For nearly six decades since its independence in the 1920s, the performance of the Irish economy was far from impressive. At its lowest ebb in 1987, Ireland was virtually bankrupt and there was mass emigration for work abroad, resulting in a rapid decline in the population - down to only 2.8 million at one point.

Yet today Ireland, with a population of 4.5 million, is one of the world's most outstanding success stories. Its GDP per capita jumped from ¤10,300 (Bt475,000) in 1990 to ¤36,100 in 2005, while merchandise exports rose from ¤18 billion to ¤85.1 billion and general government debt as a proportion of GDP fell from 96.4 per cent to 24 per cent in the same period. Economic growth has averaged 5-6 per cent per annum, with unemployment falling from 13 per cent in 1990 to around 4 per cent last year.

In short, the Irish economy has been driven by the strong continual growth in foreign direct investment (FDI), with more than 1,000 foreign firms, many of them large multinationals, currently operating in the country.

These FDIs today account for more than 80 per cent of Ireland's total manufactured exports, while about 60 per cent of its GDP comes from export receipts. The upturn in the 1990s can be attributed to the US economic boom, growth in the IT sector, European Union membership, an improved skill base, competitive costs, low taxation (12.5 per cent corporate income tax), responsive education and other government policies, and flexibility.

In the IT sector, Ireland is today home to the European, Middle Eastern and African operations of more 200 multinationals, such as Intel, Google, eBay, Yahoo, Amazon and Cisco. In addition, it has attracted nine of the world's top 10 companies in the pharmaceutical and biotech sectors, with blockbuster products such as Lipitor, Viagra, Botox and Zocor.

As for medical devices, more than 90 Ireland-based companies currently export about ¤6.4 billion worth of these products, with 13 of the world's top 25 companies represented in the country.

Looking forward, Brendan Halpin of the Industrial Development Agency (IDA) told me further success will hinge on Ireland being transformed into a more innovative and efficient knowledge-based economy driven by a high-quality education system and systems that bring together researchers and businesses for commercial applications of science and technology.

Future success will also depend on a socio-economic framework that ensures a stable economy, competition, flexible labour markets and social protection.

Dr Eamonn Cahill of Forfas, the Irish national policy and advisory board for enterprise, trade, science, technology and innovation, said he was confident that the government formed after the general election in the next few months would not abandon the pro-business and low-tax policies that have worked so well in the past 15 years, as most politicians now seem to have a convergent view on the direction of economic development.

Cahill, who is currently working for Forfas's expert group on future skills needs, also attributed the success of Ireland's economic development to the close collaboration of four key agencies, namely, the Science Foundation Ireland (SFI - modelled after the US National Science Foundation), the IDA, Enterprise Ireland and Forfas.

SFI, for instance, is tasked with building and strengthening scientific and engineering research and infrastructure in areas that are strategic to long-term competitiveness by focusing on developing human capital, supporting strong ideas, and promoting public, business and academic partnerships.

IDA is responsible for promoting foreign investment in Ireland, while Enterprise Ireland is in charge of promoting Irish-owned businesses.

As for Forfas, it's the top-level policy adviser to the government, with authority to set up independent subcommittees - such as the expert group on future skills needs to act as the central body on managing skills and labour-supply issues.

Since the Irish economy is heavily reliant on external markets, the government has lately turned to boosting its domestic economy by offering more generous tax and other incentives to small home-grown enterprises as a means to cushion future external shocks.

Nophakhun Limsamarnphun

 nop1122@yahoo.com