The Celtic Tiger A Macro and a Micro View

1. The Celtic TigerA Macro and a Micro View Dr. Joseph McFadden University of Saint Thomas Houston, Texas

2. 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!

3. 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

4. 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

5. 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

6. 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%

7. Factors of Economic Progress • Transnational Approach • Laws and Incentives • Education • Targeting • Societal Support • National Partnership Agreements • European Union

8. 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

9. 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

10. 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!

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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