[OUTLOOK]Lessons in the shine of Irish eyesIreland is one-third the size of the Korean Peninsula and has a population less than 4 million. Ireland is not one of the more powerful countries in Western Europe, but it has produced some of the greatest intellectuals in the world, including the literary giants James Joyce, Oscar Wilde, William Butler Yeats, Samuel Becket and George Bernard Shaw. Four Irishmen have won the Nobel Prize for Literature.
Ireland, with its abundance of literary geniuses, also had been one of the most poverty-stricken countries in Western Europe until just 10 years ago. Ireland's role in the world's economy had been less than significant, to say the least.
The economic luck of the Irish has changed greatly within the last decade or so. Ireland has seen surprisingly rapid economic growth in recent years, similar to that of the four "Asian tiger economies" ?as Hong Kong, Korea, Singapore and Taiwan were called in the 1980s. In fact, the Irish economy has earned a new appellation in British and Irish business circles as the "Celtic tiger."
Ireland regularly appears among the top 10 countries in almost any survey of economic competitiveness done by economic institutes in the past few years. Between 1995 and 2000, Ireland achieved an average annual growth rate of 9.3 percent. In this amazing economic feat, Ireland managed to overtake Britain, its neighbor and long-time economic mentor.
What could possibly be the secret to Ireland's sudden economic success? Ireland's "secret" actually lies in its sustained efforts to attract foreign direct investment in high value-added industries and services. It was Ireland's national strategy that by inducing inward investment from foreign companies job opportunities and social welfare could be expanded.
I recently spent time in Dublin where government officials, businessmen and economic experts all consistently emphasized that the high education level of the Irish people and the business-friendly policies of the country's government were crucial factors in getting foreign businesses and investors to have trust in the country's economy.
At present, direct foreign investment in Ireland constitutes 50 percent of the gross domestic product. The percentage is five times that of Korea. The highest percentage of investment in Ireland comes from the United States. U.S. investment is mostly concentrated in high value-added products such as chemicals, medicines, health-related supplies, computer hardware and software, electronics and financial services. In 1999, the 600 or so U.S. companies were accountable for more than two-thirds of Ireland's industrial output and at least 70 percent of its industrial exports.
Of course, the fact that American investors were so easily convinced to put their money in Ireland might be irrelevant were there not more than 40 million English-speaking Irish descendants living in the United States. However, that does not seem like the only reason profit-seeking U.S. companies have started to invest in Ireland. More important would be the several measures that the Irish government took to ensure the direct foreign investors that Ireland was a good place to do business.
First and foremost, Ireland consistently executed business-friendly economic policies based on the belief that business success is the source of economic growth and social welfare. These policies were maintained regardless of any changes in the government. Ireland had already been applying a corporate tax rate of 10 percent, the lowest in Europe, in the manufacturing industry and related services as early as the 1980s. Moreover, this application of a low corporate tax rate has the additional merit of providing transparency.
In addition, the government, unions and employers have undertaken a restructuring of the public sector without any major social clashes. This fact can be attributed to a "social partnership" agreement among the three parties that has been renewed every three years since 1987.
Along with these policies, the Irish government has diligently provided for other favorable conditions for investment. Early on, Ireland was able to achieve economic stability by joining the European Union and embracing the euro currency system.
Despite our differences in economic scale and industrial structure, Ireland's national management strategy of putting this era of globalization to good use suggests a lot for Korea. We, too, should be consistently applying business-friendly strategies and policies in order to persuade the world that Korea is indeed a good country to do business in. It is only when we apply such policies that our national competitiveness will rise and social welfare will be increased through rapid economic growth.
The writer is the chairman of the Institute for Global Economics.
More in Editorials
Arrogance on display
Surreal real estate policies
Going against the Constitution
Don’t bend the rules
Praising themselves to the sky