Ireland's Dependent Development

Published on 14 June 2020 at 15:46

The Irish Republic is considered a relatively new country, gaining independence only one hundred years ago. As a result, Ireland’s development has been extremely dependent in nature, first relying on Britain even after independence from their empire, then enjoying the collegiality of the European project in its first incarnation as the EEC, and more recently a primary reliance on multinational corporations so as to establish Ireland’s position as the ‘Silicon Valley of Europe.’ From continuous economic growth and significant employment opportunities, to continuous funding for development and prospects for both large and small Irish businesses. There are three phases in which we can identify Ireland’s dependent development: we can see this through our dependence on Britain post 1921, our continuous reliance on the European Economic Community which subsequently became the European Union, and finally our attachment to multinational corporations.

When analysing the relationship between the British Empire and a colony such as Ireland, it can be seen that the subordinate country relied heavily on Britain and, when Britain was removed from the equation on colonial independence, the former colony found itself in a situation of having trade-links and cultural connections only with Britain and its other former colonies. It appears that this was achieved through a number of mechanisms, including exploiting existing social divisions within the country and limiting the development of domestic industry. The majority of agricultural goods produced in Ireland were supplied only to Britain, limiting the market-place for Irish raw materials. After Irish independence was granted in 1921, the new government had no other trading partner because, prior to 1921, all exports went through Britain first, thus creating a dependent relationship between the two states. However, relations between both countries soured over land annuities. Ireland entered a trade war with its only substantial trading partner throughout the 1930s to 1950s. It wasn’t until 1958 that Ireland opted for a free market approach rather than protectionism, thus leading to the Anglo-Irish free trade agreement of 1965, which subsequently lead to Ireland’s involvement with the EEC. Economic growth in Ireland’s protectionist years was stagnant, which subsequently lead to a poor standard of living. This tended to show that Ireland could not be self-sufficient, and therefore dependent development can be viewed as being a better alternative to no development. Contrary to this, the trade war between Ireland and Britain proved to other potential trading partners the legitimacy and potential of the Irish economy. However as proven, the twenty years that the trade war existed, Ireland was no better off, and therefore the dependent relationship benefited Ireland more so than any alternative.

Rewards reaped from the European Union include our vast transport network in addition to access to a free market which the island has availed off.  According to the EU, Ireland is reliant on exports. The European Union has provided a platform for small and large businesses to export produce to 27 member states. In addition to this, the European Union has trade agreements with other global giants including, but not limited to, Canada, Japan, South Korea and Singapore. As a result, this free trade between member states and between the EU and other nations benefits both the businesses within each member state and also positively contributes to the Irish economy, which has expanded significantly since joining in 1973.

In addition to this, Ireland’s relationship with the European Union has also been of enormous benefit to the tourism industry due to the freedom of movement between member states, as well as visa-less access from non-member countries.  Tourism one is one of the largest sectors in the Irish economy, with many spin-off industries such as the hospitality industry, heavily relying on tourism.  Although the relationship with the EU is dependent in this regard, the tourism sector would be a much smaller entity without the freedom of movement within Europe, and therefore this dependent relationship has significantly helped to develop the tourism sector.

In addition to the opportunities provided, financially Ireland has gained a lot from the EU as well. Ireland, since joining the European Community in 1973, has benefited from a net total of €40 billion. The EU also funds a number of projects such as the European Social Fund, which helps to improve and develop disadvantaged communities. The EU also heavily funds the European Regional Development fund, as well as the Common Agricultural Policy, which accounts for 30% of Irish farmers’ total income. According to the Department of Business, enterprise and innovation, Ireland has an extremely adaptable work force.  Prior to 1973, only 27,135 people were in third level education. Since joining the EU, this figure has jumped to 231,710 as of 2018. Human and workers’ rights has also developed and improved whilst in the EU. Ireland has seen a significant improvement in the standard of living since joining the EU. Even through economic recession, Ireland has still remained one of the fastest growing economies in Europe, therefore the dependent relationship on the European Union has subsequently been a good thing for the nation.

However, on the other hand, the European Union in the 2008 crash left the Irish government with no option but to bail out the banks which subsequently lead to several years of austerity in Ireland. Despite this, the revenue, opportunities and incentives provided by the EU, outweigh the negatives between both parties.

Since joining the EU, Ireland has become a more attractive place for Foreign Direct Investment.  Due to our freedom of movement and free market access to the European Union, Ireland has enjoyed investment from the likes of, but not limited to, Intel, Facebook, Google, Salesforce, LinkedIn, as well as pharmaceutical companies like Pfizer and Boston Scientific in more recent years. This directly has created considerable job growth and has generated significant amounts of revenue. Such increase in revenue is despite a corporate tax rate of 12½%, being one of the lowest in Europe: in fact, the low rate is seen as an attractive force for the foreign investment, the large scale of which off-sets the proportionally low tax-take. Globalization has become a significant influence across the world. The terms of globalization dictate that a country should specialise in an area that maximizes profit and maximizes production. In Ireland’s instance, one of our largest sources of job creation and income is through foreign direct investment and it has been since the 1960s.  According to the Industrial Development Agency, nine of the world’s top ten pharmaceutical, software and technology companies are located in Ireland, and directly create over 200,000 jobs, in addition to spin-off employment. There are many reasons other than being a member of the EU why these corporations locate in Ireland. The country has a highly skilled and one of the most adaptable workforces in the EU. Additionally, Ireland has the youngest population in the EU with over 40% of the country’s population under the age of thirty. Since Britain’s departure from the EU, Ireland is the only English-speaking member.  Although we may be dependent on these corporations, and the development that they bring to the country, Ireland reciprocates with the very criteria that attracted these corporations in the first place.

On the other hand, there is potential for these corporations to leave when it suits them, whether it be an economic downturn or lack of opportunity, which would ultimately undo the development that these corporations have brought. However, the likelihood of this occurring is slim, given the infrastructure and potential that Ireland has for these corporations. This is evident in light of COVID 19 and an imminent economic downturn in the near future, a number of corporations are still planning to set up long term EMEA headquarters in Dublin.

Ireland has become one of the most productive economies in Europe and this is a direct result of our dependent development on Britain, on the European Union and on multinational corporations. Ireland is a small state with limited natural resources and with a limited population, which in no way can be self-sufficient and yet can still be productive. What history has proven for Ireland is that its dependent development has only been of benefit to the country.

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