Case study analysis foreign direct investment and Ireland’s tiger economy
Ireland was Europe’s most backward agricultural country in the 1980s, “The Economist” called Ireland “European beggars” in 1988. However, the economy in Irish rapid rise at an alarming rate as it joined EU and euro area since 1990s, as well as the low tax rate into long mode. Ireland’s GDP per capita up to $ 60,000 in 2007, it was the second highest country in EU and the fifth in the world. The miracle of Ireland successful economic transformation in a short period of time has been seen as “Celtic Tiger”. In 2000, the construction industry and the financial industry became Ireland’s main driving force of economic growth; therefore, it leaded to the housing market bubble. In 2008, due to the U.S. subprime mortgage crisis, Ireland’s housing market bubble burst, the hard-hit of construction industry leading to the bank industry to bear a huge bad debts. To rescue the banking sector, Irish government provided guarantees on bank debt and injected large amount of funds to banks, therefore, Irish government fall into an unprecedented crisis. The following essay will analysis the Political economy in terms of political policy, sociocultural policy and technology policy as well as the impact of Global Financial Crisis on Ireland’s economy.
Foreign Direct Investment (FDI) happens while a global business from one country has an ownership position in an organizational division located in another country (Cullen & Parboteeah, 2008). A country’s facility to attract FDI impacts its economic riches significantly; as such investments generate jobs and bring in tax revenues.
Ireland’s financial achievement is considered to be highly related to FDI, as resulted by a statement by the Enterprise Strategy Group (Alfaro & McIntyre, 2008). Both employment data and macroeconomic data also showed to point towards the strong relate between FDI and the strength of the...