If you were to take a look at the wealthiest citizens in the world in the 1980’s, you would have seen the tax havens like Monaco, Switzerland and Luxemberg, at the top of the list, you would have seen economic powers like the united states and Germany at around 13-14th richest. And all the way down at number 28, past countries like Greenland, New Caledonia, and Andorra, would be the country of Ireland.
But today, That list looks a little bit different. As Ireland now has the 4th largest GDP per capita in the world, and of countries with over 3 million people, Ireland is the 2nd behind only Singapore.
But it wasn’t always like this, you see, Ireland just 100 years ago was considered by many to be a third world country.
In the 1920’s, greater than 90% of Irelands economy came from agriculture, and most of its working population was composed of poor farmers. And after Ireland gained its independence in 1922, it only had one trading partner, which was the U.K, and virtually all of Irelands exports were Beef and Dairy.
Now at this point, Ireland was falling behind the rest of the world in regards to its economy and technology. So it decided to try a new economic policy.
The Irish saw that during the great depression, the countries that were being hit the hardest were the ones with a free market. Meanwhile, countries under communism such as China, and the Soviet Union were actually experiencing economic and industrial growth during this time.
So…the statesman Eamon de Valera decided to take some of the ideas from the communist regimes. Ireland soon nationalized and monopolized a large portion of its economy, it banned most foreign investment, and put high tariffs on all goods from other countries.
These policies were supposed to make the country self sufficient, and help rapidly industrialize the nation. But that is not what happened.
You see, the first thing that happened after these economic policies were put in place was that the Irish began leaving the country at faster rates than they were before. In fact between 1840 and 1950, the population of Ireland went from 8 Million all the way down to 4 Million. Although the potato famine of 1845 played a role in that as well.
The second thing that happened was that the Irish policy makers ran into a problem. You see, in order for a country to become industrialized, they need all of the resources required to build things like factories, ports, and modern buildings. And for large countries with tons of resources like Russia and China, that was not much of a problem.
But for a country like Ireland which is 0.49% the size of Russia and 0.88% the size of China, this would prove to be troublesome for the small European nation. And even if Ireland were to be abundant in all required resources, it would have been very difficult to build an industry around each one of those resources because Ireland’s population small…and less than that of some cities like New York and London.
One interesting note is that because the Irish took some of the ideology from the west and some of the ideology from the east, it actually was one of the very few countries that stayed neutral during world war 2.
Anyways, over the next several decades, the nationalistic economic policies would prove to be disastrous for the Irish economy, as there was very little economic or industrial growth during that time compared to the rest of the European world.
So…as virtually all communist countries have done…they decided to change their economic policy.
In 1957, Ireland began accepting foreign investment, they slowly began opening up more to international trade, they started investing heavily into education, and they began selling off many of their state owned companies.
in 1973, Ireland joined what would become the European Union, and this was viewed as the beginning of Ireland becoming a modern economy.
However, things took a little bit of a turn.
You see, a combination of an oil crisis, uncontrolled government spending, Bank strikes, and extremely high taxes, upwards of 50% for the average person, led to one of Irelands worse economic downfalls in its history.
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