Ireland: From Poverty to Prosperity and Back Again

The economic fortunes of Ireland since its entry into the EU (then EEC) in 1973 can be usefully divided into three distinct periods: adaptation to EU membership; the 'Celtic Tiger' years; and the financial collapse since 2007. In 1973, Ireland's per capita GDP was about half of the EU average but by 1992 it had exceeded 100 per cent. This rapid transformation was due to a number of factors: not least the beneficial effects of the CAP and successful exploitation of the EU structural funds. The period from 1992 to 2007 saw further acceleration of this prosperity culminating in the 'Celtic Tiger' phenomenon. Among relevant factors here were strong inflows of FDI; enlightened training and educational policies; a favourable demographic profile; a benign regulatory regime; and inflows of skilled immigration. The period since 2007 has seen a quick reversal of Ireland's economic fortunes. Much of this was due to an overblown construction sector, a loosely regulated banking system, and a loss of competitiveness arising from excessive wage inflation. The political consequences of this financial collapse have been quite profound.