Economy of Ireland from 1960 Onwards

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Project Title:The Development of the Irish Economy since 1960 Module:Economic and Social Policy
Course: BAHBMD3

Date:14 November 2012

Student:Kenneth Whelan

Word count 2000

Table of Contents

Introduction3
Free Trade and EEC Membership3
From Sterling to EMS5
The Celtic Tiger6

PART B 7 Bibliography8

PART A

Introduction
After gaining independence in 1922 the Irish state took measures to industrialise the south (Free State) of Ireland to counteract the financial deficit that remained after the civil war. A vision of free trade was the agenda during the 1920`s as the state was looking towards the exports markets. Ireland at the time was very much an agricultural economy. A fiscal policy of government spending (ESB 1927) and low taxation were some of the tools been applied to stimulate growth. This lasted until the economic war (1932 to 1938) with the UK that resulted in Ireland choosing a protectionist policy, with high tariffs being erected on imports (exports UK 90%) and the government taking control of private interests, Ireland had now abolished its free trade agenda. It wasn`t until the 1950’s (after WW11) that the foundation of a free trade agenda was put in place with the establishment of the Irish Exports Board, the introduction of tax incentives, capital incentive schemes regarding new industry and the authorisation of the IDA to seek out and promote FDI.

Free Trade and EEC Membership
The 1960`s began with the implementation of a free trade strategy that was based on a report by economist Dr T.K Whitaker (Economic Development). With the boom that was occurring across Europe, the state’s new Taoiseach, Sean Lamass was pursuing an export led growth strategy. Abolishing the protectionism policy, tariffs were reduced between Ireland and the UK in the early 1960`s and the Anglo Irish Trade Agreement was reached in 1965. Rehousing schemes were authorised to relocate people from the tenements to flat complexes such as Ballymun in North Dublin city, although these would prove to have huge financial implications for the future. Investment in education were a key factor in sustaining economic growth, so fees for secondary schools were abolished and transport to and from school for those whom required it was allotted. The policy of a zero corporate tax-rate regarding exports and the liberalisation of the law on foreign ownership of organisations saw an in-flow in FDI, in particular American and German. “Since 1960, the annual rate of growth in the value and volume of imports and exports has been very significant”, (Department of Jobs, Enterprise and Innovation).

(Department of Jobs, Enterprise and Innovation)

With the expansion of the economy in the 1960’s and 1970’s, in 1973 the Country was granted admission to join the EEC following the previous subscription to the General Agreement on Tariffs and Trade (1967), as this allowed tariff free access to the common markets, Ireland was no longer heavily dependent on the UK for exports, and with the IDA`s mission in attracting export-oriented growth sectors (electronics, engineering + pharmaceuticals) into the Country, a wave of immigration began. With an inflow (100,000) of Irish workers and their families and the rising birth rate at that time, the population grew by over (400,000) by the mid -1980’s. “Exports of goods and services amounted to 37% of GNP in 1973, these rose to 56% in 1983 and 90% in 1995” (Ireland now the Irish Economy). The national wage agreement of the 1970’s between the social partners (employers, employees, and trade unions) was an important yet difficult part of the policy. With high inflation and the Irish Punt linked to British Sterling, an agreement that regulates wage scales and...
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