The_Celtic_Tiger

Assess the development and collapse of the Celtic Tiger. Discuss the key factors that led to its dislocation in 2008' This period of rapid economic growth lasted from the 1990s until 2001, it then began to slow down for a while until 2003 where it rapidly increased again until 2006 and now at the present day we are experiencing a complete change in fortunes as the country has been plunged into a state of recession which has coincided with the recent global economic downturn. However the emergence of the Tiger in 1994 helped to change Ireland from one of the poorest countries in Europe into one of the wealthiest. Ireland’s economy can be described as a small, open trade-dependent economy and as one of the fastest developing countries in the world. There are a number of different reasons for Irelands Economic growth and all play a large part in how it occurred. One of the most significant reasons for Ireland’s economic growth was their EU membership which provided them access to the single market. Ireland’s membership into the European Union meant that they received a lot of aid to invest in the education system and the physical infrastructure. This made Ireland much more attractive to foreign investors. Before the economic boom hit Ireland, it was really only trading with the UK, but after it occurred; they were now equipped to deal with countries from all over the world. Another significant reason for this economic growth was a lower than average level of corporation tax, currently at 12.5% standard rate and 10% for certain manufacturing companies.Other important factors for Ireland’s economic growth was the IRA cease fire in 1994 this made the country a much more attractive prospect for foreign investment. Also at the time of the ‘boom’ Ireland had a high proportion of population at working age not to mention the increased participation in the labour market especially by females. As Irelands economic state increased greatly then so did its disposable income as consumer spending went through the roof and public debt decreased as Ireland was the new place to be. Unemployment rates fell substantially and industrial wages where one of the highest in Europe. As wages increased then so did the Irish population resulting in Irish cities such as Cork and Dublin to change their infrastructures to deal with this increased population. Ireland’s emergence as one of the wealthiest countries in the EU was confirmed as Ireland’s usual trend of emigration was reversed and Ireland seen a huge influx of immigrants entering the country. This led to increased multiculturalism in Ireland mainly in the larger cities like Dublin, Cork and Limerick most of the new arrivals were from Eastern European countries like Poland and Romania. During this period Irish living standards increased hugely as unemployment rates fell rapidly as it says on The Heritage Foundation website: {draw:frame} http://www.heritage.org/research/worldwidefreedom/upload/98943_1.gif The chart above clearly shows the growth of Ireland’s economy in the form of Gross Domestic Product (GDP) from the 1980’s until 2004. {draw:frame} The population increased by almost 15 percent from 1996 to 2005 in a striking reversal of previous trends. In one year alone (July 2004–June 2005), employment increased by 5 percent. Ireland is now seen as the land of opportunity by many workers from the 10 newest EU member states. Its unemployment rate of 4.4 percent is less than half the EU average. Public budgets are in balance, and foreign investment was equivalent to 17 percent of GDP in 2003. http://www.heritage.org/research/worldwidefreedom/bg1945.cfm But this second economic boom could not last forever and in 2006 Ireland announced that it was in a state of recession. This came down to a number of different factors. Rising wages, inflation, poor infrastructure, excessive public spending, and the accession of ten new European Union members in 2004 all contribute to the economies downfall. The property market which pulled Ireland out of its last slump was affected the most as house prices plummeted people could no longer afford the extortionate house prices. This had a huge affect on the economy as many businesses, companies and construction sites around the country were at a standstill. Many tradesmen lost jobs as the property market crashed which has meant Ireland’s unemployment rate has risen again but perhaps the reason for the collapse in the property market is due to property owners becoming too greedy and maybe Ireland’s economic downturn was partially selfinflicted. Ireland is not the only country suffering as there is a global economic downturn occurring at the minute as many large banks have folded in the last year like Northern Bank in England but was just saved as the Bank of England agreed to bail them out. The Financial Crisis of 2009 is currently affecting the Irish economy severely; compounding domestic economic problems related the collapse of the Irish property bubble. Ireland was the first country in the EU to officially enter a recession as declared by the Central Statistics Office. In early January 2009, the Irish Times in an editorial declared that: ‘_We have gone from the Celtic Tiger to an era of financial fear with the suddenness of a Titanic-style shipwreck, thrown from comfort, even luxury, into a cold sea of uncertainty__’._ In conclusion Ireland’s economy has been on a rollercoaster ride in the last twenty years with the first boom occurring in the nineties right to 2001 and then it slowed down for a while until 2003 when it took off again through property until recently as it’s taken a turn for the worst but Ireland is still doing well compared to before the Celtic Tiger took off. So although The Celtic Tiger has taken a stumble in the last year it is clear that it has brought Ireland a long way and turned it into a more developed country which is more attractive to investors. However it seems that Ireland has some tough times ahead as the next year is predicted to be worse again but Ireland has been through tough times before and came out of them so I think it’s only a matter of time before Ireland prospers again. Bibliography www.wikipedia.org/wiki/Tiger economy http://www.heritage.org/research/worldwidefreedom/upload/98943_1.gif http://www.heritage.org/research/worldwidefreedom/bg1945.cfm