An Overview of the Irish Economy
The Irish economy is widely regarded as one of the most successful economies of the world’s developed nations. Exceptional growth rates in the 1990’s, during which period the economy became widely known as “the Celtic Tiger”, matured into strong growth in recent years. This is highlighted by GDP growth exceeding the leading Group of Seven average of 5.3% over the period 2005-2008 (the Japanese average is 2.2%).
The strength of the economy is based on a solid foundation of core fundamentals, including steady fiscal management; low public debt; a flexible economic structure; sound financial institutions; a stable political system and high income levels. This foundation has remained resilient and robust, even against an increasingly subdued global economic background. With exports and unemployment remaining comparatively stable and increased productivity occurring across many of Ireland’s top sectors, the economy has continued to maintain its competitiveness and remains one of the most favoured countries in the European Union for foreign investment.
Success Factors
There are a wide variety of factors that contribute to Ireland’s economic success. As the only English-speaking member of the Eurozone, with access to the single market of 500 million people, Ireland is well placed to provide an ideal base for companies seeking a gateway to Europe. The Irish workforce is also highly educated, skilled and flexible with considerable international experience in comparison to other leading economies.
Ireland’s social partnership process, which brings together government, employers and trade unions, has also contributed to a stable and predictable business environment (Ireland has one of the lowest levels of industrial action in the EU), which has created a high degree of confidence in the reliability and productiveness of the workforce.
Foreign Direct Investment
Over 1,000 international companies (32 of which are Japanese) have chosen Ireland as their base. Many of these are continuing to deepen their existing investment with the addition of key strategic functions such as R&D, sales and marketing, IP and supply chain management. Ireland’s corporate tax rate, long hailed as a key driving force of the economy, is also highly favourable toward foreign investment.
Examples of multinationals that have established major operations in Ireland include Google, Yahoo, Amazon, eBay and PayPal. 14 of the world’s top 15 pharmaceutical companies, including Pfizer, GlaxoSmithKline, Takeda and Astellas, also have an operational presence in Ireland.
Vibrant Economic Activity
The Irish economy is innovative and dynamic with a significantly high proportion of entrepreneurs per head of population. This has made the country a vibrant entrepreneurial economy with start-up business activity among the strongest in Europe.
High value-added, export-driven industries, such as software, medical devices and biotechnology, have seen particularly strong growth in recent years and the Government has carefully fostered a thriving, innovative venture-capital industry through the provision of early stage and development capital funding.
Ireland’s service industry also accounts for over 45% of all exports, with financial services accounting for a significant proportion of this. The Irish Financial Services Centre, with ready access to a high skilled workforce and a wide range of incentives for international finance houses, has become the preferred location in Europe for many of the world’s top banks and financial services firms, particularly in the fund industry.
Knowledge-Based, High-Value Economy
Promoting research and development is at the heart of Ireland’s strategy for future growth. In 2006 the Government launched its principal policy initiative for driving Ireland’s science agenda which will bring an additional investment of €3 billion into all aspects of science research and development. Science Foundation Ireland, which places particular emphasis on the areas of biotechnology and ICT, has prioritised collaboration between education and research institutes and industry, on an industry-led agenda, to ensure the efficient transfer of technology and information between these sectors.
Internationalisation
Ireland, as an island economy, has always had an outward looking approach to developing solid business relations with other countries and considerable efforts are made to promote trade not only within the EU, but with countries across the world. Japan is one of Ireland’s key strategic trade partners in Asia and trade between the two countries is on average €3.8 billion/JPY600 billion per year.
Government Agencies
IDA Ireland, which has an office in Tokyo, is the Government agency responsible for attracting and managing foreign direct investment.
Enterprise Ireland, which also has an office in Tokyo, is responsible for assisting Irish companies in the Japanese market as well as promoting partnerships between Irish and Japanese firms.
If you would like to know more about the Irish economy and Ireland’s trade relations with Japan, please contact the IJCC Secretariat at secretariat@ijcc.jp.
