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12 Economy

In the 1920s and early 1930s, Ireland pursued a low-tax, low-spending policy under the government of W.T. Cosgrave and Cumann Na Gaehael, focused mainly on agriculture, livestock farming being of primary importance. The only notable expense the government went to during this time was for the rural electrification scheme, which saw £5,000,000 being spent (a colossal sum of money) constructing a hydroelectric dam on the river Shannon. During this time, 97% of trade was done with Britain.

In 1932, Eamonn De Valera's Fianna Fáil party defeated Cosgrave's party with a solid majority. De Valera focused on Agriculture again, but this time on tillage farming, as this favoured the small farmers, whereas cattle farming benefited the larger farmers. Fianna Fáil abandoned free trade and put up protective tariffs on almost all industries, spurring a long economic war with Britain, who taxed exports to Ireland in retaliation. The war ended in 1938, Ireland securing very favourable bargains.

Fianna Fáil remained in power until 1948, when the first coalition government ousted them from power. To the present day, the two largest parties, Fianna Fáil and Fine Gael, have dominated the scene, Fine Gael traditionally being pro-business, low tax and low spending, although with Fianna Fáil's alliance with the Progressive Democrats, it has modified its standpoint to be more pro-business.

The North experienced a boom during WWII and received British support support thereafter. In comparison, the Republic did not experience a WWII boom and its situation declined relative to the North. Overall, until the early 1960s, population and economic decline plagued Ireland. In the early 1960s, Sean Lemass became Taioseach and embarked on a programme of economic reform. For the first time in Ireland, second level education was made free and compulsory. The Republic abandoned protectionism and applied to join the European Economic Community, along with Britain, gaining entry in 1973.

Though the 1960s and early 1970s saw a boom and, for the first time since 1842, a rise in population, the late 1970s and the 1980s saw a long recession. There was mass unemployment, with many people with tertiary education working minimum wage jobs or being out of work. Emigration returned to 50,000 per year.

This situation changed dramatically in the early 1990's as the result of a second, more prodigious, economic boom, known as "The Celtic Tiger" (as in tiger economy). In July of 2006, a survey undertaken by Bank of Ireland Private Banking showed that, of the top 8 leading OECD nations, the Republic of Ireland was ranked the second wealthiest, behind Japan and ahead of the UK (which includes Northern Ireland), US, Italy, France, Germany and Spain, showing an average wealth per head of nearly EUR 150,000 (USD 190,000).