Question 1. What role have demographic and external factors played in Irelands economic success?

The following demographic factors played a role in Irelands economic success. Irish workers could communicate effectively with Americans especially compared to other low-wage EU nations such as Portugal and Spain. This factor was vital to U.S. companies choosing Ireland for their European headquarters. It has also been argued that the demographic dividend from the rising ratio of workers to dependents due to falling fertility, and increased female labour market participation, increased income per capita. There was a high availability of a pool of young, skilled professionals that met the needs of tech investors. Also the high birth rate provided a basis for future expansion of the economy by increased labour The other issue was the return of well qualified nations gave the necessary experience required for the success of the economy. It is also noted that falling unemployment meant that there was now a rise in the middle class society able to support potential investments. External Factors There has been much debate regarding the causes of Irelands growth which are the social partnership between employers, state driven economic development, focus on foreign direct investment, low corporation tax rate, huge investments in domestic higher education for decades, government and unions, hiring of English-speaking people and key EU membership. Corporation taxation rate There are many economists which view low corporation rate as one of the main reasons for Irelands economic growth. This rate was around 10 to 12.5% in the late 1990s. Also, the net transfer payments from the EU members like France and Germany which were as high as 4% of GDP contributed towards the growth.

Industrial policies In 1990s, Irish state organizations introduced the provision of subsidies and investment capital. This strategy encouraged high-profile companies like Microsoft, Dell, and Intel to enter the Irish market and locate in the country. Other reasons which enabled these companies to establish in the Irish markets were Irelands EU membership, government grants, low tax rates as well as relatively low wages. There was a state agency named Enterprise Ireland which provided technical, financial and social support to set up a business. The International Financial Services Center in Dublin created 14,000 job opportunities in finance, legal and accounting sectors. Similarly many such organizations created significant job opportunities. EU Aid The European Union aid was utilized in increasing investment in infrastructure as well as in education department. These investments increased the productive competence of the Irish economy which further assisted in making Ireland more attractive towards high-tech businesses. In 1973, Ireland gained the EU membership which opened the doors to large European markets other than its traditional trade partner United Kingdom.

Geographical advantage and workforce Ireland has a favourable time zone difference which allows the British and Irish workers to work during the first part of the day while their US counterparts sleep. Ireland offered cheap wage costs as compared to UK wages; it also had limited government intervention in business issues as compared to other EU members. Furthermore, a stable business environment was provided by the Irish government owing to the Good Friday Agreement. Irish economy boasted of English-speaking workforce which could effectively communicate with Americans, which was a crucial factor in attracting US companies.

Question 2: In what ways have Irish governments helped to stabilize the economic cycle since the 1980s? Since 1980, the Irish government helped stabilize the economy in the following ways: By introducing more open policies in relation to trade. This enabled trade to grow hence leading to a stable economy. Inward investment through (IDA Industrial Development Authority) to attract FDI which was instrumental in developing the country. They controlled public finances which the government could avoid laundering activities which could have destabilizing. Control of inflation meant that companies could easily execute their strategic plans without big changes in market prizes thus stabilizing the economy Air travel allowing Ryanair to enter the market helped by empowering the locals thus ensuring that the locals not only benefit from employment but also shareholding Promotion of improvements in outdated telecommunications sector was vital as most investors will require reliable up to date ICT systems Low corporate taxes thereby attracting investors Expansion of technical and higher education enabled the nation to provide vital skills The governments decision to be a member of the EU ensures stability through security and it also opened new markets within that group The governments historical ties with the United States which was already developed

Question 3 What factors may have made economic stabilization more difficult? A lot of factors made economic stabilisation so difficult. Below are some of the factors: There was over reliance on foreign investment, both in terms of employment and exports An increase in global competitive pressure was another factor which brought a lot of competition. A sudden economic boom led to inflation which was difficult to control. When they adopted the Euro, they had not anticipated the rise in inflation. There was an increase in labour costs as most high tech companies were now moving to low cost countries thus causing unemployment. There was an increase in the cost of living especially around major cities like Dublin The banking system nearly faced collapse thus there was need to bail them out. General fall in production output and exports. There was a great reduction in tax revenue.

Question 4 In what ways have supply factors contributed to Irelands economic success?

There was a surge in the supply of raw materials and equipment Labour inputs were readily available thus it made most companies produce more. The provision of financial services was a big factor also as it helped most corporations to boost their production.

The European Union aid was utilized in increasing investment in infrastructure as well as in education department. These investments increased the productive competence of the Irish economy which further assisted in making Ireland more attractive towards high-tech businesses

Technology played a major role Foreign Direct Investment in 2006 with an increase of job opportunities in IDA supported jobs.

Air travel provisions which made transportation easier and efficient.

Question 5 What internal factors are likely to constrain Irelands future economic success?

The competitiveness of the Irish economy was lost due to inflation, rising wages and excessive public spending. The wages in Ireland are much more than the EU average. These factors led to a downfall with the professional outsourcing jobs on the rise in Poland and many Irish jobs of big companies were transferred to Poland.

Flourishing promotion of indigenous industries is one of the major challenges facing Ireland. There are a few international companies in Ireland with over one billion euros in annual revenue

Labour laws to be used for bargaining thus reducing maximisation of profits. There is over reliance on labour intensive construction and manufacturing industry. Inflation was on the rise thus it will make most industries struggle. Competition from the global village is also another factor. Financing of the banking sector by the government makes it difficult for independence of banks.

New wealth of Ireland is not evenly distributed. In ESRI report of 2006, Ireland was the 2nd most unequal country in Europe.

There is a budget deficit due to the government overspending on bailing out industries and financial institutions.

Also there is reduced tax revenue and thus the government will have little to spend.

Question 6 What external factors are likely to constrain Irelands future economic success? Relocation of foreign investors Bailing out of some institutions may result in loss of confidence in some investors Liquidity crunch Inflation Brain drain as most workers make consider leaving the country to greener pastures. In future the government will need more foreign currency for imports if their manufacturing industry collapse due to relocation