3.  Introduction  Background › History › Religion  The Celtic Tiger  Cause  Introduction of the Euro & EU Aid  Taxation & Industrial Policies  Demographics & Geopolitics  Effects  Economy  Demographic & Social  Housing Bubble  The Downfall - End of the Celtic Tiger 2001-2003  Conclusion / Outlook

5.  4.6 million Inhabitants  Official languages: Irish / English  Constitutional Government  GDP per capita: 38,500 $  Unemployment rate at 14%  Public debt: 94.2 % of GDP  157% of GDP Import/Export

6.  1801 Part of the UK  1922 Indepence  1973 Member of the EU  Partition of the Island › Republic of Ireland › Northern Ireland  High level of education

7.  First settlement – 8000BC  Christianity 5 th century AD  Viking troubles 800 AD  Ireland becomes English. Henry VIII ca1530.  17 th century Plantations  The first “Great Famine”

8.  United Kingdom of Great Britain and Ireland  The second “Great Famine”  The Irish war of Independence  Northern Ireland & the Irish Free State  The Troubles  The national flag of the republic

9.  Power Distance  Individualism  Masculinity  Uncertainty Avoidance

12. 1980s Strong FDIs Reputation for high- quality manu- facturing 1990s Develop- ment of clusters in: Chemicals ICT Pharma- ceuticals 2000s Advanced Manufactur- ing with high R&D content 1970s EEC Membership Adapted educational system 1960s IDA grants Low corporate taxes

13.  Joined the European Economic Community (EEC) in 1973  In the end of the 1970s Ireland took action against currency fluctuations and joined in the European Monetary System  In 1999 the country entered the European Monetary Union

14.  Being a member of the EEC/EU resulted in EU- backed aid money: Investments were done in: › Agricultural sector › Telecommunication › Education › Infrastructure/High-technology  High-technology related TNCs started to view Ireland as a suiting and appropriate link between the U.S. and Europe

15.  Ireland compared to U.K. › U.K. left the European Exchange Rate Mechanism (ERM) in 1992 › U.K. did not join the EMU › TNCs preferred an English speaking country that was part of the euro-zone, instead of one that was not

16.  Low taxation policies pursued by governments from 1956  10% on profits from 1981-2003  12.5% on profits for trading income 2003-  25% for non-trading income  Resident companies pay corporate tax on global income  Non-resident companies pay on Irish- sourced income only

17.  23.2% Average corporate tax in 2010  Developed countries tend to have higher rates › Austria: 25% › Finland: 26% › France: 33.33% › Spain: 30% › UK: 20-27%

19.  Low taxation originally possible due to lack of industrial base › Lowering taxes is difficult  Deficits, cuts in established government programs  Impossible for countries with heavy industrial base › Industry requires infrastructure  taxes required for upkeep

20.  Low taxation attracts FDI › Major MNC’s established in Ireland  E.g. Google, Dell, Intel, Microsoft  Transfer of profits to Ireland (Tax- avoidance) › Today, still used to lower tax liability › Transfers not taxed for non-resident companies  Comparably low income tax › Attracts skilled labour

21.  Subsidies & Investment capital › Irish Government subsidises investment in Ireland  Enterprise Ireland › Provides support services for startups  Financial, Technical, Social  International Financial Services Centre › 14,000 high-value jobs › Favourable tax-rate from 1987-2005 › Offices for half of the world’s 50 top banks

22.  Adaptation of government-funded higher education  Investments were made to expand the Regional Technical Colleges and for the building of two new universities  Large share of technical and science graduates

24.  Ireland had relatively high birth rates during the decades leading up to the Celtic Tiger period  Large proportion of women outside the work force during the 1980s resulted in an enlarged labour force

25.  Making Ireland accessible: › Deregulating the airline market between Ireland and U.K. › This resulted in an increase of passengers, tourist earnings, employments and further cut costs for business people › The IT/technology-industry itself

28.  Rapid GDP growth › 7.8% to 11.5% from 1995 to 2000 › 4.4% to 6.5% from 2001 to 2007 › Some gains wiped away in the recession  Unemployment fell from 18% in the late 1980’s to 4.5% in 2007 › Currently 14%...  Debt/GDP –ratio fell › Level of Debt remained constant but GDP rose

30.  ISE surged from under 2,000 points to a high of over 10,000 points › Currently at around 2,600

31.  Unemployment decreased from 18% in late 1980s to as low as 4.2% in 2000  Economic boom created jobs and had a positive impact on the labour force; increased from 1.2 million in 1993 to 1.8 million by 2003  MNC’s accounted for 47% of manufacturing employment – Ireland dependent on MNC’s for growth and employment

33.  During 1990’s Irish population could not fill positions offered by the MNC’s – negative employment rate  The economic success of ‘Celtic Tiger’ encouraged return of Irish emigrants as well as skilled labour from across Europe  In 1996, for the first time in its history, Ireland had a positive net migration rate  Demand for labour across various sectors, including construction, finance, IT and healthcare

34.  Economic success can be contrasted with overall effect on society  High poverty rate compared to other EU member states  The ‘at risk of poverty rate’ increased between 1994- 2005  Disparity of income and unequal distribution of wealth epitomised by Michael O’leary

35.  20 % of complete GNP during the boom

36.  Constructions of new buildings  Employment: 126 000 (1998) 282 000 (2006)

37.  110 Billion Euro in Mortages  Collapse in 2008

38.  Collapse after 2008

39.  2001-2003 downturn – effect on Irish economy  Contributing factors to recession  Government attempt to maintain growth  MNC’s leaving a sinking ship  Effect on housing Market

40.  Recession since 2008  Irish Banking Scandals  Unemployment an all time high  Mass emigration

41.  Lessons from the phenomenon › Competitiveness via policies and taxation › Value of education › Applicaple to other countries?  Baltic-countries?  Emerging Asian countries?  Risks › Sudden collapse  detrimental effects › May compund social inequality