Ireland’s Second Miracle
In 2009, the Irish economy underwent one of the deepest recessions in the EU, with its economy shrinking by as much as 10%. Late in 2010, Ireland received an €85bn financial rescue package. Clearly, the winner of Ireland´s general elections held on Sunday (according to polls so far Fine Gael leader Enda Kenny) will have a lot on his shoulders. However, if the past is any indication, Ireland has the potential to resurge economically.
The country changed from a largely agricultural society in the early 70s into a modern, high-technology economy. By the final decade of the 20th century, Ireland had become one of Europe's economic success stories. Rapid entrepreneurial advancement helped the Irish make this turn. But “the Irish Miracle,” as it became known, was actually the product of purposeful reforms to create favourable conditions for entrepreneurs, including the privatization of state-owned companies, freer labor markets, lower tax rates and direct equity investment to encourage Irish people to set up their own businesses. The result: Ireland’s economy grew at a much faster pace than any continental counterpart over the next quarter century. By 2004, Ireland’s per capita income was only 10 percent below that of the United States.
These changes quickly created a culture supportive of entrepreneurs. In 2008, the New York Times reported that Ireland was “alive with enthusiasm for entrepreneurs, who seemingly rank just below rock stars in popularity.” At the time, Enterprise Ireland, an Irish government agency had leased space in an office building in Midtown Manhattan to serve as an incubator for Irish businesses hoping to expand into the American market.
Now, Ireland finds itself in dire need to reaffirm its position as a global leader in entrepreneurial spirit and resilience. Potential entrepreneurs must handle strong bootstrapping pressures, not an uncommon problem for entrepreneurs around the world. Luckily, young people in Ireland have a strong entrepreneurial spirit defined by more than a decade of entrepreneurial interest, education and support system.
There is some activity signaling this enthusiasm. For example, an entrepreneurship venture academy was just held by the Business Angel Partnership (BAP) aimed at getting 10 start-ups to an investor-ready stage with the help of seasoned angel investors and entrepreneurs. The investors present at a recent event reported that there was no shortage of entrepreneurs in Ireland. And the event itself showed that despite the recession, there is still at least a small group of high net-worth individuals who have an appetite for risk and are looking for investment.
Beyond Angel investors, there are examples like Dublin City University's Ryan Academy for Entrepreneurship which is arguing the recession might not be all bad news for those looking to found tech startups in the country. The university has established a new, €1 million accelerator fund aimed at supporting 12 early stage technology startups. The participating companies will receive €30,000 in funding, workspace in Dublin, and legal, accounting, marketing and IP services.
And with signs of fresh national leadership come a corresponding number of new organizations with at least some springing up to build Ireland’s economy through startups and entrepreneurial activity. One new initiative, Think Ireland, Inc. for example, is led by a group or Irish business leaders from across the world with such a vision for seeing Ireland thrive once again.
Other nations are also eager to put the spotlight on Ireland’s entrepreneurial spirit as a path for its recovery. For example, the U.S. State Department sponsored a conference on Muslim entrepreneurship in Ireland recently as part of President Obama’s wider international engagement through entrepreneurship. With featured speakers from the U.S., England and Ireland and over 130 participants from across sectors, the conference identified ways in which more Muslim entrepreneurs could be encouraged to use mainstream business support agencies and formal sources of financial assistance. “The Muslim community has a broad network of international contacts and we should tap into this substantial community if we wish to build Ireland’s export activity,” said U.S. Ambassador Daniel M. Rooney.
We can definitively see a silver lining shining behind the dark cloud of dour economic news. I am not surprised. The role entrepreneurship played in building Ireland’s economy is still fresh on the mind of many of its citizens. If policymakers remember the importance of creating new firms as opposed to focusing just on Foreign Direct Investment, Ireland will not need to wish for a second “Irish Miracle”.
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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.