Ireland and the European Union 1998 - 2010
Ireland has been recognised as one of the fastest growing countries compared to other European Union (EU) countries in the 1980s and 1990s. With a wider and in-depth communication with the EU as well as the rest of the world, the great changes have emerged from the increasing of export, output and employment thus named Ireland as “Celtic Tiger” (O’Donnell, 1998). This assay will specify Ireland’s great changes in terms of macro-economic performance in many aspects such as foreign direct investment, the emergence of Ireland as a net contributor to EU budget and those changes influenced its role in EU as well as the attitude towards EU during 1998 and 2010.
Ireland’s Performance – Macro-Economy
The Irish economy has buoyant and the agricultural economy has been overtaken by integrated economic strategies and processes (Bukold et al., 1996). What factors have impacted on the leaps of Irish economy? Besides the booming of Ireland, deep differences are based on influences and weights of different causes of factors. On the one hand, some argue that the internal factors which mainly contribute to the economic restructuring which include implementation of membership policies, human capital innovation and upgrading of infrastructure (Bukold et al, 1996; Room et al, 2005; Allen, 2007). On the other hand, the claims are based on the external factors which mostly contribute to Ireland’s economic development, such as the reception of EU funds, the strong support of Foreign Direct Investment (FDI) and the benefit from single market programme (Brennan, 2008; O’Donnell, 1998; Laffan, 2001). There is no single answer to explain such remarkable changes and
more perceptions should be raised. The complex interaction between domestic, European, even the US and global environment are all likely influence Irish’s economy; some key points will be discussed as follows.
Consistent Implementation of policy
When Ireland joined EEC (European Economic Community) in 1973, the core executives of its government had forced to change from the “domestic policy-making” to the “carriers of Europeanization” (Laffan and O’Mahony, 2008:56). It is not an easy job for any member country to be the “translator devices” between two sides, however it is an undeniable fact that the adaptation of EU structures by national levels of government has existed for a long time since the EU has been established (Genschel, 2001:98). Ireland has been keeping lower corporation tax compared to other EU member countries in order to gain more investments and profits (Agenda 2000). According to the data in Box.1, the real GDP growth rate was not increased as rapidly as people expected in late 2000s.
Sources: Country Report of Ireland, Political Risk Services, 2010
The OECD estimated the average real GDP growth rate was 6.1% in 2000 to 2004 with little increase of 1.2% from 2005 to 2009. Nevertheless, the expenditure of Ireland government had increased from 25.5% in 2000 to 37.6% in 2009. Furthermore, compared to the average of inflation in the euro area was 2% during 1998 to 2008, Ireland’s inflation was higher than the euro level which was up to 3.4%. In addition, the consumer price had increased 36% in the same period while considerably higher than the euro average 23% (NESC, 2010).
The way of implementation policy as “regulative” seems did not work well at this point (Bulmer and Burch, 2000:50). Although there are certain advantages of low tax policy by encouraging variety of investments into this country, nobody could grantee that those investments would not pulled out by attracting of lower tax in other countries. The housing market was also raising problems. Generally, the tax system and loan regulations towards housing can influence the house prices (Mikol and Noord, 2004). There is a notable fact that the Irish construction industry has taken place nearly 25% of the...
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