Globalisation — case study Essay Example

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The case study seeks to analyze Ireland’s power shift in terms of its economy in a significantly short period as compared to other nations. In the late 1980s, Ireland was one of the poorest countries within the European Union. In the decades preceding this period, it remained one of the poorest European nations. With high spending, poor infrastructure, lack of a manufacturing industry, and high rates of unemployment, the economy of Ireland seemed to have a grim future (Bergin et al, 2010). However, in the 1990s and at the turn of the century, the economy of the country shifted significantly owing to the changed policies relating to their relationship with other nations. The chances in trade policies across Europe was a significant tool used to cost its economy to greater heights. Another reason for its success is the high rate of foreign direct investment, which has proven to increase the overall revenue, living standard, and reduce the unemployment rate. The selection of Ireland was mainly due to its strategic position in the EU. With a better consciousness of the challenges coupled with the advantages that the country had over other European nations, the nation was able to reposition themselves in the European and the larger global economy.

Characteristics of Ireland’s Political Economy

Ireland continues to be praised as having one of the most successful political landscapes in Europe. According to Thorntorn (2014), Ireland scored highest on the scale of political stability. This is a crucial element in the economy, which boosts an ease of doing business, especially with foreign investors and corporations. However, this was not always the case, as Alfaro et al (2010) note. In order to be given the title Celtic Tiger, the nation underwent dramatic economic changes which brought them from the brink of default and poverty, and into an economic giant in a matter of a decade.

Before the late 1980s, Ireland had sunk into more debt as a result of high government spending and lack of effective management of their resources. In order to change this, there needed to be political changes to begin with. Ireland was created in 1921 as a result of its separation from Britain’s colonial rule. From this point, the country was described as a ‘wounded nation’ with severe shortage of funds, infrastructure, and high unemployment. In the 1920s, the country could barely provide basic resources such as water to its citizens (Giblin et al, 2013). The country’s main source of revenue was through export of agricultural products, much of which went to the United Kingdom. Even so, this sector was still severely underdeveloped, and thus unable to sustain the growing population as well as spending.

Towards the 1950s, the economic conditions were further exacerbated through the introduction of the Finance Act of 1932, which placed further financial restrictions through increase in tariffs. However, towards the early 1960s, the country slowly lowered these restrictions, and marketed themselves as the ‘young Europeans.’ The move was initially designed to enable its local industries to develop while restricting international trade, which would be too competitive for its local market. It was during this time that Ireland was beginning to develop a sense of nationalism. This was an ideology aimed at improving the welfare of the country. Soon enough, it was evident that this political move did not work in the best interest of the country because it exacerbated the isolation that it was already experiencing.

Thus, in the mid 1950, the government aimed to shift their agenda to a more pro-market one, thereby easing the existing trade restrictions (Giblin et al, 2013). Tax reliefs were granted to some sectors, while the government leaned towards foreign investors. After joining the International Monetary Fund and the World Bank, the government was able to establish the Control of Manufacturers Act, which relaxed the export and import barriers. Furthermore, the government was able to develop some economic programs, which allowed for development of specific sectors.

From a macroeconomic perspective, one area that challenged the country’s development was lower education levels. This area was addressed through increasing the school dropout age from 14 to 15 years. Furthermore, specific levels of education were readjusted in order to provide for a more practical curriculum. The government also made moves to increase education levels through making secondary education free (Alfaro et al, 2010).

One of the government agencies that were at the center of economic and political development was the Industrial Development Authority. This body was responsible for establishing regulations in import and export. It was also a tool used to market the country to foreign investors in order to make them invest. Investments would not only boost the country’s economy, but also partly solve the issues of high unemployment.

Attractiveness to Foreign Direct Investment

To a large extent, foreign direct investment was a significant phenomenon that fueled Ireland’s economic growth. Foremost, the country became more aggressive in marketing themselves to the foreign investors. The government made efforts to ease restrictions in trade, which allowed ease of entry into the Irish markets. Secondly, the low education levels rose significantly as a result of the changed laws, which meant that investors would have a ready workforce. According to Thorntorn (2014), investors were especially attracted to the “quality of the workforce with particular reference to its flexibility, adaptability, strong work ethic, and high levels of educational attainment” (4). Skilled labor was available in areas such as Science and Engineering, where heavy investments continue to be made.

To Ireland, political stability meant that the successive administrations would maintain the pro-business ideals, which drew more investors. The sense of nationalism instilled in the following generations meant that people would be willing to make decisions that best work for the larger Irish community. The IDA was a powerful tool that adjusted the economic landscape to one that suited and attracted international markets (Arnold et al, 2011). The company was also in charge of selecting specific types of companies which would make profitable investments that allow for the development of the country.

Some of the conditions included picking companies that used high amounts of local raw materials, natural resources, and labor. The IDA was also keen on selecting companies that provided high likelihood of financial stability through providing exports. Financial stability also meant that growth would be strong in terms of product or service output. Thus, the manufacturing industry was of special interest to the IDA. Ireland also wanted companies that had high investment, because it meant that they would become more committed to their overall success.

The foreign investors also benefited from protections of intellectual property. This allowed investors to become more open to not only expanding their business to Ireland, but also developing them therein. The overall cost of doing business was made favorable for investors, with tax incentives being introduced. In addition to this, there were regulatory incentives introduced into the market, which allowed for investors to become more competitive with the local markets. Ireland needed to show that the market was favorable for them, with high competition existing between them and the rest of the European Union. Its connection to this trade giant made it an especially attractive destination, because it meant that investors would be able to experience the trade freedoms across Europe courtesy of the EU (Bergin et al, 2010).

Another area of attraction was the ease in which foreign labor force was allowed. In as much as Ireland wished to reduce the unemployment rate, there was a need to recognize that the various areas would be better handled by a foreign labor force. Ireland also exceeded in their process of building infrastructure to support the foreign industries. Through better management of funds, the country was able to develop schools, factories, social amenities, and other necessities that enhance economic development.


Ireland’s economic haul has been described as one of the greatest economic shifts in Europe. Through the shift in political and economic landscape, Ireland was able to move from being one of the poorest counties in the European Union, to one of the richest. The change is highly attributed to foreign direct investment, which was made possible through making Ireland’s economic environment more favorable to foreigners. This was made possible through ease of trade restrictions, education enhancement, and careful selection of firms by the IDA, aggressive marketing, and its connection to the EU.


Alfaro, L., Dev, V., & McIntyre, S. (2010). Foreign Direct Investment and Ireland’s Tiger Economy (A). Harvard Business School.

Arnold, J. M., Brys, B., Heady, C., Johansson, Å., Schwellnus, C., & Vartia, L. (2011). Tax policy for economic recovery and growth. The Economic Journal, 121(550).

Bergin, A., Conefrey, T., FitzGerald, J., & Kearney, I. (2010). Recovery scenarios for Ireland: an update. ESRI Quarterly Economic Commentary, Summer.

Giblin, T., Kennedy, K., & McHugh, D. (2013). The economic development of Ireland in the twentieth century. Routledge.

Thorntorn, Grant. (2014). Foreign direct investment in Ireland: Sustaining the success. Amarach Research.