After several years of continuous growth, Ireland’s GDP value managed to grow even further in the course of 2005, rising by 5.1 percent between 2004 and 2005. Since trade has accounted for over half of GDP since 1990, it has been a major contributor to Ireland’s expanding economy (OECD 2006).
The following essay will hence “identify and discuss the main features of Ireland’s trade”. Within the topic chapter 1 focuses on how Ireland has become one of the most open economies in OECD countries and thereby could attract multinational companies and Foreign direct Investment (FDI). Chapter 2 will outline the influence of trade on economic growth, employment, net output and labour productivity. Chapter 3 will give a brief overview of Ireland’s current merchandise and service trade as well as FDI in- and outflows. Chapter 4 concludes the essay by summing up the most important points and by assessing potential future trade of Ireland.
Table of Contents
INTRODUCTION
1. IRELAND’S WAY TO AN OPEN ECONOMY
1.1 The Export Led Growth and FDI Promotion Phase
1.2 The Value-Added Growth Phase since 1980
2. INFLUENCE OF TRADE ON IRELAND’S KEY ECONOMIC FIGURES
2.1 Trade and Economic Growth
2.1 Influence of Trade on Employment and Net Output
2.2 Influence of Trade on Labour Productivity
3. OVERVIEW OF IRISH TRADE
3.1 Merchandise Trade
3.2 Services Trade
3.3 Foreign Direct Investment
4. CONCLUSION
Objectives and Key Themes
This essay explores the evolution and impact of international trade on the Irish economy, specifically analyzing how the country transitioned into an open economy and the subsequent effects on key economic indicators. The research aims to evaluate the role of foreign direct investment (FDI) in driving national growth, industrial employment, and labour productivity, while also providing a current overview of trade patterns and future outlooks.
- The historical transition from protectionism to an open, export-led economy.
- The influence of international trade on GDP growth, employment, and net output.
- Sectoral shifts within Irish manufacturing and the significance of foreign-owned enterprises.
- An overview of current trends in merchandise and services trade.
- Analysis of inward and outward Foreign Direct Investment (FDI) flows.
Excerpt from the Book
1.1 The Export Led Growth and FDI Promotion Phase
After 20 years of protectionism and economic nationalism, Ireland’s political attitude towards international trade changed in the late 1950s. Key elements of this “Export Led Growth and FDI Promotion phase” (Newman and O’Hagan 2005 p166) until the early 1980s were a gradual shift to free trade in manufactured goods. First, by the reduction and eventually phasing out of tariffs and quotas with the Anglo-Irish Free Trade Area Agreement in 1966, second by Ireland’s entry into the EC in 1973 and third by the full adjustment to EC tariffs in 1978. The reduced tariffs increased the attractiveness of Ireland as a low cost production base for foreign companies. Furthermore, Ireland’s government determined certain business sectors as target sectors for foreign investment, including electronics, medical devices, pharmaceuticals and later internationally traded services (Newman and O’Hagan 2005). These sectors were suitable for international trade because of low transportation cost and high productivity potential.
In addition, foreign firms were attracted to Ireland, among others, because of its low corporation tax of 12.5 percent and its corporate tax relief on profits generated on export sales (The Economist Intelligence Unit 2005). For non-EC companies, mainly from the US, Ireland was an attractive investment option as an English speaking country, which provided access to the EC (Leddin and Walsh 2003).
Summary of Chapters
INTRODUCTION: The introduction outlines Ireland's recent economic growth and the significance of trade as a primary contributor to its GDP since 1990.
1. IRELAND’S WAY TO AN OPEN ECONOMY: This chapter details the historical evolution from protectionism to an open economy, focusing on the phases of export-led growth and subsequent value-added development.
2. INFLUENCE OF TRADE ON IRELAND’S KEY ECONOMIC FIGURES: This section assesses how trade has historically impacted economic growth, employment levels, and labour productivity within the manufacturing sector.
3. OVERVIEW OF IRISH TRADE: This chapter provides a comprehensive current status of Irish merchandise trade, services trade, and the dynamics of inward and outward foreign direct investment.
4. CONCLUSION: The final chapter summarizes the primary findings regarding the role of trade and provides insights into the challenges and future prospects for the Irish economy.
Keywords
International Trade, Ireland, Foreign Direct Investment, FDI, Export-led growth, Merchandise trade, Services trade, Economic growth, Employment, Labour productivity, Multinational companies, Manufacturing, Corporate tax, Globalisation, Open economy
Frequently Asked Questions
What is the primary focus of this work?
The work primarily identifies and discusses the main features of Ireland’s trade and its profound impact on the nation's economic development since the late 1950s.
What are the core thematic fields covered?
The core themes include the historical shift to an open economy, the role of foreign direct investment, the influence of trade on productivity and employment, and current trends in merchandise and services exports.
What is the central research goal?
The goal is to analyze how Ireland transformed its economic structure to attract foreign companies and to evaluate the resulting benefits to its GDP, net output, and employment.
Which scientific methodology was utilized?
The paper employs a descriptive and analytical review of economic data, historical policy shifts, and sectoral performance indicators sourced from official reports and academic literature.
What topics are explored in the main body?
The main body examines the historical phases of Irish industrial policy, the quantitative influence of trade on key figures, and detailed breakdowns of current merchandise, services, and FDI flows.
Which keywords best characterize the study?
Key terms include Ireland, International Trade, Foreign Direct Investment, FDI, Economic Growth, and Labour Productivity.
How did Ireland's entry into the EC influence its trade strategy?
Entry into the EC in 1973 was a pivotal moment that facilitated the reduction of tariffs and allowed Ireland to position itself as an attractive low-cost production base within Europe.
What does the term "Value-Added Growth" signify in this context?
It refers to the policy phase starting in the 1980s that aimed to increase national productivity by focusing on R&D intensive production and internationally traded services rather than just basic manufacturing.
Why did Ireland become a net exporter of FDI in 2004?
The study notes that in 2004, Irish companies, particularly those within the IFSC, began repatriating more capital from foreign affiliates than they invested abroad, marking a shift to net exporter status.
- Quote paper
- Ramona Kraft (Author), 2006, The Main Features of Ireland's Trade, Munich, GRIN Verlag, https://www.grin.com/document/71943
