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This site includes the postings from the Irish Aires email list. This includes a listing of Irish/Celtic events in the Houston area and other information that the Irish Aires radio program posts.
Saturday, July 02, 2005
Ireland 2nd Richest Country in EU
http://www.chron.com/cs/CDA/ssistory.mpl/editorial/outlook/3245209
Next Best Thing To Gold At The End Of Ireland's Rainbow
By THOMAS L. FRIEDMAN
DUBLIN, Ireland — Here's something you probably didn't know: Ireland
today is the richest country in the European Union after Luxembourg.
Yes, the country best known for hundred of years for emigration,
tragic poets, famines, civil wars and leprechauns today has a per
capita GDP higher than that of Germany, France and Britain. How
Ireland went from the sick man of Europe to the rich man in less than
a generation is an amazing story. It says a lot about Europe today:
All the innovation is happening on the periphery by countries
embracing globalization in their own ways — Ireland, Britain,
Scandinavia and Eastern Europe — while those following the French-
German social model are suffering high unemployment and low growth.
Ireland's turnaround began in the late 1960s when the government made
secondary education free, enabling a lot more working-class kids to
get a high school or technical degree. As a result, when Ireland
joined the EU in 1973, it was able to draw on a much more educated
work force.
By the mid-1980s, though, Ireland had reaped the initial benefits of
EU membership — subsidies to build better infrastructure and a big
market to sell into. But it still did not have enough competitive
products to sell, because of years of protectionism and fiscal
mismanagement. It was going broke, and most college grads were
emigrating.
"We went on a borrowing, spending and taxing spree, and that nearly
drove us under," said Deputy Prime Minister Mary Harney. "It was
because we nearly went under that we got the courage to change."
And change Ireland did. In a quite unusual development, the
government, the main trade unions, farmers and industrialists came
together and agreed on a program of fiscal austerity, slashing
corporate taxes to 12.5 percent, far below the rest of Europe,
moderating wages and prices, and aggressively courting foreign
investment. In 1996, Ireland made college education basically free,
creating an even more educated work force.
The results have been phenomenal. Today, nine out of 10 of the world's
top pharmaceutical companies have operations here, as do 16 of the top
20 medical device companies and seven out of the top 10 software
designers. Last year, Ireland got more foreign direct investment from
America than from China. And overall government tax receipts are way
up.
"We set up in Ireland in 1990," Michael Dell, founder of Dell
Computer, explained to me via e-mail. "What attracted us? (A) well-
educated work force — and good universities close by. (Also,) Ireland
has an industrial and tax policy which is consistently very supportive
of businesses, independent of which political party is in power. I
believe this is because there are enough people who remember the very
bad times to de-politicize economic development. (Ireland) also has
very good transportation and logistics and a good location — easy to
move products to major markets in Europe quickly."
Finally, added Dell, "they're competitive, want to succeed, hungry and
know how to win. Our factory is in Limerick, but we also have several
thousand sales and technical people outside of Dublin. The talent in
Ireland has proven to be a wonderful resource for us. Fun fact: We are
Ireland's largest exporter."
Intel opened its first chip factory in Ireland in 1993. James Jarrett,
a vice president, said Intel was attracted by Ireland's large pool of
young educated men and women, low corporate taxes and other incentives
that saved Intel roughly a billion dollars over 10 years. National
health care didn't hurt, either. "We have 4,700 employees there now in
four factories, and we are even doing some high-end chip designing in
Shannon with Irish engineers," Jarrett said.
In 1990, Ireland's total work force was 1.1 million. This year it will
hit 2 million, with no unemployment and 200,000 foreign workers
(including 50,000 Chinese). Others are taking notes. Prime Minister
Bertie Ahern said: "I've met the premier of China five times in the
last two years."
Ireland's advice is very simple: Make high school and college
education free; make your corporate taxes low, simple and transparent;
actively seek out global companies; open your economy to competition;
speak English; keep your fiscal house in order; and build a consensus
around the whole package with labor and management — then hang in
there, because there will be bumps in the road — and you, too, can
become one of the richest countries in Europe.
"It wasn't a miracle; we didn't find gold," said Mary Harney. "It was
the right domestic policies and embracing globalization."
Friedman is a columnist for The New York Times and a three-time
Pulitzer Prize winner.