Transcript The Celtic Tiger A Macro and a Micro View

The Celtic Tiger
A Macro and a Micro View
Dr. Joseph McFadden
University of Saint Thomas
Houston, Texas
The Celtic Tiger – A Macro Look




In 2000, Ireland was selected as the
most global nation in the world
Two strong categories: economic
integration and personal contact with
internationalism
Ireland also ranked #1 on a recent
survey on a happiness scale
A successful combination of
globalization and happiness!
The Celtic Tiger



Ireland began to flourish in the 90s
Positive response to the criticism of
the Whitaker Report
Consultants had three strong
recommendations: break
dependence on Britain, stop being
economic illiterates, and create a
more favorable economic
development climate
Economic Progress in Ireland



The nation represents a true
economic miracle
Is Ireland a model?
A pattern of dynamic economic
success can be seen when comparing
the pre-Celtic world with the Celtic
Tiger World
Ireland – 1973 and pre-Celtic Days





GNP – 59% that of the European
Community average!
Per capita income among the lowest
in Europe
61% of exports went to the UK, only
9% to other European nations
Agriculture: limited electricity and
tractors
Economic isolation
Ireland – 1990s and Beyond




GNP – grew by 73%, an average of
9% growth per year in a decade!
Unemployment holding at 5%;
Ireland imports workers, and 10% or
more of the population is foreign
born
Exports – 68% to EU (22% to UK)
and 15% to US
Irish middle class grew by 25%
Factors of Economic Progress







Transnational Approach
Laws and Incentives
Education
Targeting
Societal Support
National Partnership Agreements
European Union
Transnational Approach



Welcoming companies that
manufacture in Ireland for European
markets and beyond
New money is brought in, and
companies borrow little or no money
from Ireland
An explanation as to why Ireland’s
GDP is 25% larger than its GNP
Laws and Incentives






Very attractive corporate income tax
Lowest corporate tax rate in the EU!
Permits and protects a high rate of
profit
Fiscal restraint to hold down inflation
Minimal restrictions on business
operations
Maximum integration into European
economy
Education




Heavy investment especially in
Secondary and third level education
with paid tuition for all enrolled
Emphasis on science and technology
Students earning admission have
funding to support them
Educational attainment established
as a national priority!
Targeting



Ireland has targeted key business
areas that are likely to remain
Used tax and other incentives to go
after the markets they desired
Key targeted areas: Computers,
Pharmaceuticals, Electronics,
Telecommunications, and the most
recent International Logistics and
Shipping
Societal Support




Progress could not be achieved
without the people’s support
High income taxes
Irish provincialism and ambivalence
regarding capitalism have been
overcome
Globalization does not necessarily
conflict with national values
National Partnership Agreements



National agreements are negotiated
and voted on by the Irish Congress
of Trade Unions (ICTU)
A “National Partnership Agreement
Towards 2016” is in progress
It places specific emphasis on social
justice
European Union




Especially in the areas of agriculture
support, infra-structure projects,
transfer funds, and standardization
The kind of planning that other
nations did under the Marshall Plan
Throughout Ireland one can see the
blue flag of the EU
Ireland identified as the Mississippi of
the EU, and funds flowed in
Concerns




Persistence of poverty, income
disparity, acquired debt, and high
unemployment among some
segments of Irish society
How is economic progress affecting
Irish values?
General EU concerns regarding unfair
tax advantage that Ireland enjoys
Contrast IR with NI
The Celtic Tiger – A Micro Look




How did economic development work
on the ground?
Targeted industry: Logistics/Maritime
Shipping
Creation of the Irish Maritime
Development Office (IMDO)
Purpose: to attract companies of the
highest operating standards to
Ireland
The Strategy in Practice



Ireland conducted a thorough study
of the history of the industry in
question
They found archaic nationalistic
requirements and a muddled
Shipping Tonnage Tax situation
As a response, Ireland avoided
restricting requirements and devised
an attractive Shipping Tonnage Tax
The Strategy in Practice



Education is promoted in order to
stimulate careers in maritime
industry
Ireland has also attracted a small but
highly qualified dedicated staff of
young professionals
This team tries to meet the real
needs of potential operators and
develops relationships with clients
Benefits for Companies






Lower corporative tax rate
Pro-business environment
English speaking Euro global economy
Open-minded, well educated
employees
Emerging maritime knowledge
environment
Educational system geared to serving
international companies
Benefits for Companies






New maritime college to provide
skilled workers
Opportunities to teach
Assistance in infrastructure facility
needs
Office space in Dublin at attractive
rates
Attractive labor rules
Positive working environment
Conclusions and Comments


Having no strong history as a maritime
nation, Ireland is working hard to
overcome the disadvantage
Ireland provides the four requirements
for business abroad: security for
employees, fairness in the playing
field, a qualified work force, and
business incentives
Conclusions and Comments



Exportation of the Celtic Tiger model
is highly unlikely
Struggling nations can learn from
Ireland, but the model must be
adapted to specific conditions
Irish case study represents a
remarkable improvement that has
placed Ireland in the forefront of
globalization in the 21st century