Based on statistics that are a few years old, here’s something you probably didn’t know: Ireland is the richest country in the European Union after Luxembourg. Yes the country that forever has been best know for civil wars, tragic poets, drinking and leprechauns (and Colin Farell – wait did we cover that under drinking? Hehe) today has a per capita GDP higher than that of Germany, France and Britain. How Ireland went from the sick man of Europe to the rich man in less than a generation is an amazing story. Ireland’s turnaround actually begun in the late 1960s, when the government eliminated the fees for secondary education, enabling a lot more working-class kids to get a high school or technical diploma. As a result, in the years after Ireland joined the European Community in 1973, it was able to draw on a much more educated workforce than it had had in the previous generation. By the mid 1980s though, Ireland had reaped the initial benefits of EC membership – subsidies to build better infrastructure and a bigger market to sell its products into. But it did not have enough competitive products to sell, because of the legacy of years of protectionism and fiscal mismanagement. The country was going broke, and most college grads were emigrating.
Deputy Prime Minister Mary Harney explains: “We went on a borrowing, spending and taxing spree that nearly drove us under. It was because we nearly went under that we got the courage to change.” And change Ireland did. In a quite unusual development, the government, the main trade unions, farmers and industrialists came together and agreed on a program of fiscal austerity, slashing corporate taxes to 12.5 percent (far below the rest of Europe), moderating wages and prices, and aggressively courting foreign investments. In 1996, Ireland made public college education basically free, creating an even more educated workforce. The results have been striking. Today nine of the world’s top ten pharmaceutical companies have operations in Ireland, as do sixteen of the top twenty medical device companies and seven of the top ten software firms.
“We set up in Ireland in 1990,” says Michael Dell, founder of Dell Computers. “What attracted us? A well educated work force – and good universities close by. Also Ireland has an industrial and tax policy which is consistently very supportive of business, independent of which political party is in power…. Ireland also has very good transport and logistics. Finally, they are competitive, want to succeed, hungry and know how to win…The talent in Ireland has proven to be a wonderful resource for us. Fun fact: We are Ireland’s largest exporter.”
Intel opened its first chip factory in Ireland in 1993. James Jarrett, an Intel vice president, said Intel was attracted by Ireland’s large pool of educated young men and women, low corporate taxes, and other incentives that saved Intel roughly $ 1 billion over ten years. Harry Kraemer Jr.,the former CEO of Baxter International, a medical equipment maker that has made several investments in Ireland, explained that “the energy level, the work ethic, the tax optimization, and the flexibility of the labour supply” all made Ireland infinitely more attractive to invest in than France or Germany, where it is enormously costly to fire even one worker. The Irish, he added, had the self confidence that if they kept their labor laws flexible, some jobs would go, but new jobs would keep coming- and that is exactly what happened. In 1990, Ireland’s total workforce was 1.1 million. By the end of 2005 it was roughly 2 million, with no real unemployment.
Ireland started a campaign to double the number of Ph.D.’s it graduates in science and engineering by 2010, and it has set up various funds to get global companies, and brainy people of all kinds to come to Ireland to do research. Ireland is now actively recruiting Chinese scientists in particular. “It is good for our own quality students to be mixing with quality students from abroad,” said Mary Hanafin, Ireland’s Minister of Education. “Industry will go where the major research goes.” Ireland set up a science foundation to give grants to any researcher from anywhere in the world who had an idea that he or she would pursue in Ireland and that might one day produce a company or a product. Between 2001 and 2005, Science Foundation Ireland established more than 160 new research groups, 34 of them led by leading scientists who have come to Ireland from laboratories abroad.
John Chambers, the CEO of Cisco Systems which is constantly being wooed to invest in one country or another, said it best: “The jobs are going to go where the best-educated workforce is with the most competitive infrastructure and environment for creativity and supportive government. It is inevitable. And by definition those people will have the best standard of living.”
Hmmm. I hope you are listening.