Irish economy over the period (1994-2009).

IRELAND AND ECONOMIC ENVIRONMENT
IRISH ECONOMY OVER THE PERIOD (1994-2009).


Ireland remarkable economic growth during the last decade has attracted the attention of economist and development specialist around the world. The colloquial term “Celtic Tiger” has been used to refer to the country itself, and to the years associated with the boom. This boom in Ireland was between 1994-2007, this period of rapid economic growth. But after 2007 Irish economic was change, economy slow down, on market starts the recessions. About this situation on Irish market influence for example ; including EU membership and subsidies increased, increased exports, increases in foreign direct investments, delayed convergence, good macroeconomic management, increased level of education and a social contract between government, trade unions and employers.

In this essay I would like show haw Ireland changes during this year’s, at 1994 to today. I divide my essay on three part, that’s help me to better show Ireland economic to cross years. In each phase I include the overall employment situation , labour force, employment major sector, show levels of unemployment , emigration and immigration flows , export and import products , balance of trade and balance of payments also I include the information about actual Irish inflation and compare with three other European Countries.


1ST PHRASE OF CELTIC TIGER ( 1994-2000)
Between 1994 and 2000 the annual rate the
YEAR GDP
1994 6,00%
1995 9,50%
1996 7,90%
1997 10,90%
1998 9,00%
1999 9,00%
2000 10,50%


This information come from “After the Celtic Tiger” P.Clinch (2002)
At 1994 to 2000 the GDP is at 6% to 10.90 %. During that period Irish living standard rose dramatically to equal then eventually surpass that of all but one state in Western Europe.


The performance of the labour market has been even more remark. The number of work has risen by 45 % over the past twelve years, representing the annual average increase of over 3 % a year. Labour forces 1.77 million (1999 ) and labour force - by occupation: services 63%, industry 28%, agriculture 9% (1999 ).
The graph below show compare between the Ireland Employment and rest of the European Union Employment.

This information come from “After the Celtic Tiger” P.Clinch (2002)

This information come from “After the Celtic Tiger” P.Clinch (2002)-

Economic growth that the economic is getting bigger-more is being produced, national income is rising. A larger economy doesn’t necessarily imply commensurate increases in income per person. For this reason the distinction between the growth of total output and output per capita is crucial.



http://images.google.com/imgres?imgurl=http://www.skillsstrategy.ie/images/1.5.2a.jpg&imgrefurl=http://www.skillsstrategy.ie/1.6.html&usg=__1uCWdsRbgWCtCwa-Uick2C1A-Sw=&h=219&w=520&sz=28&hl=pl&start=9&sig2=_53GFZpvdviziP_TeHDkIA&um=1&tbnid=DhrKykDikv8XzM:&tbnh=55&tbnw=131&prev=/images%3Fq%3Direland%2Blabour%2Bforce%2B1994%26hl%3Dpl%26lr%3D%26client%3Dfirefox-a%26rls%3Dorg.mozilla:pl:official%26hs%3Dj68%26sa%3DN%26um%3D1&ei=bF8FS6S0HIWnjAeQv-nNCw
The rapid growth of employment has been really exceptional feature of Ireland recent boom. The boom in employment has been when the total number at work stagnated and the natural growth of the population comes back from emigration. Ireland expectation rate of employment growth was facilitated by a very elastic supply of labour. The elastic labour supply allowed employment to grow at an exceptional pace without –until 1999-2000 reaching the point at which labour shortages led to significant wage inflation. This combination was facilitated by the contribution of the partnership process to wage moderation.



The factors that accounted for highly elastic labour supply therefore lie at the heart of the Irish economic “miracle”. They include for example;
*Once of boom got underway the openness of the labour market led to a sizeable net inflow of population.
*The large initial of unemployment. The unemployment rate fell from (average) = 16 % in 1994 to under 4 % by the end of 2000. (That is about 100,000 additional workers)
*Women’s labour –force participation rates had been rising slowly, but the rate of increase accelerated sharply during the economic boom ( The graph below show the Female Participation in paid labour force in 1998.)

P.Clinch”After Celtic Tiger” p48
After 1990s Ireland has created an environment for growth and benefited from a number of external factors. Globalization and rapid technological advances spurred the industries in which Ireland was strong ,had relatively low wages, governments grants, low taxes rates and could offer further competitive advantages and what is important the Enterprise Ireland had provides financial, technical and social support to start up business. For big company like; Microsoft, Dell, Hewlett Packard and IBM the Ireland country had too attractive location for serving the increasingly integrated European market. Also these companies give all lots of access to employment and reduce number of unemployment people. Moreover these companies are on the Irish market to nowadays. This international company give a new emphasis has been placed on educations and personal skills, because the firm needed the good qualification and experienced person. According P. Clinch (2002) wrote: “ In estimated that between 1990and 1999 GDP increased by 75%, but the tree sectors dominated by multinational corporation
*(MNC’s)- chemicals, *computers and instrument engineering, *electrical engineering”
Economic growth, more jobs, and rising living standard meant the resolution of the emigration problem, which had believed Ireland for generations.
The most obvious policy available to stimulate the supply of labour force is to encourage immigration. A flow of working- age adult has many attractions as a way of supplementing the natural increase of the labour force. But the impact of large-scale immigration on the well-being of the population has to be carefully evaluated.

http://migration.ucc.ie/irishmigrationinthe1990scharts.htm
The high net emigration rate of the 1980s was replaced by what is now the highest net immigration rate in the EU. For the first time in modern history Irelands is witnessing the growth of communities of residents. At 1994-2000 the most people immigration to Ireland than emigration because people can find any job. People who come to Ireland would like find better and easier “live “ but the first term after coming is very hard for all international person.
The most obvious policy available to stimulate the supply of labour force is to encourage immigration. A flow of working- age adult has many attractions as a way of supplementing the natural increase of the labour force. But the impact of large-scale immigration on the well-being of the population has to be carefully evaluated.

The volume of Irish exports increased dramatically over the 1995–2000 period, registering average annual growth of 16.9%; the rate of import growth over the same period was only slightly lower at 16.6%.The year 2000 was the first since 1991 that the current account was not in surplus. The reduction of the balance of payments surplus in the early 2000s suggested that the level of Irish imports was increasing due to increased demand for luxury items and services, rather than from a decline in exports. Irish export growth during those years, in fact, consistently surpassed EU growth.

Balance Trade of export and Import

NOTE: All figures are in millions of U.S. dollars, and not seasonally adjusted unless otherwise specified. This information come from ; http://www.census.gov/foreign-trade/balance/c4190.html


Balance of Payments - Current Account €m

The reduction of the balance of payments surplus in the early 2000s suggested that the level of Irish imports was increasing due to increased demand for luxury items and services, rather than from a decline in exports. Irish export growth during those years, in fact, consistently surpassed EU growth.

Ireland’s inflation rate reached twice the euro zone (look on figure below) average during 2000.This outcome would hardly have been thought possible at the time when adapted the single century, when it was widely anticipated that membership of the euro zone would ensure that our inflation rate would remain very close to that of the continental economy.

CAUSES OF INFLATION
* over the issue of money * print of banknotes which are not covered * interest on the Money * unexpected and rapid growth of production costs for example energy * unbalanced state budget (budget expenditures exceed revenues) * monopolized economy * debt principal companies in the sector
EFFECTS OF INFLATION
*Real depreciation of the liabilities and claims, since the purchasing power of money decreases, consumers want to get rid of it by purchasing goods whose value does not decrease. *Thereby drive the economic sectors that produce durable goods (by a wide range of machinery, jewelry, gold, etc.). *As the rising prices of goods, consumers prefer to buy their cheaper alternatives * Effect leads to an increase in prices of other goods

Irish and European Zone Inflation (“After the Celtic tiger”, Peter Clinch, p.84)


At 1994 to 2000 the inflation rate don’t was high. The best number of inflation is 1999 year, but Ireland still had very high percent of inflation if we compare with all Eurozone. P.Clinch wrote “People are so less happy when inflation is high”. Because people know when is higher inflation the cost of live going up.




2nd PHASE OF CELTIC TIGER (2000-2006)
The Celtic Tiger's momentum slowed sharply in 2002, after seven years of high growth. The Irish economic downturn was in line with the worldwide downturn. The economy was impacted by a large reduction in investment in the worldwide information technology (IT) industry. The industry had over-expanded in the late 1990s, and its stock market equity declined sharply. The economic downturn in Ireland was not a recession but a slowdown in the rate of economic expansion, this situation I will explain through statistics, graphs and information about 2nd phase of Celtic Tiger.
Number of GDP come from (www.oecd.org)
In 2000 GDP growth in Ireland was around 9% but after 2001 this amount radically change , the GDP in next year was only around 6 % that’s the results of slowdown global economic . However between 2004 to2005 the GDP go up at nearly 1,5%. This result inform as about better condition on Irish market. Ireland GDP on end of the 2009 is expected -6.5%.



In second phase of Celtic Tiger Ireland still have problem with high inflation. The product of high exchange rate changes of two main trading partners of the Republic outside the euro area.
www.cso.ie
Since 2000 inflation decreased slightly to rise again in 2006. I would like give few example why this happened: * the factors beyond the control of Irish policy maker such as rising world oil prices *the weakness of the euro combined with the overvaluation of sterling. *Boom in housing (rising houses prices also added to high inflation rate). *The prices in the non-traded services sector such as restaurants and hotels have also increased. *Deficit in skilled labour forces specially IT and pharmaceutical increased wages level in that sectors.

Irish and European Zone Inflation (“After the Celtic tiger”, Peter Clinch, p.84)
In 2001 Ireland produced 25% of all European PC’S and Dell, IBM, Apple and HP all had sizeable Irish operations, with Dell having the major European manufacturing plant in Limerick. There has been a renewed investments by multi –national firm. Intel had resumed its Irish expansion Google created an office in Dublin. Domestically, a new state body, Science Foundation Ireland, was established to promote new science companies in Ireland. A drive had been underway to attract high-skill jobs to Ireland.
The government has set up Science Foundation Ireland[36] to promote education for highly-skilled careers, and to invest in science initiatives that will further Ireland's knowledge economy. Through this people have to go to university or pass the 3th level of education if want get better work. During the years at 2000 to 2006 the Irish company every each Imports more merchandise and goods. In this period the most exported products was , IT technology, pharmacy and chemicals product , machinery and transport equipment and food and live animal. Ireland in 2000 to 2006 years more exported than imported product. At this way the economy is constant and country is richer.

The slowdown in the global economy and slower than predicted growth in the euro area was expected to negatively impact Irish exports. The current account was forecast to return to a surplus in 2004 due to an improved EU and world economy.

WWW.CSO.IE


The unemployment rate in Ireland hit a record low 145,100 in September 2000. Most economists say Ireland is close to full employment; the government has started a drive to persuade Irish abroad to return, saying that at least 200,000 workers from abroad will be needed over the next seven years. In 2002 , there were more than 224,000 non-Irish residents in the Republic of Ireland , ina total population of 3.9 milion..On 1 May 2004 Ireland fully opened its labour market to the nationals of the 10 new accession states. Since then nationals of these states are free to come to Ireland to work or reside without restriction or prior permission. They have an unfettered right to come to work in Ireland and to change employment as circumstances or opportunities arise.

Information come from ( http://stats.oecd.org/index.aspx?queryid=451) Information come from European Commision Eurostat

One of the bigest succes of the Irish economy has been new job creation. From 1990 to 2005 employment soared from 1.1 milion to 1.9 milion.
People who come from to Ireland can find employee to industrial base relies on 149,654 jobs in 1,273 foreign –owned company companies and on 147,895 jobs in 7,390 Irish firms.
At the turn of the years 2000 and 1001 the amount of unemployment go down , more people get the work , but after 2004 when the country bounder was opened and to Ireland come a lots of international people the unemployment rate was only 4,4% that’s the reason of requirement of labour.





Employment usually find the job on services, building and industry market.
In the 2006, the total number of immigrants that entered Ireland was around 100,000-- up almost 100,500 over the previous year and substantially higher than for any other year since these specific immigration statistics began to be collected in 1987. However, CSO figures showed that emigration from Ireland increased as well; during the same period in 2006, the number of people leaving the country was around 39,000. This is the highest figure since the early 90s. As a result, while immigration is increasing, net migration has fallen from the record high around of 71,000 in the year 2006 .
Note: Immigrants are defined as individuals who are usual residents of Ireland who did not usually live in the country on April 30 of the previous year. Source: Central Statistics Office (CSO), Dublin.
Information come from http://www.airninja.com/worldfacts/countries/Ireland/population.htm

Each year the population rise. At 2000 to 2006 in Ireland population grow on 264.978 peoples.
At 2004 the Ireland is seen as the land of opportunity by main workers from the 10 newest EU member states.
This increase ware motivated for opened boundary. In 2004 huge amount of international people come to Ireland, usually that was Polish, Slovakian and Russia people. This nationality come to Ireland looks for job and for better live. If many international people comes to Ireland have to live somewhere and rent the houses, that’s was way why at 2004 increases the building sector.

DOWNTURN AND RECESSION IN ECONOMY
(2007-2009)
Ireland is in deep economic crisis. Real GDP is shrinking at an annual rate of over 8% and the unemployment rate climbed to 11% in March taking the jobless rate to a level last seen in the mid 1990s. Consumer price inflation is now negative - the prices of goods and services are falling as are asset prices, especially property where the housing market is mired in deep slump. It will come as no surprise that consumer confidence has collapsed and that the Irish government’s own finances are in a real mess - income taxes may have to rise to plug some of the widening gap - the fiscal deficit now means that Ireland will suffer a further credit downgrading in the near future.
http://www.indexmundi.com/ireland/gdp_real_growth_rate.html
The Irish economy began to experience a slowdown in 2008.
The Gross Domestic Product (GDP) which measures the value of all the goods and services produced in this country, fee0,8 % in a second three months of 2008 compared with the some quarter of 2007.That was second quarter of negative economic growth, which is the definition of recession
As of March 2009, the government was looking for ways to cut expenditures over the next five years in order to drive the budget deficit down to 3% of GDP by 2013. As of March 2009, the government was predicting a 4% fall in GDP, deflation at 3.5%, and double-digit unemployment ( see unemployment graph below).


http://www.indexmundi.com/poland/inflation_rate_(consumer_prices).html

Inflation in 2007 was 3,9% but in next year the nuber of Inflation grow up at 1% and that was heart economy situation,but this year (2009) the inflation again go down about 0,80%. That’s the good information for people and beceause if number of inflation is smaller than national market is better for people who live in this country.


http://www.indexmundi.com/poland/inflation_rate_(consumer_prices).html
Inflation, this is the process of price, resulting in uncontrolled and socially unacceptable changes in national income. In today's global economy, it is generally, though with varying intensity in different countries. Between Ireland and 2 other European country inflation rate is similar, only United Kingdom have smaller value of Inflation rate, From this statistic we can define haw looks economy in this country. Ireland , Poland and Spain still have highest inflation rate that’s the way of increase in prices during the 2009 year. England slowly goes out from recession and collapse of economy, more peoples can find works, the price goods go down and more people investment in England market. If inflation will be smaller than people will have better live.


Employment and Unemployment (ILO) '000s

Total of Employment between 2007 and 2008decrease of 1,1000
person that’s numbers of
unemployment increase
about 1,1000 person, that’s show haw Irish economy slow down because every year grow number of people without job.
Figures released by the CSO (www.cso.ie) say that Ireland’s Unemployment rate is at the highest it’s been for 3 years(.2004-2007) The Department of Enterprise, Trade and Employment also issued new figures showing there were 2,305 redundancies in July2007. This brings the total for this year up to 15,054 – 8.3pc higher than last year. In January 2008 the Irish Unemployment rate rose to a 7.5 year high, coming in at just under 5%.. In April 2009 the unemployment rate risen at 11.4 % and will still rising, end of the year can rise to 12% maybe 13 %. From report by the Economic and Social Research Institute (ESRI) said that “unemployment would rise by 17% next year (2010).

http://www.finfacts.com/artman/uploads/3/Irish-employment-2009unemployment-sept222009_1.jpg
If we look on this picture we get information haw many people lost the full time job or have to change full time work to part time work. What give us smaller earning every year. When people didn’t get the wages or got only small amount then can’t bay more items. Thus potentially client cant earn another in such a situation the economy is in a deadlock.
The pressures of recession affect unskilled, semiskilled and manufacturing jobs for example Dell I Philips in January 2009 transfer the manufactory from Ireland to Poland, at this situation in Ireland loses the 1700 manufacturing jobs, one of the reason why this company change country was high labour and company cost (tax, wages, rent etc).


This graphs show the employment Major sectors.
In 2007 the major sector of employment was *Construction(13%), *Wholesale & Retail Trade( repair of motor vehicles and motorcycles) (14%) *Industry (14%) *Human Health and Social work Activities (10%) of whole employments.


http://www.cso.ie/statistics/empandunempilo.htm
In 2008 Construction employee go down about 2%,Industry and Human Health was on the same level like year before and Rentail Trade increase 1%.. Only Construction, Trades and Transpiration each year have change with quantity of employment people. Usually those kind of companies hardest feel recession. But all the sector still have the same or little be changed number of employment percentage between 2007 and 2009 year.



The Irish Export and Import is also changed at 2007 because number of exported products decreased about 2,838 m euro , the same situation is with imported products (5.901 million euro)http://www.cso.ie/statistics/botrade.htm

The economy is affiliated with the transport of huge financial problems related to the high price of fuel, ferries or fees associated with tax. This is due to also recession and the decline of the economy, moreover large amount of freight business was closed or the contract with the other country has been limited. The balance trade in 2007 is 25.740 and in 2008 is only 28.820. In 2001 the balance trade amounted 38,047 million euro that is about 10 million euro smaller.
http://www.cso.ie/statistics/balanceofpayments.htm
In 2008 stood at almost -5.2% of GDP. However the deficit
narrowed to around -4% over the first half of 2009 and
according to forecasts, is projected to narrow further over the next couple of years.


In the year ending in April, 2007, the total number of immigrants that entered Ireland was 109,500 -- up almost 2,000 over the previous year and substantially higher than for any other year since these specific immigration statistics began to be collected in 1987. However, CSO figures showed that emigration from Ireland increased as well; during the same period in 2007, the number of people leaving the country was 42,200. This is the highest figure since the early 90s. As a result, while immigration is increasing, net migration has fallen from the record high of 71,800 in the year ending April 2006 to 67,300 in the year ending April 2007.
In April 2009the number of emigrants is estimated to have increased by over 40% from 45,300 to 65,100, while the number of immigrants continued to decline over the same period, from 83,800 to 57,300.These combined changes have resulted in a return to net outward migration for Ireland (-7,800) for the first time since 1995. But Immigration of all non-Irish national groups showed a decline, with those from the EU12 countries showing the greatest fall from 33,700 in April 2008 to 13,500 in April 2009, a decline of 20,200.

http://www.cso.ie/releasespublications/documents/population/current/popmig.pdf


Recession
In September 2008 Ireland became, the first euro zone country to officially enter recession. The recession was confirmed from the Central Statistic Office (www.cso.ie) showing the bursting of the property bubble and collapse in consumer spending terminated the boom that was the Celtic Tiger.
Many factors contribute to an economy's fall into a recession, * Inflation. Inflation refers to a general rise in the prices of goods and services over a period of time. The higher the rate of inflation, the smaller the percentage of goods and services that can be purchased with the same amount of money. Inflation can happen for reasons as varied as increased production costs, higher energy costs and national debt.
*Building boom - which caused the unemployment of millions of construction workers and workers engaged in producing and supplying materials to the building industry
*Stock collapse : The collapse of the stock market wiped out the savings of millions of shareholders, created adverse expectations that ended up reducing consumption and investment.
*The rate of unemployment . Usually, the rate of jobless people remains steady every month. But if there is a constant, steep rise in that number, then this could be a sign of recession. People don’t have work than don’t spend allots of money on own expenses.
*Price going up. When prices of food, fuel and other utilities shoot up - and the government seems helpless to do anything - then it could be said that inflation is fanning the flames of a possible recession. Every one product is more expensive but the wages is still the same than people after shopping and bills will have smaller money than before increasing.
*Company expencess- Company doesn’t employee more people. Many companies might also offer voluntary retirement programs in order to reduce their workforces and cut expenses. Also production of manufactured goods was made more costly by environmental laws and regulations, which not only made it more costly to produce goods but caused a decrease in prospective profits negatively affecting investment in manufacturing and reducing our ability to compete with foreign manufacturers.
*Prices Of Property And Stocks Come Down- When repossessed homes and stock prices come down in value, but nobody has the funds to buy them





The Celtic Tiger is identified as a transitory and relatively short lived phenomenon at 1990 to 2005. This period is not a miracle but this is result of several positive factors, including demographic change and positive policy environment, interacting to produce a burst of rapid economic growth. In this essay I show tree phase of Irish Economy. at the turn of the years is shown as the change different sectors through employment (number of unemployed and the employed), a variable number of inflation and GDP. Also I presented the population migration, export and import products from countries not only of the European Union and although that has changed as the Balance Payment and Trade Balance. Irish market changed from the richest to one of the poorer country. As the first the first country in the European union announced recessions in 2008. At 2008 Irish economy feeling the effects of the financial crisis better than other countries and a strong European currency adversely affects the export. It is also concerned number of people not like inflation and also a big reason for that is the high fees and prices in the shops. However let's hope that Ireland will rise from the ruin and its economy will grow from year to year until it becomes the Celtic Tiger 2.




Bibliography
• Clinch P. & Convery F. & Walsh B. (2002), “After the Celtic Tiger”, Dublin, The O’Brien Press Ltd., p. 25-35.43-50, 68-80,134-141,.
• Houston E. (2004), “Working and Living in Ireland”Dublin, Working and Living Publicatio., p.7-15,91-95, 203,
• Kirby P.(2002), “The Celtic Tiger in Distress”,London, Pelgrave Publisher, p.12-20,71-77, 185-187.
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