Irish Economy A Model of Success

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IBS Case Development Center
Irish Economy: A Model of Success?

This case study was written by Sardhi Kumar Gonela, under the guidance of D Satish, IBS, Hyderabad. It is intended to be used
as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The
case was compiled from published sources.
 2005, IBS Case Development Center. All rights reserved.
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“Just yesterday, it seems, Ireland was one of Europe’s poorest countries. Today it is about as
prosperous as the European average, and getting richer all the time.”1
“...inappropriate fiscal and perhaps monetary policies held Ireland back in earlier years, with the
result that convergence, when it occurred, was telescoped into a short period.”2
In 1988, The Economist described Ireland as ‘The poorest of the rich’, comparing the island
republic with its European counterparts. Just nine years later the magazine referred the nation as
Celtic Tiger, ‘Europe’s shining light’. Indeed, so was the economic transformation of the country,
which in late 1980’s had been on the verge of an economic disaster and was suffering from “awful
cocktail ofhigh unemployment, slow growth, high inflation, heavy taxation and towering public
debts.”3 In 1986, Ireland which along with Greece and Portugal was one of the three poorest
countries in the European Union (EU) surpassed UK in 1999, one of the wealthiest nations in the
continent and in the world too, at a per capita GDP of €23,410 compared to UK’s €22,760.4
“Unemployment fell from 17% in 1987 to 4% in 2003.”5 For many decades Irish per capita output
ranked 24th among the industrial nations of the world.6 In 1993 it ranked 22nd, moved up to 18th in
1997 and to 9th in 1999.7 Journalistic literature termed the economic success of Ireland,
miraculous, but the economists observed that the country has just demonstrated its true potential
after decades of mismanaged monetary and fiscal policies. One of the key goals of Irish
macroeconomic policy has been to use fiscal and monetary policies for the growth of the economy
and reduce the unemployment rates.
History of a Struggling Economy
Ireland in 1920’s was a protectionist economy with very high tariff barriers. Form mid 1930’s to
early 1960’s Ireland suffered economic stagnation. During the period 1930-1960, Catholic Church
played a prominent role in the Irish state affairs. The Catholic Church intended to keep Ireland as a
1
“Ireland shines”, http://www.economist.com/opinion/displaystory. cfm?story_id=E1_TQJPPP, May 15th
1997
2
Honohan, Patrick, Walsh, Brendan, “Catching up with the leaders: The Irish hare”,
http://www.highbeam.com/doc/1G1- 91916801.html, March 22nd 2002
3
“The luck of the Irish”, http://www.economist.com/surveys/displaystory.cfm?story_id=E1_PNGTDST,
October 14th 2004
4
“Richer than the Brits?”,
http://www.economist.com/world/europe/displaystory.cfm?story_id=E1_PQTTDV, July 27th 2000
5
“Tiger, tiger, burning bright”,
http://www.economist.com/surveys/displaystory.cfm?story_id=E1_PNGTDQS, October 14th 2004
6
“Catching up with the leaders: The Irish hare”, op.cit.
7
Ibdi.
rural economy, so that it remained a staunch Catholic country. While at the same time the rest of
the Western Europe was heading towards urbanisation and modernisation. The Catholic Church
saw education as a threat to itself, as it feared if the Irish became more educated, they will loose
respect for the Church. Thus preventing the spread of education was the main agenda of the
Church aided government policy. Due to which, in Ireland there arose a situation where supply of
unskilled labour was abundant. Therefore the Irish economy due to low labour participation rate
and protectionist economic policies could not catch up with the “Golden Age”8 of the European
growth and remained an agricultural economy through the 1950s.
In the early nineteenth century Robert Malthus, in one of his letters noted, ‘a population greatly in
excess of the demand for labour’ as the ‘predominant evil of Ireland.’ As a consequence
emigration was a common phenomenon among the Irish populace all through its history. Famines
of 1840s triggered mass emigration and thus, the poverty-stricken agrarian Irish society became
the cheap labour provider for the Western countries, especially to the US and UK. Emigration
trend had been persistent even after the country gained independence in 1922 till the latter decades
of the 20th century. Immediately after the independence, a lot of Protestant citizens emigrated
because they found the new state unattractive, even though there religious and civil rights were
adequately protected. Consequently a population of 6.8 million in 1841 was reduced to 2.9 million
by 1926 and further dipped to 2.8 million by 1961.9 Again in 1960’s lot of emigration took place in
Ireland due to the high unemployment rates prevalent there. Many Irish emigrated to UK, as UK
had a well developed and attractive social welfare system and the wages for unskilled labour in
UK was much higher than those in Ireland. Thus all these factors made emigration a feasible
option.
Ireland between 1950’s and 1960’s was being considered as an economic wasteland with very few
industries and a very high emigration rate. Sean Lemass (Lemass), Taoiseach10 of Ireland from
1959-1966, to bring Ireland out of the economic stagnation, introduced the ‘First Programme of
Economic Expansion’ (1958-63). The programme had a positive effect on the Irish economy and it
laid the foundation for the economic success of Ireland in the mid-1990s. Under the programme,
Ireland moved away from the protectionist policy and opened up which encouraged foreign
investment in the country. Foreign Direct Investment (FDI) was encouraged by lowering taxes,
providing tax exemptions and other incentives. Barriers to trade were reduced and multinational
companies investing in Ireland were totally exempted from corporate tax. The most notable policy
of the period was the introduction of free secondary education in 1966 by Lemass which
revolutionised the Irish education. The Irish government’s investment in education over the past 40
years was a key contributor to the Irish miracle. In 1960’s the Irish economy rapidly expanded
under Lemass’s leadership. In early 1960’s, Ireland lowered its import tariffs and by 1965 it
concluded a free trade agreement with the UK. Ireland signed the General Agreement on Tariffs
and Trade (GATT) on 22nd December 1967, which was a world wide agreement on trade.
Although these steps provided a little momentum for growth, significant boost came in 1973 when
Ireland joined European Economic Community (EEC), which provided duty-free access to the
EEC countries, there by increasing trade with respective countries (Exhibit I). The exhibit shows
that Ireland experienced the benefits of membership instantly, and the balance of trade shifted
away from an exclusive concentration with the UK to a balanced distribution.
8
Economic historians describe the period between World War II and the first oil shock of 1973 as the
Golden Age in the European economy, as the countries grew rapidly than ever before or after that period.
9
Walsh, Brendan, “ECN 2011 The Irish Economy”, www.ucd.ie/economic/staff/bwalsh/lect1.ppt
10
The prime minister of Ireland
Exhibit I
Irelands Exports by Location 1973 and 2003 - A Comparison
Source: “Ireland and the EU 1973-2003”,

http://www.cso.ie/releasespublications/documents/statisticalyearbook/2004/ ireland&theeu.pdf, page 8
The combination of duty-free access of Ireland to the European mainland with zero corporate tax
and the English speaking low wage Irish work force attracted many US manufacturers. The
farming community benefited from Europe’s farm subsidies. But this optimism in the economy
was short-lived due to the ‘oil shocks’. 11 To offset the ill effects of these oil shocks, successive
Irish governments in mid-1970s and early 1980s resorted to monetary and fiscal expansionary. For
instance in late 1970s the Irish government pursued ‘dash for growth’ policy which involved a
huge fiscal injection. At the same time the economy also experienced the two macroeconomic
problems of high inflation and unemployment, thereby reducing the economic growth rate.
Combined with these internal factors, were the high global interest rates and the low foreign
demand which further weakened the economy. Topping it all was the problem of currency
pegging.
Traditionally Irish pound was linked with the British sterling. In the late 1970s a combination of
internal and external influences caused high inflation, unstable currency and high interest rates.
“Consequently, once an opportunity was presented to break away from sterling and link with the
D-mark (Duetsche Mark) - a currency that had since the Second World War enjoyed significantly
lower interest rates and inflation than Ireland and the UK - the Irish Government grabbed it with
both hands.”12 In 1979 Ireland entered into the European Exchange Rate Mechanism (ERM) of the
European Monetary System (EMS) linking the exchange rate with German mark thereby putting
an end to the 150-year-old one-to-one link with the sterling. This caused serious problems to the
economy because the ERM currencies accounted for only 33% of Irish foreign trade, while Britain
accounted for almost 50%, making the Irish economy vulnerable to the fluctuations of sterling. As
a result, to maintain a balance with the other ERM currencies Irish pound was devalued twice in
the first decade of ERM membership. In March 1983, Irish pound was unilaterally devalued by
3.5% and by 8% in August 1986. Apart from exchange rate issue successive governments failed to
11
Oil shocks refer to the dramatic increases in the prices of oil and gasoline in 1973-74, 1979-80. In each of
those instances economies around the world went into recession. More specifically, they experienced
stagflation - the combination of recession and inflation.
12
Power Jim, “OBITUARY FOR THE IRISH POUND”, http://www.ibf.ie/pdfs/ibrs99.pdf
follow public finance policies consistent with the required disciplines of ERM. This resulted in a
high fiscal deficit, which in 1981 peaked at 15.7% of national income. High fiscal deficits
undermined international confidence in the Irish economy, increasing inflation rates and interest
rates more than those in the German economy. These problems apart, political conditions added
fuel to fire, deteriorating the economic conditions. By the 1980’s Ireland was referred as the sick
man of Europe.
The coalition government that was formed in 1983 inherited a plethora of problems and was under
pulls and pressures to take stringent steps required for the economic recovery. The cocktail of the
circumstances ensured that recession continued and the economy stagnated for five consecutive
years pushing the country into the danger of default by the end of the year 198613, when public
debt reached 120% of national income. 14 Unemployment rose to 17% of the labour force, leaving
224 dependents for every 100 people employed and net emigration reached 1% of the population.
But in the year 1987, newly elected Fianna Fail (an Irish national party) government came up with
new fiscal and monetary initiatives putting an end to the existing economic chaos. The Irish
Government over the years implemented a series of economic programs which aimed at curtailing
inflation rate, increasing employment rates and promoting FDI.
Macroeconomic Management: Exemplary?
“The figures recording Ireland’s transition from Europe’s worst- to its best-performing economy
are remarkable. In 1987 Irish GDP per person was 69% of the EU average (adjusted to EU 15); by
2003, it had reached 136%. Unemployment fell from 17% in 1987 to 4% in 2003; and government
debt shrank from 112% of GDP to 33%...Annual GDP growth in the decade of the 1990s averaged
a tigerish 6.9%”15
- The Economist
An economy’s major macroeconomic objectives are rapid economic growth, high level of
employment and price stability. To achieve these objectives fiscal and monetary policies are
implemented. Starting 1987, Ireland implemented new fiscal and monetary polices which enabled
it to achieve a rapid economic growth, reduce unemployment and control price and wage inflation.
These factors enabled Ireland’s transformation from the sick man of Europe to the Celtic Tiger.
Generally an economy’s macroeconomic performance is judged by looking at its variables like
Gross Domestic Product (GDP), unemployment and inflation rate. And Ireland did very well when
measured on these parameters during the Celtic period (1994-2001).
Charles Haughey’s government that came into power in 1987 enjoyed the support of the
opposition party Fine Gael under ‘Tallaght Strategy’. According to that strategy Fine Gael agreed
to provide constructive opposition as long as the ruling Fianna Fail followed sound fiscal policies.
The government was required to take stringent measures to restore confidence of foreign investors,
so as to acquire urgently needed capital as the domestic sources were not in a position to provide
additional capital. Backed by the opposition the government temporarily stopped all public sector
recruitments, resulting in a sharp decline in public sector wage bill. This was combined with
cutbacks in capital spending which brought an order to the economy by decreasing the fiscal
deficit. Government cut the corporate tax to 10%, compared to 30% in Britain, 40% in France,
46% in Germany and 35% in the Netherlands. Another important step towards attracting the FDI
13
“Why worry?”, http://www.economist.com/surveys/displaystory.cfm?story_id=E1_PNGTDTJ, October
14th 2004
14
“Green is good”, http://www.economist.com/world/displaystory.cfm?story_id=E1_TQJPGJ, May 15th
1997
15
“Tiger, tiger, burning bright”, op.cit.
was entering into ‘social partnerships’, the agreements signed by the government, employers and
employees to sub serve individual interests for national interest. First such agreement, entered into
in 1987 (renewed every 3 years), restricted the wage increments to 3% and drastically reduced
personal taxes, ensuring that the employees were left with more take-home wages apart from
keeping a check on inflation. This also helped Irish wage rates to become more competitive in the
international market. Successive agreements have resulted in falling unit labour costs, stability in
economic policy, industrial peace, public sector reforms and a flexible and responsive
policymaking mechanism.
These steps had a positive effect on the economy. The economy gathered momentum after years of
stagnation leading to tax revenue buoyancy, interest rate differential with Germany narrowed
(Exhibit II), public debt reduced and above all the FDI flow increased. The economy entered into a
virtuous cycle of low interest rates, economic growth and tax buoyancy. With the virtuous cycle
operating well and leaving a positive effect on the economy, in the latter 1980s and early 1990s,
Irish currency, the Irish pound, earned credibility and fluctuation was less than 1% against the D-
mark. With the economy doing well, maintaining the confidence of the markets was the priority
for the government. But the German reunification and the entry and exit of pound sterling from
ERM of EMU put considerable pressure on the Irish pound in 1992.
Exhibit II
The Three Month IRISH/German Interest Rate Differential
Source: Power Jim, “Obituary For The Irish Pound”, http://www.ibf.ie/pdfs/ibrs99.pdf

In the 1990s, in Ireland inspite of large increase in money supply and large increase in prices.
inflation decreased (Exhibit III). As the price increases were mainly witnessed in house prices and
assets and not in consumer goods or services. This inflation was welcomed by the economists
calling it ‘good inflation’. The monetary policies of1990’s were successful in controlling inflation
in Ireland. However, from the year 2000 onwards, Ireland experienced a rise in inflation. The
Central Bank of Ireland is a member of the Eurosytem. On January 1st 1999, Eurosystem adopted
euro and assumed the task of implementing single monetary policy for the Euro area. The main
objective of the single monetary policy is price stability; Central banks in Euro zone have been
given the responsibility of maintaining price stability.
The reunification process shook the EMU and the refusal of other countries to countenance a
unilateral revaluation of the D-mark resulted in a currency crisis in the EMU. At the same time
sterling disturbed the Irish pound. In October 1990 sterling joined ERM with an exchange rate of
D-mark 2.95, which proved too high for Britain. Subsequently in September 1992, Britain
withdrew from ERM. These factors resulted in a 16% appreciation of the Irish pound in a span of
five weeks. This was followed by high interest rates and increasing inflation. Eventually in January
1993, obliging to the market pressures, Irish authorities devalued the pound by 10%, reinjecting
confidence in the economy.
Exhibit III
Irish Inflation
Source: Power Jim, “Obituary For The Irish Pound”, http://www.ibf.ie/pdfs/ibrs99.pdf

Low labour costs and low tax rates combined with healthy economic conditions and governmental
initiatives in the form of five year ‘National Development Plans’ (Annexure I) lured many
multinationals to invest in the country. Another attracting factor for the foreign companies was
transfer pricing. Since Ireland had lower corporate tax on manufacturing, transactions were booked
at transfer prices. This resulted in high profit margin for the Irish affiliates in the global profits of
the companies operating in Ireland. Backed by these strong factors, by 2004, Ireland acquired one-
quarter of all American FDI in Europe. About 1,100 multinational companies operate in the
country exporting goods worth $60 billion a year.16 Multinationals are pre-eminent in certain
sectors like pharmacy and software. Ireland accounted for almost one-third of all FDI in Europe in
pharmaceuticals and healthcare with nine of the world’s top ten drug companies operating in the
country. Ireland was producing one-third of all personal computers sold in Europe. The republic
was the world’s biggest software exporter, surpassing the US. The Dublin based International
Financial Services Centre was a big success, employing some 16,000 people. 17 FDI changed the
employment pattern of the Irish society transforming it to a service based society and increased the
workers participation in economy from 60% in 1980s to 70% by 2004.
The unemployment rate fell from 17% in 1987 to 4% by 2004. Interpreting in terms of absolute
numbers, the number of workers increased from 1.1 million in 1990 to 1.8 million18 by 2003. The
16
“Why worry?”, opcit.
17
Ibid.
18
Dorgan Sean, “How Ireland Became the Celtic Tiger”,
growth in employment (Exhibit IV) was mainly due to immigration from the member states of the
EU. Irish men and women living abroad were returning back to Ireland which was witnessing a
very high level of economic growth, rise in living standards and more employment opportunities.
The Irish government’s fiscal policy of low taxation has also contributed to the employment
growth in Ireland. Various tax benefits aimed at, reducing unemployment and the number of poor
working people. The Irish income tax policy aims at maintaining full employment in the economy
by lightening the tax burden on the Irish labour and in a way makes sure that workers are left with
more income in hand.
Exhibit IV
Growth in Employment in Ireland (1973-2003)
Source: Dorgan Sean, “How Ireland Became the Celtic Tiger”,

http://www.heritage.org/research/worldwidefreedom/bg1945.cfm, June 23rd 2006
With the macro economic variables like reduced public debt (Exhibit V), low interest rates, stable
currency and inferior tax regime (compared to other European countries) having a positive effect
on the economic cycle and an increase in the national output due to the foreign players, Ireland
witnessed a faster per capita growth rate compared to the other countries of the region, which
earlier had the same growth rate as Ireland in the mid 1985 (Exhibit VI). GDP at constant prices
(real GDP) and its components in absolute terms increased significantly in 1990s (Annexure II).
The per capita GDP in 2004 stood at 138%, which was the second highest in the Europe. In the
international rankings by the OECD, on the basis of per capita GDP accounted for purchasing
power, Ireland stood 4th only after Luxembourg, the US and Norway. (Exhibit VII). But, in the
same rankings on the basis of GNP Ireland figured at 17th place, the difference is a major cause of
worry for the country.
http://www.heritage.org/research/worldwidefreedom/bg1945.cfm, June 23rd 2006
Exhibit V
Reduced Public Debt and Budget Deficit
Source: “Tiger, tiger, burning bright”, www.economist.com, October 14th 2004
Exhibit VI
Comparative GDP per capita growth rate (EU)
Source: “The luck of the Irish”, www.economist.com, October 14th 2004
Exhibit VII
Disparity between GDP and GNP of Ireland
International Ranking by the OECD of Income per Head in Terms GDP and GNP
Accounting for Purchasing Power
Rank GDP GNP Rank GDP GNP
1st Luxembourg Luxembourg 11th Australia Austria
2nd United States United States 12th United Kingdom Australia
rd th
3 Norway Norway 13 Belgium Japan
th
4 th Ireland Switzerland 14 France France
th th
5 Switzerland Canada 15 Sweden Sweden
6th Canada Denmark 16th Japan Finland
7th Denmark United Kingdom 17th Finland Ireland
th th
8 Netherlands Netherlands 18 Germany Germany
th
9th Austria Belgium 19 Italy Italy
10th Iceland Iceland 20th Spain Spain
Source: Cullen Joe, “There’s lies, damned lies, and wealth statistics.”, www.esri.ie, (The Irish Times), May
11th 2004
Challenges for the Celtic Tiger
GNP of Ireland was 25% lesser than the GDP (Exhibit VIII), and exports, mainly driven by the
multinationals, have been higher than GNP from the year 1999. These reveal the inherent
weaknesses of the Irish domestic industry. Experts opined that the future growth of Ireland must be
measured by the convergence of GNP with GDP, which interprets that the future growth of the
country must be depicted by the growth of indigenous industry. “That might, sadly, put an end to
another splendid quirk with which to confuse those first-year students: that Ireland’s total exports
exceed the country’s national income.”19 Since 2000, Irish inflation is also on a rise and that is
something which the country has to watch out for. Due to the concerns on rising inflation in
Ireland, the government agreed to monitor inflation on monthly basis and adopt various policies to
curb inflation.
Critics note that the internal and external conditions that favoured the growth of Ireland, in the late
1980s and early 1990s, are irreversible. The increased number of participants in the economic
activities due to favourable demographics will not be repeated. The favourable tax regime has
already yielded maximum benefits. The FDI flow will be stagnant denying the country the
additional capital. Under those circumstances, sustaining the present growth in the economy would
prove to be difficult. Another major factor that experts point out is that the economic growth of
Ireland had been a result
of increased inputs and not increased productivity. As The Ecomist observed, “...much of the Irish
miracle (ie, higher output) was attributable to one-off changes (i.e. greater input) and not to
productivity growth (ie, more efficient use of that input). In effect, an economy that was suffering
from 50 years of inefficiency, poor organisation and under-use of inputs (especially female
workers) has spent the past 15 years catching up with more efficient, better-organised neighbours.
19
“Measure for measure”, http://www.nber.org/~rosenbla/econ110/lecture/ireland.pdf, October 14th 2004
Now it needs to find ways to keep the momentum going.”20

Exhibit VIII
GDP and GNP of Ireland (1960–2003)
Source: “Economy” http://www.cso.ie/publications/statisticalyearbook/economy.pdf
20
“Tiger, tiger, burning bright”, op.cit.
10
Annexure I
National Developments Plans of Ireland
Plan Operational Programmes
NDP • Industry • Peripherality (Transport)
1989-1993 • Agriculture and Rural • Telecommunications and Postal
(€ 11.6 mn) Development Services
• Tourism • Energy
• Human Resources • Sanitary and Local Services
NDP • Industrial Development • Fisheries
1994-1999 • Agriculture, Rural • Tourism
(€ 22.2 mn) • Development and Forestry • Economic Infrastructure
• Transport • Environmental Services
• Human Resources • Local, Urban and Rural Development
Development
NDP • Economic and Social • Productive Sector
2000-2006 Infrastructure • Southern and Eastern Region
(€59.7 mn) • Employment and Human • Border, Midland and Western Region
Resources Development
Shift In Priorities - NDP Objectives
Plan Objectives
NDP • prepare the economy to • improve further the state of the
1989-1993 compete successfully in the public finances
internal market • accompany economic growth by a
• reduce unemployment, raise greater social dimension in our
productivity and increase per society
capita income to average EU
levels
NDP • ensure the best long-term return • re-integrate the long-term
1994-1999 for the economy by increasing unemployed and those at high risk of
output, economic potential and becoming so into the economic
long-term jobs mainstream
NDP • continue sustainable national • foster balanced regional development
2000-2006 econmic and employment • promote social inclusion
growth
• consolidate and imporove
Ireland’s international
competiviveness
Source: “Overview of structural funds in Ireland”, http://www.weru.org.uk/Esrc/Niall.ppt
11
Annexure II
Components of Irish GDP at Constant Prices
Index numbers of Gross Domestic Product and expenditure aggregates at constant
market prices
Base year 1995=100
Public
Personal Expenditure Capital
Year GDP Exports Imports GNP
Consumption on Goods Formation
and Services
1960 25.5 34.0 32.0 18.8 5.5 8.4 31.0
1961 26.7 34.9 33.0 20.9 6.4 9.6 32.4
1962 27.5 36.2 33.9 24.7 6.4 10.1 33.4
1963 28.7 37.6 35.3 27.4 7.0 11.2 34.8
1964 30.1 39.2 36.4 31.3 7.6 12.6 36.5
1965 30.6 39.4 37.7 35.3 8.3 14.0 37.3
1966 31.0 40.0 38.1 31.8 9.1 14.5 37.6
1967 32.5 41.4 40.1 31.4 10.1 15.0 39.5
1968 34.8 44.9 42.1 38.6 11.0 17.4 42.4
1969 36.7 47.4 44.9 47.0 11.5 19.7 44.5
1970 37.9 48.5 48.3 47.1 12.0 20.2 45.9
1971 39.6 50.3 52.5 48.7 12.5 21.1 47.8
1972 42.1 52.9 56.3 56.3 12.9 22.2 50.3
1973 44.4 57.0 60.1 64.5 14.3 26.4 53.0
1974 46.0 58.0 64.6 62.3 14.4 25.8 55.0
1975 46.6 56.5 68.8 49.6 15.5 23.2 55.4
1976 47.7 58.0 70.7 58.7 16.7 26.6 56.2
1977 51.0 61.9 72.1 67.1 19.1 30.1 59.5
1978 54.8 67.4 78.0 74.8 21.4 34.8 62.8
1979 56.6 70.4 81.6 86.4 22.8 39.7 64.7
1980 57.8 70.7 87.4 75.0 24.2 37.9 65.8
1981 59.4 71.9 87.7 81.1 24.7 38.5 67.2
1982 60.2 66.9 90.5 84.9 26.1 37.3 66.0
1983 60.3 67.5 90.2 75.9 28.8 39.1 65.2
1984 62.5 68.8 89.6 75.0 33.6 42.9 66.3
1985 64.0 72.0 91.2 68.7 35.8 44.3 66.9
Contd…
12
Contd…
1986 64.3 74.1 93.6 68.0 36.9 47.1 66.5
1987 67.1 76.5 89.0 65.0 42.0 50.0 69.4
1988 70.1 79.9 84.6 62.7 45.7 52.5 71.2
1989 74.5 84.9 83.8 76.3 50.4 59.5 75.0
1990 79.8 85.9 88.3 92.5 54.8 62.4 80.5
1991 81.7 87.5 90.8 86.0 58.0 63.9 82.7
1992 84.3 89.9 93.5 75.6 66.0 69.2 84.6
1993 86.5 92.5 93.2 72.3 72.4 74.4 87.4
1994 91.8 96.0 97.1 81.0 83.4 85.9 93.2
1995 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1996 108.1 106.4 103.3 117.0 112.2 112.5 107.8
1997 119.8 114.0 108.7 140.9 131.8 131.3 118.0
1998 130.5 122.1 114.9 165.6 160.8 165.6 127.4
1999 144.9 132.8 123.4 179.7 185.2 185.6 138.5
2000 159.3 144.8 133.2 197.3 222.9 225.0 152.4
2001 168.9 152.7 147.7 189.5 241.6 240.1 158.2
2002 179.3 156.9 160.3 192.9 255.4 248.1 160.6
2003 185.8 161.0 164.4 203.7 253.4 242.5 165.1
Source: “Economy” http://www.cso.ie/publications/statisticalyearbook/economy.pdf
13

Irish Economy A Model of Success

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MEBE0001

IBS Case Development Center

Irish Economy: A Model of Success?

 2005, IBS Case Development Center. All rights reserved.

Irish Economy: A Model of Success?

History of a Struggling Economy

Irelands Exports by Location 1973 and 2003 - A Comparison

Source: “Ireland and the EU 1973-2003”,

Macroeconomic Management: Exemplary?

The Three Month IRISH/German Interest Rate Differential

Source: Power Jim, “Obituary For The Irish Pound”, http://www.ibf.ie/pdfs/ibrs99.pdf

Source: Power Jim, “Obituary For The Irish Pound”, http://www.ibf.ie/pdfs/ibrs99.pdf

Growth in Employment in Ireland (1973-2003)

Source: Dorgan Sean, “How Ireland Became the Celtic Tiger”,

http://www.heritage.org/research/worldwidefreedom/bg1945.cfm, June 23rd 2006

Reduced Public Debt and Budget Deficit

Source: “Tiger, tiger, burning bright”, www.economist.com, October 14th 2004

Comparative GDP per capita growth rate (EU)

Source: “The luck of the Irish”, www.economist.com, October 14th 2004

Challenges for the Celtic Tiger

Now it needs to find ways to keep the momentum going.”20

GDP and GNP of Ireland (1960–2003)

Source: “Economy” http://www.cso.ie/publications/statisticalyearbook/economy.pdf

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