AN ISLAND OFF THE COAST OF AN ISLAND
Republic of Ireland Braces for 1992
PERIPHERALITY: The word comes up surprisingly often in ordinary conversation here. The Republic of Ireland - 26 counties of the whole island, with only 3 1/2 million inhabitants - is ever mindful of being off the coast of Britain, on the edge of Europe. Yet the Irish are equally mindful of their need to be part of Europe. Irish businesses need larger markets to achieve economies of scale; their farmers can produce far more than their own people can consume. Since 1973, they have been enthusiastic members of the European Community (EC).
So the Irish are looking forward to European economic integration - known as the ``single market'' or ``1992,'' for the year it is to take place. But their enthusiasm is tempered with concern.
``There is a tendency for economic activity to go to the center,'' says J. J. Sexton, a demographer at the Economic and Social Research Institute in Dublin.
Even single-digit gains within the European market could mean a lot for Ireland. But Mr. Sexton says that 1992 may not lift Ireland as much as it will Germany and other nations.
Ireland may still do all right by 1992, however. Earlier this year, The Economist of London studied the EC 12, plus Austria, Sweden, and Switzerland, to calculate probable ``winners'' and ``losers'' in the single market. Ireland came in fifth place; its strengths, the magazine figured, included its open economy, relatively low wages, and high proportion of gross national product accounted for by net exports of capital goods.
The International Financial Services Center, under construction here beside Sir James Gandon's old Georgian Custom House along the River Liffey, is the epitome of the new high-tech Ireland. World-renowned firms are setting up shops for mutual funds management, corporate reinsurance, and corporate treasury management. These activities can be pursued anywhere, if telecommunications are good enough, and Ireland has spent a lot on telecommunications lately.
These niches are very important in a place as small as Ireland - especially insofar as they mean jobs.
The tough austerity program in place since Prime Minister Charles Haughey assumed power in March 1987 is paying off. Employers, farmers, and trade unions signed on to a ``program of national recovery.'' Spending has been cut, tax rates lowered, trade and balance of payments deficits turned into surpluses. Irish inflation has run below the EC average. For 1989-90, 30,000 new jobs were created - a very strong showing by historical standards. Net emigration, which had peaked the year before at 50,000, fell to 30,000.
But unemployment remains stubbornly high - around 16 percent. Irish industrial recruiters tout their ``unique demographic structure'' vis-`a-vis labor-short Europe. Ireland has more to offer than just a labor surplus, however. As an English-speaking EC country, it draws American computer firms. Half of Irish industrial output is accounted for by high-tech multinationals.
High tech is not the whole of Ireland: Agriculture remains important, though troubled. It employs about 15 percent of the Irish labor force - a very high rate for a developed country. And agriculture and food products account for 25 percent of total Irish exports and for 42 percent of net export earnings, says John Fox of the Department of Agriculture and Food.
But Irish farmers worry the EC will strike a deal under the General Agreement on Tariffs and Trade that will put them out of business. The issue is not just earnings and market share, but social fabric and maintaining employment - ``keeping people on the land,'' as Con Lucey, chief economist for the Irish Farmers Association, says.
Says Mr. Fox: ``We joined the Community largely for the benefits of the CAP [Common Agricultural Policy] and despite the damage caused to nonagricultural industry.''
David Croughan, chief economist of the Confederation of Irish Industry, sees it differently: as an exchange of a protectionist for a competitive, free-trade orientation. Since 1973, noncompetitive industries, such as auto assembly, have mostly closed down. ``What was left was what was competitive.''
Mr. Croughan is bullish on 1992. But in any case, ``there isn't actually an alternative.''