The Republic of Ireland is renowned for great literature, breathtaking scenery and the easygoing charm of its people.
But ask the man on the street about lucrative economies and Ireland would probably be an afterthought at best.
Once characterised by low growth, high unemployment and a stagnating population, Ireland has been transformed into a hi-tech ‘Celtic Tiger’, and attracts huge inward investment.
Overseas companies are lured by a pro-business climate, where corporate tax is set at only 12.5% – almost a third of the UK level.
Scenic but no longer a rural economy
The Irish economic boom is driven by, and lures, an increasing number of foreign companies. UK retail has a strong and growing presence – Tesco, Boots and Marks and Spencer being three notable examples.
Strong foreign investment
Over 1,000 overseas companies use Ireland as their European base, accounting for one quarter of GDP and 130,000 people directly. UK companies benefit from mutual EU membership, which also negates visa problems.
Many leaders in high-technology areas such as e-Business, engineering, information communications technologies, pharmaceuticals and medical technologies base their European operations in Ireland – IT giants Google, Apple, Intel and Microsoft to name four.
Nine of the world’s top 10 pharmaceutical companies also operate in Ireland. Foreign business accounts for one quarter of GDP and 130,000 people directly.
Perceptions of the ‘Emerald Isle’ as a largely agricultural nation can be easily dispelled by statistics. Its economy has been one of the fastest growing in the developed world since its metamorphosis accelerated dramatically in the 90s.
It posted 6.0% real GDP growth in 2005 – more than twice that of the UK, 2.4% more than the US, and four times as much as Japan.
Agriculture and traditional manufacturing have given way to a large service sector and a buoyant hi-tech industry. By 2004 the service sector accounted for two-thirds of the economy, industry for 28% and agriculture for only 6%.
Export-led and with a balance of payments surplus, Ireland is ranked 10th in the 2005 IMD World Competitiveness yearbook for exports as a percentage of GDP.
Geographically well-placed
A small island, the country has maritime access to the world markets. Ports in Limerick, Dublin, Cork, Waterford and Rosslare Harbour handle three-quarters of its trade.
Airports in Dublin, Cork and Shannon account for 125,000 tonnes of freight and 10 million passengers annually, and flights leave for European and North American destinations daily.
Ireland’s rail and road networks are not among the best in the EU, although investment is substantial and ongoing. Internal transport is facilitated by the country’s small size, which mitigates to some extent the cost of punitive excise duty levied on petrol. Helicopters and passenger planes travel a network of six regional airports.
It is geographically well placed, having access to the EU market of 537 million people, and neighbours the UK, the fifth largest economy in the world. A fifth of Ireland’s exports go to the US, although the majority – over 60% – go to the European Union.
UK and US businesses invest heavily in Ireland, and relations benefit from a common language, commercial culture and – given large ex-pat communities in both countries – strong cultural ties.
Recognised as an influential leader in technology in a recent UN report, it is a good place for hi-tech business to locate now, and in the future – around €2.5 billion has been spent in the last five years on research and development.
Tax incentives, business-friendly legislation and sophisticated telecommunications and financial infrastructures all make Ireland a great place to base e-commerce as well.
Highly knowledgeable workforce
A knowledge-based economy, its workers are well-equipped to accommodate hi-tech business: in the 20-29 age group, there are 23.2 science technology graduates per 1,000 people, outstripping France (19.6), the UK (16.2) and the US (10.2).
It’s a small wonder that the IMD World Competitiveness Yearbook lauds the Irish workforce as being among the most flexible and adaptable in the world. Countries renowned for their economic prowess, such as the UK and Japan, lag behind.
“Irish workers are not just good at accumulating knowledge,” says Bernard Collins, former Vice President of International Operations and Director of the International Board with Boston Scientific.
“They are also very good at applying it. There is an eagerness to get things done right the first time, and to do it better, faster.”
The same applies to productivity, with the US, UK and France all trailing behind in terms of GDP produced per person per hour. Ireland is in the top four countries in the world for output per capita in purchasing power terms.
Stable economy
With the fifth lowest level of unemployment in the EU, the Irish diaspora has finally been stemmed: only 16,000 emigrated last year, compared to an influx of 70,000. At 4%, unemployment levels are much lower than in France (9.6%) and Germany (9%).
Even in the UK – where the Labour Government has trumpeted its achievements in reducing unemployment – the figure is higher, at 5.2%.
Ireland’s population has now grown to 4.25 million – an 8% increase since 1996. Dublin and its surrounding areas are by the far the most populous part, with just over one million residents. Cork, followed by Limerick and Galway, is the next largest.
Those considering relocating business to the Republic should also note that at 40%, it has the highest proportion of people under the age of 25 of any EU country.
Business in Ireland will likely be less burdened by tax and pension costs than its European counterparts with higher dependency ratios. These demographics are favourable to businesses with younger customer bases, such as the leisure industry.
Some business costs are not so light. As of March 2005, industrial gas and electricity costs were far more expensive than those in the UK and US as well as much of Europe.
Factory rental costs are obviously more expensive in Dublin: €6-12 per square foot compared to €5-9 on average elsewhere in the country. Wage increases in recent years have also surpassed those in most of the rest of the EU.
Flourishing industries
However, with disposable incomes higher than in most of the EU, Ireland is an attractive prospect for purveyors of consumer goods. Its citizens spend an average of £3,422 per year on British goods – the highest per capita spend on British products in the world – so it is an ideal market to expand into for UK companies.
The tourist industry, too, is thriving. It centres on cosmopolitan Dublin, but will continue to develop elsewhere as people seek a broader Celtic experience.
Other prime areas for investment in Ireland are: construction; transport; energy, thanks to a deregulated market; the environment, given that the Government is spending €4 billion in order to meet its EU obligations; and healthcare, an area in which Government spending has risen to €11 billion.
