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The Rise of the Celtic Tiger: How Ireland's Economy Transformed in Just a Decade
Between the mid-1990s and the late 2000s, Ireland experienced a period of astonishing economic growth, a period known as the "Celtic Tiger." The term refers not only to the economic phenomenon of Ireland, but also to the process of Ireland's transformation from a poor country in Western Europe to a wealthy country. The main driving force of this transformation is foreign direct investment, coupled with domestic policy reforms and social cooperation, making Ireland seem to have changed everything in just ten years.
"Ireland's economic growth has been described as a rare example among Western countries, matching the growth of East Asian countries."
In the early 1990s, Ireland's economic situation was quite sluggish relative to other Western European countries, with both poverty and unemployment rates remaining high. With Ireland's average annual economic growth rate reaching 9.4% from 1995 to 2000, this change is astonishing and rapid. Over the next decade, the economy continued to be stable, although growth slowed to 5.9%. During this period, Ireland successfully attracted a large amount of foreign investment, which was closely related to its low tax policy and friendly business environment.
There are many reasons for this economic boom. First, Ireland's low corporate tax rate has attracted many multinational companies, such as Intel and Microsoft, who have chosen to set up base in Ireland. Secondly, Ireland’s female labor force participation rate has increased significantly, which has further boosted economic growth.
"Some commentators believe that Ireland's budget during the period of high growth is more beneficial to high-income groups."
However, along with economic prosperity, the gap between rich and poor in society is also widening. According to a report by the Economic and Social Research Institute of Ireland (ESRI), between 2004 and 2005, the income gap showed a widening trend, triggering discussions on the fairness of economic policies. Even though the unemployment rate dropped to a low of 4.5% at the end of 2007, the rising cost of living sacrificed some people's purchasing power.
During the peak period of the Celtic Tiger, Ireland's gross domestic product (GDP) surged, which also led to rapid growth in consumer spending, and people's disposable income reached a record high. For example, in 2004, domestic external holiday expenditures accounted for as much as 91% of total holiday expenditures. This kind of consumer culture not only changed Ireland's economic structure, but also affected its social culture.
“Many Irish people believe that immigration is vital to economic development and that this has changed the socio-demographic structure of Ireland.”
With the increase in the number of high-income people, Ireland's immigration problem has become more and more obvious. Many young people choose to leave the countryside and flock to cities to work and live, leading to the emergence of a multicultural trend in Ireland. In 2007, an estimated 10% of Ireland's residents were foreign-born, mostly workers from Poland and the Baltic States.
As time went by, the arrival of the global financial crisis in 2008 led to a sharp decline in the Irish economy. Since 2008, the country's economic growth rate has completely lost momentum, and GDP dropped sharply by 14% before 2011. Looking back at this time, historian Richard Aldous said the Celtic tiger was as extinct as the moa. Many economists believe that this period of history will become a model for future research, showing the consequences of economic policy mistakes.
"In 2009, an editorial in The Irish Times wrote: 'We have fallen from the prosperity of the Celtic Tiger into a cold sea of financial fear.'"
With the establishment of the new government and the implementation of reform measures, there was an economic growth of 6.7% in 2015, marking that Ireland has once again entered the track of strong growth. This makes people think, how should Ireland find its position in the global economic environment in the future?
