In 2017, Israel's GDP was approximately US$320 billion, ranking 34th in the world; Ireland's GDP was approximately US$300 billion, ranking 37th in the world. Although Ireland is twice the size of Taiwan, its population at that time was less than 5 million, but its per capita GDP was as high as approximately US$66,000, ranking among the best in the world.
In 2023, the American financial magazine "Global Finance" released a ranking of the world's richest countries. Ireland led the way and topped the list of the richest countries. It prepared a fiscal budget in 2024 and faced luxury troubles that other countries could only dream of: 86 The budget surplus of 100 million euros is the envy of other countries.
A phoenix emerging from the financial tsunami
But did you know that after the 2008 financial tsunami, Ireland was deeply involved in a debt crisis. And was forced to apply for bailout from the European Union and the International Monetary Fund (IMF) on November 21, 2010, becoming the "PIIGS" (the other four countries are Portugal, Italy, Greece, and Spain) one of them.
Fortunately, with the concerted cooperation between the government and the private sector, Ireland announced its withdrawal from the bailout program on December 15, 2013, becoming the first European country to exit the bailout.
In just 3 years, we have come out of the predicament and gained all the hardships. This road must have been bumpy and difficult.
How do small countries rise?
I have been interested in the system of small countries for a long time, because Taiwan is a small country. So after visiting Israel in June 2016, I decided to plan a trip to Ireland to learn about how small countries survive when they face pressure.
At the end of June 2017, a delegation of finance, culture and financiers arrived in Dublin, the capital of Ireland. As soon as they got off the plane, they went straight to Enterprise Ireland to receive a briefing. This official unit actively attracts foreign investment and plays the role of angel investors, specializing in assisting Irish companies to go global.
The director who received us, Alan Hobbs, happened to be his Taiwanese son-in-law. In order to welcome us, he specially raised the flag of Taiwan, which was really touching.
6 reasons for Ireland to rise again
Regarding the rise of Ireland, Hobbs believes that there are six main success factors:
- The young population
- Free higher education
- Active investment by multinational companies
- Government investment in local companies
- Reduction of corporate income taxes
- Strengthen public construction
After listening to the briefing, what impressed me most was the policy of tax reduction and investment attraction.
Ireland's corporate tax rate was reduced to 12.5%. With such a simple move, it attracted more than 900 American companies to invest, with a direct investment amount of more than 200 billion US dollars.
But why does the Irish government want to cut taxes?
Before the tax reduction, Irish domestic enterprises were taxed at 30% and foreign-invested enterprises were taxed at 10%. Under this kind of differential treatment of "favoring one another but sparing one another", domestic enterprises will try their best to become foreign-invested enterprises. Later, the European Union came forward and Ireland simply changed to a single tax rate of 12.5%. The effect was unexpectedly significant, and other European countries began to follow suit.
Before 19944, Ireland's per capita GDP was about US$5,000, and it was once nicknamed "Europe's beggar" by the news weekly "The Economist". The unfair tax system has also led to huge net outflows in the current account and financial account. It was not until the switch to a single tax rate in 2003 that the Irish economy experienced dramatic changes.
After the financial tsunami, the real estate bubble burst, luxury homes plummeted by 60 to 70%, and the economy nearly collapsed. In response to this predicament, the Irish government cut back on food and clothing, cut the salary of civil servants by 20%, and borrowed 85 billion euros from the EU to strengthen public construction. Three years later, it was reborn from the ashes.
The key to ultra-high GDP per capita: education
I asked Gerard Whitty, Asia Director of Ireland's Industrial Development Agency, how it was possible for Ireland to create a country with a GDP per capita of nearly US$66,000 with such a small population. He answered bluntly: "Invest in education!"
Whitty said economic development is Ireland's most important goal. Although their finances are not generous, they invest limited resources into education and training, and university departments are also adjusted flexibly in a timely manner and will not remain static.
He also said that although political parties in Ireland often rotate, the original intention of the government will never change and is to serve enterprises. For example, when companies were preparing to invest more in the Internet of Things, the government began to set up IoT-related departments in universities. Later, 1,500 students with IoT expertise could be trained every year. When he saw that Quanta and Advantech were struggling to find IoT talents in Taiwan, he also suggested that they come to Ireland to recruit talents.
They are very sure that only with strong enterprises can a strong country grow. Therefore, the Irish government interacts with companies at any time to understand the talent needs in the next five years, or even 10 years from now.
