Kat McManus

1/21/2024

Final Essay

The Celtic Tiger is a term used to refer to the rapid growth of Ireland’s economy in the 1990s

through the late 2000s. The phrase “Celtic Tiger” refers to the unusually large growth rate

Ireland experienced, modeling many Asian economies as Ireland engaged in what is commonly

known as “catching up” growth. Fueled by foreign investment and low taxes, the economy

experienced an intense shift, but in 2008, it fell into the Financial crisis and was left with a

poverty bubble and extreme economic downturn. Despite its crash, the Celtic Tiger period

allowed Ireland to accumulate wealth, attract job seekers, and build infrastructure which overall

was a great benefit to Ireland.

In the 1980s, Ireland was in economic despair and experienced recession, unemployment, and a

continuous pattern of emigration. A young resident who was lured by the promises of emigration

stated that “1980s Ireland left little room for any optimism- abroad was beckoning.”1 Between

the Troubles in Northern Ireland, the political violence, and the fact that Ireland was drowning in

public debt, Ireland was one of the poorest countries in Europe. Some major contributing factors

included the worldwide oil crisis in 1975, a wealth tax, and a reduction in farming income which

severely impacted the economy. In a move that Ireland is still part of today, the country voted to

1
Lynch, Philip. “‘1980s Ireland Left Little Room for Any Optimism - Abroad Was Beckoning.’” The Irish Times,
The Irish Times, 4 Nov. 2019,
www.irishtimes.com/life-and-style/abroad/1980s-ireland-left-little-room-for-any-optimism-abroad-was-beckoning-1.
4071598.
join the European committee, which would later blossom into the European Union in 1993.2 The

Irish pound was then phased out and the Euro became the currency in 2002 to comply with the

European Union's shared currency. To reduce the public debt in 1987, the Programme for

National Recovery was launched. However, this program only managed to stabilize the debt

situation and keep unemployment down. 3 Then, a huge economic advancement opportunity

occurred in Ireland: it was chosen to be the location for Intel’s new processor fabrication plant4.

As an essential part of a personal computer, Intel’s microprocessor had a monopoly at the time.

Ireland was chosen for its incredible technological potential, its location, cheap land, and reduced

taxes. The arrival of Intel into Ireland is known as the arrival of the Celtic Tiger and the economy

has never looked the same.

Within the next decade, Intel’s bold decision inspired technology investment in Ireland's capital

city, Dublin. To encourage further foreign investment, Ireland created policies that would support

these corporations. Ireland took a strategic move and set corporate taxes at about ten percent,

while most other European Union countries had a corporate tax rate close to thirty-five percent,

luring in investors while still being a part of this dominant grouping.5 Unlike many of Ireland’s

fellow Union members, the dominant language was English, which enticed American investors

who could understand the language with ease, hire workers who could communicate without

translators, and overall save money. Finally, the Irish government developed grants for

businesses and by 1998, over sixty percent of this funding was going to foreign companies.6

2
“History of Ireland in the EU | Ireland.Ie.” Ireland.Ie, The Irish State,
www.ireland.ie/en/eu50/history-of-ireland-in-the-eu/. Accessed 22 Jan. 2025.
3
Róisín Ní Mháille Battel. “Ireland’s ‘Celtic Tiger’ Economy.” Science, Technology, & Human Values 28, no. 1
(2003): 93–111. http://www.jstor.org/stable/1558024.
4
Róisín Ní Mháille Battel. “Ireland’s ‘Celtic Tiger’ Economy.” Page 102.
5
McCann, Gerard. “The ‘Celtic Tiger’ in Hindsight.” Nordic Irish Studies 12 (2013): 109–25.
http://www.jstor.org/stable/23631048.
6
McCann, Gerard. “The ‘Celtic Tiger’ in Hindsight.” Page 112.
These fiscal policies reaped great rewards and Dell and Microsoft- two other tech giants- soon

followed Intel’s lead and established headquarters in Ireland. Almost ten years later, in 1997,

over one thousand companies had offices in Ireland with 455 American-based companies and

460 European-based companies.7 High-tech companies like pharmaceuticals, biotechnology, and

computer hardware thrived during the Celtic Tiger period and still make up the basis of the Irish

economy today.

When you walk through Dublin’s Docklands area, you can find yourself surrounded by

companies like Google, Meta, LinkedIn, Accenture, and RyanAir. Besides these companies, you

may see lesser-known, but just as valuable companies like Eli Lilly, AstraZeneca, and Pfizer. All

of these companies have one in common- they're all massive international biopharma companies

creating pharmaceutical drugs to cure some of the world’s worst sicknesses. There are over 85

pharmaceutical companies based in Ireland and combined, their drugs make up 39% of Ireland’s

total exports.8 Clearly, Ireland depends on these companies for jobs, research, and investment,

but how has Ireland become so dependent on these companies? In 1959, Leo Laboratories

opened a manufacturing location in Ireland, creating an active pharmaceutical ingredient (API)

manufacturing plant. Noticing the success of Leo Laboratories, companies slowly began to invest

in manufacturing locations in Ireland. In accordance with the pattern that has emerged from the

Celtic Tiger, the industry began to boom in the early 2000s when Wyeth Pharmaceuticals nearly

invested 2 billion USD into one of the world’s largest biologics production sites. Economically, it

7
Róisín Ní Mháille Battel. “Ireland’s ‘Celtic Tiger’ Economy.” Page 103.
8
Hargreaves, Ben . 2023. “Why Ireland Has Emerged as Europe’s Biopharma Hotspot.” Pharmaphorum. April 28,
2023. https://pharmaphorum.com/rd/why-ireland-has-emerged-europes-biopharma-hotspot.

‌
makes perfect sense. Between Ireland’s low corporate tax rates and its existing biomedical

infrastructure, it's in the company’s best interest to continue investing in Ireland. In an interview

with Eli Lilly, the company also cited the need for specified training and schooling in biomedical

and pharmaceutical fields, which the company accredits the Limerick region for its talent.

Ireland’s strategic location also allows it for easy interaction with Europe and North Africa.

Since 2011, pharmaceuticals have employed about 50,000 people and created exports worth over

100 million Euros per year, strengthening both the economy and the community.

Despite all of these investments and improvements to the economy, there are still criticisms of

the Celtic Tiger period and its consequences. One criticism seen often is that Ireland’s economy

has not diversified enough, putting it at risk of financial crashes that could be extremely difficult

to recover from. Because Ireland’s economy is mostly based on technology, pharmaceuticals, and

medical devices, if any one of these industries saw an unpredictable market crash, it could have

devastating effects. These include vulnerability to fluctuations, and the economy and community

will have to match those fluctuations, which can cause frustration as well as economic booms

and busts. These busts can lead to job losses and employers may be hesitant to hire as many

people as they did before the recession, causing more permanent unemployment. It would also

lead to creating a community that lacks a diverse skill set and is unable to take different types of

jobs. This can hinder not only economic growth but also a community’s growth as companies

will bring in specialized workers to fill the roles that the community cannot. An additional

consequence of a lack of varied skill sets includes the lack of ideas, reducing creative

problem-solving and innovation. This will hinder the community’s growth as people do not have

diverse enough skills to face new problems. There are also inequality concerns as it is likely that
certain groups will be concentrating on low-paying jobs while others will be concentrated in

higher-income jobs, leading to further income inequality and disparity throughout communities.

This can cause further tensions and fuel social issues without being properly addressed. An

economy lacking diversity will also be single resource dependent and as those resources become

harder to extract, companies will have to make sacrifices or come up with innovative solutions to

face this challenge. As noticed above, there are real dangers to single-sector economies and it is

crucial that economies like these expand and create diverse economies that better support all

community members.

Ireland’s economy was also heavily funded by Foreign Direct Investment (FDI), as companies

looking to expand from the United States into Europe looked for places to base their European

headquarters. Due to the promising conditions specified earlier, they chose Ireland but most are

not Irish or even European companies. Ireland’s growth is in part due to Multinational

Companies’ (MNCs) investment, specifically in the pharmaceutical and technology sectors. This

created an economy that is vulnerable to external shocks and legal rulings beyond Ireland’s

borders. This is an issue especially important when thinking about global tax regulations in

comparison to national tax regulations, causing consequences for one country because of another

country’s regulations. Because of this, Ireland must be especially considerate when deliberating

economic policy and must closely keep up with foreign policy. These foreign policies could

force some of the companies to move out of Ireland and would cause mass economic shrinkage.

The Irish policies must be able to support that kind of loss and damage to the economy without

collapsing.
A consequence of the Celtic Tiger period that was clearly visible was the housing bubble Ireland

faced in the early 2000s. The early 200s saw a rapid and unsustainable increase in home prices

due to easy access to credit and a construction boom. In 2007, this all crashed and there was a

severe economic downturn leading to a recession because of Ireland’s dependence on its housing

market. There was also a crisis in the banking sector as it had to respond to this crisis and had to

lay off thousands of employees. After the crash, house prices plummeted and left homeowners

with negative equity, so people were unable to move and sell their home at a reasonable price.

This housing bubble is considered to be one of the worst housing market crashes in all of Europe

and caused financial hardship to thousands of families. The recession led to a huge fall in GDP

and a hike in the rate of unemployment.

Due to the banking sector having so much reliance on the housing market they were extremely

vulnerable to this crash and had to be bailed out by the European Union in 2010. Ireland’s

instability caused a threat to the global economy and the European Union offered a long term

adjustment program worth an 85 billion Euro bailout to stabilize the economy.9 The terms of the

bailout included reduced public spending to reduce the government's ever growing budget deficit

and new practices in the banking sector to ensure that this would not happen again. In Ireland’s

letter of intent to the IFM, the government wanted to “decrease their reliance on the economic

boom and transform the country into a export driven economy and a global platform for

investment.”10 The bailout became very controversial as the terms and conditions of the bailout

required additional assistance from the European Union to set Ireland on a path that could reduce

9
Breen, Michael. “The International Politics of Ireland’s EU/IMF Bailout.” Irish Studies in International Affairs 23
(2012): 75–87. http://www.jstor.org/stable/23489215.
10
Lenihan, Brian, and Patrick Honohan. Letter to Dominique Strauss-Kahn. 2010. Review of Ireland: Letter of
Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of UnderstandingLetter,
December 3, 2010.
and sustain debt. The debate began before the bailout even happened, in September of 2008

when the Irish government “issued a two year guarantee on the liabilities of Irish controlled

banks.”11 At first, it had its intended effect: deposits returned to Irish banks and confidence was

somewhat restored in the public. However, the government soon realized that to keep their initial

promise, it would have to raise taxes to a level that would cause the average citizen to go

bankrupt because the losses were much greater than they were predicted to be. This was the

beginning of Ireland’s extraordinary budget deficit and need for outside assistance. Deposits

declined by €125 billion from a peak of €600 billion in late 2008 and Ireland was desperately in

need of assistance.12 The Irish government was hesitant to accept help though and Patrick

Honohan took matters into his own hands and made a public announcement on the radio that

assistance was not just necessary, but impending. This bailout was not unconditional and Ireland

exited the program in 2013 with low market bond rates and began paying off the bailout. This is

typically seen as the most visible consequence of the Celtic Tiger period.

Another critique of the Celtic Tiger period is that it led to increased income inequality. Although

the economy was growing rapidly, not everyone saw the benefits that came with it. Those who

lived in rural areas or were not able to commute did not get higher paying jobs, more social

benefits, or increased expected lifespan. Considering that in 1990, 43% of Irish citizens lived in

rural areas, the wealth gap grew significantly.13 Areas like Dublin, Cork, and Galway saw

increased prosperity that did not translate to other areas of the country. Additionally, other

11
Breen, Michael. “The International Politics of Ireland’s EU/IMF Bailout.” Irish Studies in International Affairs 23
(2012): 75–87. http://www.jstor.org/stable/23489215.
12
Gary O'Callaghan, 'Did the ECB cause a run on Irish Banks? Evidence from disaggregated
data', Irish Economy Note No. 13 (February 2011). Available at: www.irisheconomy.ie/Notes/
IrishEconomyNotel3.pdf (20 August 2012)
13
“Ireland Rural Population 1960-2025.” 2025. Macrotrends.net. 2025.
https://www.macrotrends.net/global-metrics/countries/IRL/ireland/rural-population#google_vignette.
disadvantaged groups did not experience the benefits of a booming economy. The rising property

prices also disproportionately benefited the wealthy and increased the income gap. The neglect to

social services in these areas and rising housing costs increased the number of those experiencing

homelessness and other social problems.

Ireland also struggled to create regulations in an adequate time that matched the economic

growth. Due to the rapid change, the government couldn’t create effective policy fast enough,

especially when it concerned the financial and construction markets. This led to poor

constructions being allowed to build according to poor quality standards and businesses

expanding rapidly without paying appropriate taxes. This lack of oversight can be directly tied to

the banking collapse and the need for Ireland to be bailed out in 2010. Additionally, the lack of

regulations meant that there were few environmental concerns and companies could easily

pollute the environment and destroy important landmarks without consequence. Carbon

emissions also increased dramatically from 31.2 million metric tons to a whopping 46.4 million

metric tons in 2001.14 This negative externality disrupts human and wildlife lives and negatively

affects the environment. It would take years for effective policy to be developed and enacted to

reduce carbon emission. The short term focus of many legislation to increase economic growth

was extremely effective, but the Irish government failed to keep pace with the consequences of

expanded economic activity.

14
“Ireland: Carbon Dioxide Emissions 1970-2021.” n.d. Statista.
https://www.statista.com/statistics/449777/co2-emissions-ireland/.
However, the figures matched what was being seen in Ireland economies. In the late 1980s,

Ireland's15 GDP rate was about thirty percent and in 2002, it skyrocketed to eighty-seven percent.

In 1993, Ireland was experiencing close to a sixteen percent unemployment rate and 8 years later,

in 2003, its unemployment rate had reduced to less than four percent, reducing by almost

seventy-five percent. Ireland's emigration also steeply declined during this period, going from

71,000 people emigrating in 1989 to 25,000 in 1997. 1996 was the first year in decades in which

the immigration rate into Ireland was higher than the emigration rate out of Ireland, a significant

achievement. Between 1981 and 2002, life expectancy increased by four years, thanks to

Ireland’s newly accumulated wealth that was used to foster public education, recreation, and

medicine. The numbers simply do not lie- life got better for most Irish people during this period

and citizens enjoyed new benefits like busing as a form of public transportation and lived longer,

healthier lives.16

Despite the many critiques of the Celtic Tiger period, most Irish people saw incredible benefits

that will last generations to come. The many companies that based themselves in Ireland

increased the tax revenue leading to more social services to be offered for citizens. Jobs were

created and the new industries inspired people to pursue higher education, raising the average

income rates and leading to a better educated population. Many people who had emigrated from

Ireland saw an increased promise in the job force and chose to return to the country and

emigrants leaving their countries to seek safety and jobs chose to immigrate to Ireland. This

created a more diverse community that accepted and celebrated different races, religions, and
15
O’Leary, Eoin. “Reflecting on the ‘Celtic Tiger’: Before, during and After.” Irish Economic and Social History 38
(2011): 73–88. http://www.jstor.org/stable/24338906.
16
“Sustainable Development Indicators Ireland 2017.” Social Sustainable Development Indicators Ireland 2017-
Central Statistics Office, Central Statistics Office, 13 July 2017,
www.cso.ie/en/releasesandpublications/ep/p-sdii/sustainabledevelopmentindicatorsireland2017/soc/#:~:text=The%2
0unemployment%20rate%20fell%20from,remained%20around%205%25%20until%202007.
cultures. This increased diversity led to increased economic diversity as immigrants started new

unique businesses and delicious international cuisine. Due to the amount of companies that

focused on health, technology, and pharmaceutical innovation, Ireland was able to easily access

some of the world’s best health technologies and live longer lives. Additionally, access to the

internet and technology increased and people were able to communicate across the world and

secure jobs repairing and maintaining the new tech. Using the new tax revenue, the Irish

government was able to invest in important infrastructure like roads, airports, and public

transportation. These improvements led to increased modernization, connectivity, and help solve

some of the biggest problems in Ireland. Areas like Dublin saw mass improvements and gained

global attention making it an international city with respected museums, systems, and companies

at its head. Dublin became a city recognized internationally, for its art, history, and entertainment

scene, which enhanced Ireland’s overall reputation. Ireland’s workforce became highly educated

and investments in primary and secondary education gave all citizens equal access to education

and led to a highly literate and educated workforce. This caused Ireland to become attractive to

younger educated workers both nationally and internationally, leading to a more productive and

innovative workforce.

Ireland’s association with the European Union also opened up many doors for Ireland and made

it easier for trade to flow and for people to live and work within several countries. By adopting

the Euro, Ireland asserted itself as a global economic powerhouse that used a steady currency

that people all over Europe could rely on. The usage of the Euro also attracted investors, as they

knew that the currency would be honored to its full value and made it easier to do business with.

The government used strong fiscal and monetary policy during this time to simultaneously
increase access to public services and decrease its debt, a notable feat. When the government

faced a budget surplus in the early 2000s, the money was put to use on infrastructure projects and

public services, something that helps all citizens. The increased digitization of the modern age

also increased tourism in Ireland and the country experienced a greater need for more jobs and

businesses that would support the growing number of tourists. Overall, the economic boom

increased opportunities for Irish families and allowed thousands to be lifted out of poverty and

enjoy new opportunities. Emigration also declined sharply as opportunities were made available

to many people to let them grow and thrive without having to leave the country. This is also seen

through increased investment in higher education that attracted Irish and non-Irish citizens,

further promoting growth. The Celtic Tiger period permanently changed Ireland and life for its

citizens, offering more chances for employment and educational opportunities that led to

healthier lifestyles within more diverse communities. Because of this dynamic change, Ireland

has one of the most respected economies in the world and experiences foreign and internal

investment opportunities. The many social benefits of this transformed Ireland outweighs the

costs the Celtic Tiger may have had and increased the strength of the economy and the country,

leading to a unified and advanced nation.