Economy

Ireland’s economic history is characterized by the fact that the country was passed over by the Ind. Revolution.

Some historians attribute this fact to the sudden union with the structurally superior economy of England:

1) Iron and coal prices in Ireland were as cheap as they were in parts of England outside of the mining centers

2) By merging the 2 economies suddenly, Ireland didn’t industrialized. Instead it became a supplier of food and capital to the “mainland”.

Nevertheless, Ireland has managed to rise beyond its agricultural dependences.

Factory employment is now 3 times what it was at the time of independence.

Much of the early manufacturing development was concentrated in the north-east of Ireland, with the area relying mainly on linen and shipbuilding.

In the attempt to develop an industrial sector the Irish Government followed at first a protectionist policy with the objective to establish Irish-owned manufacturing to serve the home market. There was a major reversal of policy from the late 1950s, with the initiation of a movement towards free trade and promotion of export-oriented industry.

Foreign investments have been actively encouraged, the main investments coming from the USA, Britain and Germany.

Ireland today is a small, modern, trade-dependent economy. It focuses on services & high-tech industries, is reliant on industry and foreign investment.

The principal sectors in Irish manufacturing are metals and engineering, the food, drink and tobacco industries, textiles & clothing.

The country began to grow rapidly in the 1990s, fuelled by foreign investment. This attracted a wave of incomers to a country where, traditionally, mass emigration had been the norm. The national GDP growth averaged 6 % in 1995-2007, & the boom earned Ireland the nickname of “Celtic Tiger” (a reference to the “tiger economies” of South-East Asia). The unprecedented economic growth was fuelled by a dramatic rise in consumer spending, construction & investment.

Between 2004-07, the Irish economy generated roughly 90000 new jobs annually & attracted over 200000 foreign workers, mostly from the new EU member states, in an unprecedented immigration influx. The construction sector accounted for approximately one-quarter of these jobs.

Industries in which there has been substantial recent growth include light engineering, electronics, synthetic fibers (химволокно), pharmaceuticals and plastics (пластмасса).

A key element of the economic growth in Ireland since 1987 has been the Social partnership - a set of voluntary “pay pacts” between the Government, employers and trade unions.

US investment has been particularly important to the growth & modernization of Irish industry over the past 25 yy, providing new technology, export capabilities, & employment opportunities. As of year-end 2009, (according to official Irish data) the stock of US foreign direct investment in Ireland stood at US 235$ bln, more than the US total for China, India, Russia, Pakistan & Brazil combined. There’re approximately 600 US subsidiaries (дочерних компаний) currently in Ireland that employ roughly 100000 people & span activities from manufacturing of high-tech electronics, computer products, medical supplies, & pharmaceuticals to retailing, banking, finance, & other services. In more recent years, Ireland has also become an important research & development centre for US firms.

Many US businesses find Ireland an attractive location to manufacture for the EU market, since it’s inside the EU customs area (таможеная зона) & uses the euro. US firms year after year account for over half of Ireland’s total exports.

Other reasons for Ireland’s attractiveness include:

-low (12.5%) corporate tax rate for domestic & foreign firms;

-the quality & flexibility of the English-speaking work force;

-cooperative labor relations;

-political stability;

-pro-business government policies;

-a transparent judicial system;

-strong intellectual property protection;

-the pulling power of existing companies operating successfully (a “clustering” effect).

The Republic of Ireland is now the most globalised nation in the western world according to Ernst & Young’s 2011 annual Globalization Index report.

Ireland has attracted the cream of multinational companies to its shores. There has been a trend among US & UK multinational corporations to register a company in Ireland which is viewed as tax heaven. The prevalent amount of these corporations work in electronics (INTEL, Microsoft & Google), banking, insurance, shipping, electrics, pharmaceuticals, advertising & marketing.

Factors that negatively affect Ireland’s ability to attract investment include:

- high labour & energy costs (especially when compared to low-cost countries in Eastern Europe & Asia),

- skilled labor shortages,

- inadequate infrastructure (such as in the transportation & Internet/broadband sectors),

- price levels that are ranked among the highest in Europe.

Since the onset of the world financial crisis the country’s GDP fell by over 3 % in 2008, nearly 8 % in 2009, & 1 % in 2010. The Irish economy underwent one of the deepest recessions in the euro zone, with the subsequent collapse not only of its domestic property market but the construction market alike.

The property boom in Ireland, caused by rapid economic growth, had been fuelled by massive lending from the banks. When this collapsed – and lenders were unable to repay – the Irish banking system was also plunged into crisis.

In November 2010, Ireland & the EU agreed a financial rescue package for the republic worth 85 bln euros (Европа навязала займ). It caused the political crisis in I. & PM’s resignation.

In the wake of the collapse of the construction sector & the downturn in consumer spending & business investment, the export sector, dominated by foreign multinationals, has become today a key component of Ireland’s economy.

Faced with sharply reduced revenues & a burgeoning budget deficit, the Irish gov-t introduced the first in a series of draconian budgets in 2009. In addition to across-the-board cuts in spending, the 2009 budget included wage reductions for all public servants. The country’s GDP fell by: 3.5 % - in 2008, 2 % - in 2009, 1 % - in 2010.

In 2011 Ireland achieved moderate growth– the GDP rose by 1 % but the recovery is expected to slow in 2012 as a result of the euro-zone debt crisis.

Labour force by occupation (2011):

- services: 76 %

- industry: 19 %

-agriculture: 5 %

Unemployment stands at 14.8 %.

In terms of contribution to the national GDP, services contribute 49 %, industries – 46 %, agriculture – 5 %.

Trade. Ireland’s exports: machinery& equipment, computers, chemicals, pharmaceuticals, live animals. + Один из крупнейших поставщиков мяса.

Major import partners: GB & NI – 30%, USA – 18 %, France – 5 %, Germany – 7 %, China – 6 %, Japan – 2 %, rest of the world (including EU) – 32 %.

Ireland’s import products: grains, petroleum products, machinery, transport equipment, chemicals, textile yarns (пряжа).

13. Outline the system of gov-t in the Republic of Ireland. The major political parties in Ireland & their brief history. Parliamentary elections of 2011 & their results. Irish-British links.