490 million citizens appear to have scuppered the deal mapped out in Lisbon that was meant to shape Europe in the 21st century

Ireland may have enjoyed a net gain of €40bn from Europe since it joined what was then the EEC in the mid-1970s, but its voters were concerned about the loss of sovereignty, possible tax harmonization and a threat to the country's neutrality.

The slowdown….

number of new cars licensed for the first time in August 2008 fell 31.8 per cent compared to the same period a year earlier

the banks have loaned €106 billion to builders and developers, which accounts for half of all business debt in the Republic.

- Foreign-owned firms were responsible for 90.2% of Irish exports in 2006 - including both merchandise goods and internationally traded services

more than million Irish workers had no occupational pension after a decade and a half of the Celtic Tiger

Fintan O’Toole – columnist, Irish times – Tues., 23 Sept 2008 [what if the problem is…] the very ideology of

laissez-faire capitalism, with its focus on short-term greed, its lack of interest in social and environmental consequences, and its vulnerability to outright fraud that has created the crisis? What if we're seeing, not a temporary adjustment, but a tectonic shift in the relationship between the market and Government?

Useful web - addresses

www.irlgov.ie ( Irish government web –site) http://www.economist.com/countries/Ireland/ Ireland – globaledge with links to useful

websites http://news.bbc.co.uk/ ( click on country

profiles for a useful overview)