The Strength of the Celtic Tiger: The Case of Pharmaceuticals

Abstract

The Strength of the Celtic Tiger:The Case of Pharmaceuticals Tim White (bio) As extraordinary economic growth propelled it into an admired and influential position in the international economy at the end of the twentieth century, Ireland's history of economic isolation and misery was replaced by increased economic achievement and prosperity. Ireland's past as a rural, idyllic, and self-contained island on the periphery of the world economy became a memory, and a modern, integrated, and economically strong state emerged as a respected contender in the international marketplace. Such a dramatic turn-around, while perhaps unforeseen by some, can be understood through Ireland's slow but steady attempts to initiate new and proactive economic policies, the root of which date back to the end of de Valera's tenure as taoiseach. In 1959, Fianna Fáil's new leader Seán Lemass initiated a set of economic development plans, outlined in the Whitaker Report, with the goal of reversing the isolating and economically stifling policies of de Valera. This new economic strategy can now be seen as the beginning of Ireland's period of economic growth.1 In broad terms, it committed the country to the pursuit of more open trade, tax breaks, and subsidies to enlist investment from [End Page 26] transnational corporations (TNCs), financial support to Irish companies to strengthen their competitiveness, improved educational and training programs to create a competent workforce, and an effort to improve the quality of infrastructure in Ireland. While the domestic priorities of the nation were announced at the time of its publication, the importance of the goals outlined in the Whitaker Report was not fully realized until much later. In 1973 the Republic of Ireland joined the European Economic Community (EEC), the precursor to the European Union (EU). Ireland's underlying commitment to free trade, open markets, and economic advancement was already established, allowing it to accept and benefit from the organization's advantages and opportunities. It was this relationship with the markets of other European nations, among other factors, that laid the foundation for Ireland's dramatic economic growth in the mid-1990s, a phenomenon today termed the "Celtic Tiger." Although the significance and reliability of some of the statistics describing the economic boom can be disputed,2 the evidence of the Celtic Tiger phenomenon is overwhelming. Ireland's gross domestic product (GDP) grew at the rate of nearly. percent annually in the 1990s and between 7 and 9 percent in the last years of this decade. Since 2000 Ireland's GDP has continued to grow at a rate of nearly 5.5 percent.3 The decade of the 1990s witnessed a 30 percent increase in employment and a tripling of gross manufacturing output in Ireland.4 Since 2000 the number employed in Ireland has grown by 345,600, and the annual unemployment rate has averaged just over 4 percent, much lower than historic levels of unemployment in Ireland.5 One of the key indices of the Celtic Tiger phenomenon [End Page 27] has been the tremendous growth in Irish exports. Exports grew fourfold in the 1990s and have grown an additional 14 percent since 2000.6 During the 1990s, inflation fell from 6 percent to 1 percent, resulting in more consumer purchasing power and further economic stimulation.7 Since 2000 and the collapse associated with the dot.com bubble, there has been a decrease of 33,500 manufacturing jobs in Ireland, or just over 13 percent, but the number employed in the medical, precision, and optical instruments sector has increased, while the number working in the chemical and pharmaceutical sector holds steady.8 Generally, lower wage manufacturing has increasingly left Ireland while high-skill manufacturing remains strong. While no single statistic can completely portray the extent and magnitude of the Irish economy's growth, when considered as a whole, the increased exports and GDP growth, positive trade surplus, and increased employment and purchasing power clearly show a nation enjoying extensive economic prosperity. This economic boom Ireland began experiencing in the mid 1990s cannot be attributed purely to a stroke of luck but rather resulted, at least in part, from careful planning and effective government policies. These latter factors...