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ECONOMY
Ireland boasts a vibrant, globalized economy, with GDP per capita second only to Luxembourg’s in the EU. The “Celtic Tiger” period of the mid-late 1990s saw several years of double-digit GDP growth, driven by a progressive industrial policy that boosted large-scale foreign direct investment and exports. In recent years, Ireland has experienced more moderate growth, coupled with price levels above the EU average. The 2003 world economic slowdown affected Ireland as real GDP growth slowed to 3.7% and the government budget fell into deficit. The economy strengthened in 2004, however, with a small government surplus and real GDP growth of just above 5%.
In 2004, U.S. exports to Ireland were valued at $8.2 billion, less than a third of the value of Irish exports to the U.S. ($27.4 billion). The range of U.S. products includes electrical components, computers and peripherals, drugs and pharmaceuticals, electrical equipment, and livestock feed. Irish exports to the United States represent approximately 20% of all Irish exports. The U.S. is Ireland’s second-largest export destination--second only to the U.K. Exports to the United States include alcoholic beverages, chemicals and related products, electronic data processing equipment, electrical machinery, textiles and clothing, and glassware. In 2004, Irish exports to the United States rose by 6% compared to 2003, while Irish imports from the United States rose by roughly 1%.
In 2004, the United States contributed $18.5 million to the International Fund for Ireland, a program that supports cross-border initiatives, cross-community reconciliation, and economic development.
U.S. investment has been particularly important to the growth and modernization of Irish industry over the past 25 years, providing new technology, export capabilities, and employment opportunities. Ireland, with 1% of the European Union’s (EU’s) population, attracted 8% of all U.S. investment in Europe in 2003. In 2004, there was $10.5 billion worth of new U.S. investment in Ireland, more than twice the U.S. investment flow to China. Currently, there are more than 570 U.S. subsidiaries, employing approximately 90,000 people and spanning activities from manufacturing of high-tech electronics, computer products, medical supplies, and pharmaceuticals to retailing, banking and finance, and other services.
Many U.S. businesses find Ireland an attractive location to manufacture for the EU market, since it is inside the EU customs area and uses the euro. U.S. firms year after year account for over half of Ireland's total exports. Other reasons for Ireland's attractiveness include: a 12.5% corporate tax rate for domestic and foreign firms; the quality and flexibility of the English-speaking work force; cooperative labor relations; political stability; pro-business government policies; a transparent judicial system; strong intellectual property protection; and the pulling power of existing companies operating successfully (a "clustering" effect). Factors that negatively affect Ireland's ability to attract investment include: increasing labor and energy costs (especially when compared to low-cost countries in Eastern Europe and Asia), skilled labor shortages, inadequate infrastructure (such as in the transportation and Internet/broadband sectors), and price levels that are ranked among the highest in Europe.
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