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Between 1977 and 2000, Ireland’s GDP per capita grew from 72 percent of the EU average to 116 percent. What was behind Ireland’s success?

Since joining the European Union in 1973, Ireland received approximately €17 billion in EU Structural and Cohesion Funds through the end of 2003. In the first two rounds of EU funding, the entire country was classified as an Objective One area. Between 1993 and 2003 cohesion funds supported 120 infrastructure projects at the cost of about €2 billion. (a) The choice of projects was based on a national development plan, which focused on investments in economic infrastructure that stimulated long-term national economic growth. These included investments in leading areas and in connecting leading and lagging  areas, such as the M50 (Dublin Ring Road), M1 (Dublin-Belfast), and improvements in the N4 (Dublin-Sligo), N7 (Dublin-Limerick), and N11 (Dublin-Rosslare). 

The Irish also invested in education, training, and lifelong learning in all of Ireland to provide investors with a good business environment countrywide. With its skilled labor force and good logistics, Ireland has become a popular destination for American fi rms wishing to reach European markets. In 2004 Irish-based U.S. fi rms exported $55 billion worth of goods
and services, mostly destined for Europe.

Ireland’s rapid convergence toward the incomes of Europe’s leaders was accompanied by a rising spatial concentration of economic activity. Compared with the other cohesion countries—Greece, Portugal, and Spain—Ireland’s economic concentration rose much more (see the figure below). But its per capita income grew much faster too. In 1977 Greece, Ireland, and Spain had per capita incomes of about $9,000; Portugal’s was about $6,000. By 2002 Portugal had an income of $11,000, and Greece and Spain close to $15,000. Ireland’s per capita income had risen to $27,500.

Click to enlarge Today, almost all regions in the new member nations in Eastern Europe qualify for EU financial support. They should consider the Irish example of using the funds for international convergence and not—until later stages—for spatially balanced economic growth within their borders. Sources: Dall’Erba 2003, WDR 2009 team. a. Ireland’s National Development Plan (NDP) 2000–06.     Â