Ireland boasts a vibrant, globalized economy, with GDP per capita second only to Luxembourg’s in the EU. The “Celtic Tiger� period of the mid-late 1990s saw successive years of double-digit GDP growth, driven by a progressive industrial policy that boosted large-scale foreign direct investment and exports. In recent years, Ireland has experienced more moderate growth, coupled with inflation rates above the EU average. The 2003 world economic slowdown affected Ireland as GDP growth slowed to 3.7% and the government budget fell into deficit. The economy has strengthened in 2004, however, with projections of a government surplus and annual GDP growth of 4.7%.

In 2003, U.S. exports to Ireland were valued at $7.7 billion, less than a third of the value of Irish exports to the U.S. ($25.8 billion). The range of U.S. products includes electrical components, computers and peripherals, drugs and pharmaceuticals, electrical equipment, and livestock feed. Irish exports to the United States represent approximately 15%-20% of all Irish exports. The U.S. is Ireland’s second-largest export destination–second only to the U.K. Exports to the United States include alcoholic beverages, chemicals and related products, electronic data processing equipment, electrical machinery, textiles and clothing, and glassware. In the first six months of 2004, Irish exports to the United States fell by 1% compared to the same period in 2003, while Irish imports from the United States rose by roughly 1%.

In 2004, the United States contributed $18.5 million to the International Fund for Ireland, a program that supports cross-border initiatives, cross-community reconciliation, and economic development.

U.S. investment has been particularly important to the growth and modernization of Irish industry over the past 25 years, providing new technology, export capabilities, and employment opportunities. Ireland, with 1% of the European Union’s (EU’s) population, has attracted 25% of all new U.S. “greenfield� investment in Europe since 1997. In 2003, there was $9.1 billion worth of new U.S. investment in Ireland, more than twice the U.S. investment flow to China. Currently, there are more than 570 U.S. subsidiaries, employing approximately 90,000 people and spanning activities from manufacturing of high-tech electronics, computer products, medical supplies, and pharmaceuticals to retailing, banking and finance, and other services.

Many U.S. businesses find Ireland an attractive location to manufacture for the EU market, since it is inside the EU customs area. Government policies are generally formulated to facilitate trade and inward direct investment. The availability of an educated, well-trained, English-speaking work force has also been an important factor, though wage increases over the past five years have significantly exceeded the EU average. Ireland offers good long-term growth prospects for U.S. companies under an innovative financial incentive program, including capital grants and favorable tax treatment, such as a low corporation income tax rate for manufacturing firms and certain financial services firms.