Capital - Dublin (GMT) Largest City - Dublin Population - 4,109,086 est. Languages - English, Gaelic Irish Demonym - Irish Currency - Euro (EUR) GDP per capita - $43,600 est. Calling Code - +353 Internet TLD - .ie
Ireland (Irish: Éire) is a country in north-western Europe. The modern sovereign state occupies five-sixths of the island of Ireland, which was partitioned in 1921. The term Republic of Ireland is "the description of the State". It is bordered by Northern Ireland (part of the United Kingdom) to the north, by the Atlantic Ocean to the west and by the Irish Sea to the east. It is a member of the European Union, has a developed economy and a population of 4.2 million. The state known today as the Republic of Ireland came into being when 26 of the counties of Ireland seceded from the United Kingdom of Great Britain and Ireland (UK) in 1922. The remaining six counties remained within the UK as Northern Ireland. This action, known as the Partition of Ireland, came about because of complex constitutional developments in the early twentieth century.
Economy
Ireland is a small, modern, trade-dependent economy with growth averaging 6% in 1995-2006. Agriculture, once the most important sector, is now dwarfed by industry and services. Industry accounts for 46% of GDP, about 80% of exports, and 29% of the labor force. Although exports remain the primary engine for Ireland's growth, the economy has also benefited from a rise in consumer spending, construction, and business investment. Per capita GDP is 40% above that of the four big European economies and the second highest in the EU behind Luxembourg. Over the past decade, the Irish Government has implemented a series of national economic programs designed to curb price and wage inflation, reduce government spending, increase labor force skills, and promote foreign investment. Ireland joined in circulating the euro on 1 January 2002 along with 11 other EU nations.
Market Overview
With a GDP growth rate of 4.7% in 2006, following 4.5% in 2005 and 4.5% in 2004, Ireland continues to enjoy the economic success that characterized the “Celtic Tiger” era of the 1990s. Ireland’s economic vibrancy also stands out in the EU region, particularly the country’s welcoming business environment and continued attractiveness to foreign investment. Moreover, while a number of Western European countries are beginning to see population decline, the Irish population is growing, fueled in large part by a relatively high birth rate and the inward migration of jobseekers from Central Europe and elsewhere. These immigrants have sought opportunities in lower-skilled sectors, such as construction, but also in higher-skilled, well paying technical fields where labor shortages are found. Their arrival is also beginning to add a multicultural flair to a population that previously had been relatively homogeneous.
The United States and Ireland enjoy longstanding political, economic and commercial relations and a close cultural affinity. A coexisting, profitable and mutually dependent commercial and economic relationship has existed as well between the two countries, one that has grown to become neatly interwoven over the past 25 years. U.S. companies in Ireland take advantage of doing business in a common language, with educated and savvy partners that have connections across Europe in most sectors, in a country with a government that is pro-business, economically focused and highly stable. Of particular note for American exporters, the similarities in language and business styles, and the fact that U.S. business practices are well known and understood in Ireland, bode well for enhanced U.S.-Irish business ties.
Ireland today is a wealthy country, with a per capita GDP reaching $41,800 in 2005. Ireland is also a net exporting nation, with merchandise exports surpassing $115.6 billion in 2005. Ireland’s current unemployment rate is one of the lowest in Europe, at 4.3 percent. Labor and energy costs, however, have made Ireland a more expensive place to conduct business, particularly in comparison with South and East Asia. The rate of inflation in Ireland was just over 4 percent in 2006, and absolute price levels are among the highest in the EU. Exports from Ireland by U.S. subsidiaries (at $55 billion in 2005) account for over 50% of its exports, and 27% of all Irish exports go to the United States. Imports into Ireland reached $74 billion (euro 57 billion) in 2005, with the U.S. share of the import market averaging around 11% (or about $8 billion annually).
Ireland’s government has done an effective job in promoting foreign direct investment (FDI), and the result has been sustained robust economic growth since the 1990s. Ireland’s FDI stock has grown from euro 53 billion in 1998 to euro 141 billion in 2005. Investment has helped the Irish Government to meet its goal of employment creation, especially in technology-intensive and high-skill industries. The Government also continues to pursue balanced regional development, by encouraging more FDI (and job growth) in areas outside Dublin. The Government is also focused on international competitiveness, offering incentives to foreign-invested companies to locate research and development (R&D) activities in Ireland. Recent announcements of R&D investments by U.S. pharmaceuticals, medical technology and IT companies in Ireland reflect successes in this area. Some highlights of Ireland’s successful investment track record include:
There are currently about 620 U.S. firms in Ireland, directly employing approximately 100,000 workers and supporting work for another 250,000, out of a total labor force of 2 million. The U.S. represents roughly half of all foreign direct investment in Ireland.
In 2005, U.S. investment stock in Ireland, a country of just over 4 million people, was worth $61.6 billion, roughly 6 percent of the U.S. total for the EU and more than double the U.S. total for China and India combined ($25.3 billion).
U.S. companies are primarily attracted to Ireland as an export platform to the EU and elsewhere. Most of the approximately $55 billion worth of products, exported by Irish-based U.S. firms in 2005 went to the EU. Other factors that have worked in tandem to make Ireland an attractive place for business include: a low corporate tax rate (12.5%), compared to corporate rates of 20-25% in other EU countries; a well educated and flexible English-speaking work force; generally harmonious labor relations; political stability; pro-business government policies; a transparent judicial system; and, the pulling power of existing companies operating successfully in Ireland (a "clustering" effect).
American companies account for 70% of Irish employment by multinationals supported by Irish Government investment promotion agencies. The range of U.S. investments is wide ranging, including chemicals; bio-pharmaceuticals and medical devices; computer hardware and software; electronics; and, financial services.
U.S. investors continue to show interest in Ireland. In 2005, Ireland emerged as a magnet for U.S. internet/digital media investments, most notably, with industry leaders Yahoo!, Google, Paypal, and Amazon making Dublin the hub of their respective European operations. Furthermore in 2006, Amgen and Eli Lilly announced investments worth a combined $1.4 billion in Cork, which is becoming a global biopharmaceutical center.
The Irish Government’s has seen some recent successes in its ongoing strategy to refashion Ireland as an R&D-centered, innovation-based, knowledge-intensive economy – thus the euro 3 billion fund (about $3.9 billion) for upgrading postgraduate education. This strategy will play out over years and will be a deciding factor in Ireland’s ability to attract continued investment from R&D-heavy U.S. companies. In addition, the recent announcement by the Irish Government of a euro 2.5 billion “Strategy for Science, Technology and Innovation” indicates a long-term commitment to build on Ireland’s R&D strengths.
While U.S. investors continue to show strong interest in Ireland, a number of possible clouds lurk on the horizon, including; rising labor costs, increased shortages of skilled labor, an overburdened transport infrastructure, inadequate broadband internet access in parts of the country (and slow service in getting “hook-up” to the internet), and energy and housing price levels that are among the highest in Europe. Furthermore as the Irish Government reported in late 2006, concerns about relatively high-energy costs (and the reliability of energy supplies) could also undermine its attractiveness as an FDI destination.
Market Opportunities
U.S. exports to Ireland reached $6.2 billion in the first nine months of 2006, down 8% from the same period in 2005, when they totaled $6.7 billion. (First nine-month export totals for 2006 are compared to figures for 2005, which was a banner year for U.S. exports to Ireland, when shipments reached $9.3 billion, up 14.3% over their 2004 level.) U.S. exports to Ireland include virtually all products and services, including aircraft equipment, power generation technology, medical products, electrical equipment, and pharmaceuticals ranking among the leading sectors. By comparison, U.S. imports from Ireland were $21.7 billion in the same period, up 1.3% over the same first nine months in 2005. Much of the U.S. trade imbalance with Ireland can be attributed (as cited earlier) to the Ireland operations of U.S. investors in Ireland, many of which are used as a base for further manufacture and re-export to other countries, including the United States. There are significant opportunities within the marketplace for small-to-medium sized U.S. exporters. Successful exports include state-of-the-art products (and parts and components for products) in the ICT sector, pharmaceuticals, and medical and health care devices, as well as travel/tourism, engineering/design, and financial services. In addition, growth sectors for exports include consumer and sporting goods, building and construction products, hotel and restaurant equipment, food processing equipment, industrial machinery, power generation and air conditioning and refrigeration equipment.
