The Extent to Which an Increase in Investment is the Main Driver of Economic Growth in Ireland
Overview
This essay examines whether increased investment is the primary driver of economic growth in Ireland, analyzing the country's remarkable economic expansion from 1987 to 2007 known as the Celtic Tiger. The paper applies economic theory to evaluate the role of investment in Ireland's sustained GDP growth and sectoral development, particularly in technology and communications industries.
What this essay covers
- Introduction and definition of investment and economic growth with context of Ireland's Celtic Tiger phenomenon
- The Keynesian Theory of Investment and analysis of investment patterns across Irish sectors including tech, life sciences, and financial services
- Examination of specific investment trends such as R&D, regtech, and technological infrastructure development
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THE EXTENT TO WHICH AN INCREASE IN INVESTMENT IS THE MAIN DRIVER OF ECONOMIC GROWTH IN IRELAND
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The Extent to Which an Increase in Investment is the Main Driver of Economic Growth in Ireland
In a 1994 investment report for Morgan Stanley on Ireland’s economy, Gardiner described Ireland as the Celtic Tiger because of the country’s surge in economic growth between 1987 and 2007. Between 1995 and 2000, the country’s annual growth rate averaged 9.4%, and between 1987 and 2007, the GDP grew by an astonishing 229% and thus, earning the name Celtic Tiger (Donovan & Murphy, 2013). Today, the Celtic Tiger still lives on with a growth of 15.2% in 2021 (OECD, 2022). Based on this phenomenal growth, there is a need to understand the role of investment. “Investment is the buying of a financial asset with the prospect that the asset will result in income in the future” (Gillespie, 2019). In ideal conditions, investment is supposed to influence the economic growth of a nation. According to Peterson (2017), economic growth "…is the increase in quantities of services and goods per head of the population within a given timeframe, measured in GDP. Based on these terms, the current paper focuses on investment to determine whether it is the primary driver of economic growth in the Republic of Ireland.