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 In 2000, Ireland was selected as the most global nation in the world Two strong categories: economic integration and personal contact with internationalism Two strong categories: economic integration and personal contact with internationalism Ireland also ranked #1 on a recent survey on a happiness scale Ireland also ranked #1 on a recent survey on a happiness scale A successful combination of globalization and happiness! A successful combination of globalization and happiness!

The Celtic Tiger Ireland began to flourish in the 90s Ireland began to flourish in the 90s Positive response to the criticism of the Whitaker Report 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 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 The nation represents a true economic miracle Is Ireland a model? Is Ireland a model? A pattern of dynamic economic success can be seen when comparing the pre-Celtic world with the Celtic Tiger World 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! GNP – 59% that of the European Community average! Per capita income among the lowest in Europe Per capita income among the lowest in Europe 61% of exports went to the UK, only 9% to other European nations 61% of exports went to the UK, only 9% to other European nations Agriculture: limited electricity and tractors Agriculture: limited electricity and tractors Economic isolation Economic isolation

Ireland – 1990s and Beyond GNP – grew by 73%, an average of 9% growth per year in a decade! 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 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 Exports – 68% to EU (22% to UK) and 15% to US Irish middle class grew by 25% Irish middle class grew by 25%

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

Transnational Approach Welcoming companies that manufacture in Ireland for European markets and beyond 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 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 An explanation as to why Ireland’s GDP is 25% larger than its GNP

Laws and Incentives Very attractive corporate income tax Very attractive corporate income tax Lowest corporate tax rate in the EU! Lowest corporate tax rate in the EU! Permits and protects a high rate of profit Permits and protects a high rate of profit Fiscal restraint to hold down inflation Fiscal restraint to hold down inflation Minimal restrictions on business operations Minimal restrictions on business operations Maximum integration into European economy Maximum integration into European economy

Education Heavy investment especially in Secondary and third level education with paid tuition for all enrolled Heavy investment especially in Secondary and third level education with paid tuition for all enrolled Emphasis on science and technology Emphasis on science and technology Students earning admission have funding to support them Students earning admission have funding to support them Educational attainment established as a national priority! Educational attainment established as a national priority!

Targeting Ireland has targeted key business areas that are likely to remain Ireland has targeted key business areas that are likely to remain Used tax and other incentives to go after the markets they desired 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 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 Progress could not be achieved without the people’s support High income taxes High income taxes Irish provincialism and ambivalence regarding capitalism have been overcome Irish provincialism and ambivalence regarding capitalism have been overcome Globalization does not necessarily conflict with national values 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) National agreements are negotiated and voted on by the Irish Congress of Trade Unions (ICTU) A “National Partnership Agreement Towards 2016” is in progress A “National Partnership Agreement Towards 2016” is in progress It places specific emphasis on social justice It places specific emphasis on social justice

European Union Especially in the areas of agriculture support, infra-structure projects, transfer funds, and standardization 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 The kind of planning that other nations did under the Marshall Plan Throughout Ireland one can see the blue flag of the EU Throughout Ireland one can see the blue flag of the EU Ireland identified as the Mississippi of the EU, and funds flowed in 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 Persistence of poverty, income disparity, acquired debt, and high unemployment among some segments of Irish society How is economic progress affecting Irish values? How is economic progress affecting Irish values? General EU concerns regarding unfair tax advantage that Ireland enjoys General EU concerns regarding unfair tax advantage that Ireland enjoys Contrast IR with NI Contrast IR with NI

The Celtic Tiger – A Micro Look How did economic development work on the ground? How did economic development work on the ground? Targeted industry: Logistics/Maritime Shipping Targeted industry: Logistics/Maritime Shipping Creation of the Irish Maritime Development Office (IMDO) Creation of the Irish Maritime Development Office (IMDO) Purpose: to attract companies of the highest operating standards to Ireland 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 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 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 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 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 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 This team tries to meet the real needs of potential operators and develops relationships with clients

Benefits for Companies Lower corporative tax rate Lower corporative tax rate Pro-business environment Pro-business environment English speaking Euro global economy English speaking Euro global economy Open-minded, well educated employees Open-minded, well educated employees Emerging maritime knowledge environment Emerging maritime knowledge environment Educational system geared to serving international companies Educational system geared to serving international companies

Benefits for Companies New maritime college to provide skilled workers New maritime college to provide skilled workers Opportunities to teach Opportunities to teach Assistance in infrastructure facility needs Assistance in infrastructure facility needs Office space in Dublin at attractive rates Office space in Dublin at attractive rates Attractive labor rules Attractive labor rules Positive working environment Positive working environment

Conclusions and Comments Having no strong history as a maritime nation, Ireland is working hard to overcome the disadvantage 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 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 Exportation of the Celtic Tiger model is highly unlikely Struggling nations can learn from Ireland, but the model must be adapted to specific conditions 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 21 st century Irish case study represents a remarkable improvement that has placed Ireland in the forefront of globalization in the 21 st century