COMPETITIVENESS IN THE IRISH ECONOMY

Competitiveness in the Irish Economy

Competitiveness in the Irish Economy

Introduction

The republic of Ireland is small open regional economy. Ireland is the member of European Union since 1972 and also a founding member of Euro zone. The population of Republic of Ireland is around 4.4 million, and it has a land area of about 75,000 square km, with further population in Northern Ireland at around 1.7 million (CIA, 2012). Ireland economic growth got a rapid pace in the early 1990s, which was mainly due to the higher levels of investment into the Irish economy by the multinational companies. This foreign direct investment was principally from the United States, which trade into European single market and beyond. Ireland economy enjoyed great benefits in the late 1980s and 1990s due to the foreign direct investment. The other advantage that took the pace in Ireland economy was its membership of World Trade Organization (WTO) from 1967, the membership of European Union and successive European single market situated in Ireland (O'hagan, 1995, p. 126). In this paper, I will be discussing about recent trends in competitiveness in the Irish Economy and why competitiveness is such an important issue for Ireland. In the conclusion, some recommendations will be discussed for policies that can improve Ireland's competitive position.

Discussion

Measuring and benchmarking competitiveness of Irish economy is the on-going and continuous process of the policy makers over the last two decades. The cost environment of Irish economy has the major impact on the domestic and international markets, and the policy makers are finding appropriate majors for maximizing the wealth and creation of employment for the citizens (Porter, 1990). Competitiveness in Ireland economy is due to its English speaking population and its membership of the European Union. Ireland economy is rich with low cost skilled labor, which resulted in high levels of investment into the education sector from 1970s. Besides that, Ireland has competitive industrial policy which favors the foreign direct investment from the late 1950s (Forfás, 1996). The foreign direct investments mainly include the investments in critical infrastructures. This progress in the economy of Ireland was mainly achieved by the membership of European Union, both in terms of capacity building for planning and development of infrastructure, and by means of structural funds support programs (OECD, 2009).

In current scenario, the Irish economy is facing the economic challenges, which are daunting the economic path of the country. Policy ...