1) the fact that Brazil has an automatic system of wage and pension indexation, and 2) has a flexible exchange rate, whereby devaluations of the currency can increase Brazilian domestic prices more easily than is the case in Ireland, which, as a member of the euro, cannot unilaterally devalue its currency.
+ a low corporate tax policy (1956),This was initially introduced to promote exports, but now applies to all business. A 12.5% rate applies across the board. It has helped Ireland attract a great deal of foreign investment and thereby become a world leader in pharmaceuticals, medical devices, international financial services and software + opening up to free trade (1966 to 1973), This policy was not popular at the time and led to job losses in sectors like clothes and shoe manufacture, but was vital to modernising our economy and attracting foreign investment+ free second level education (1966), Ireland was 20 years behind most European countries in doing this but it was a decision that paid big long term returns, as I expect the improved educational participation brought about by the Braxilian government initiatives will also do+ EU membership (1973),This was a vital decision too. It brought big benefits in terms of access to markets and funds for infrastructure development. But even more important it imposed necessary disciplines on our own policy. We were forbidden by EU rules from subsidizing particular industries, by cheaper energy or current subsidies of any kind. Sometimes it is helpful to have an external agent imposing disciplines like this.+ investment in technological education( 1980’s), The availability of young people with good technological skills was vital in attracting Foreign investment in new business start ups in Ireland+ improved tax collection (1987), This is something in which I was directly involved myself as Finance Minister. We introduced a system of self assessment for income tax, higher penalties for tax evasion, and simplifies tax filing systems. As a result Ireland was number one in the world for ease of tax collection, whereas Brazil was 150th. The number of hours it takes a firm to meet its tax filing obligations should be kept to an absolute minimum. The tax system should be as simple as possible. VAT should be levied at point of final sale, not at different stages in the value chain+ improved court services(1990’s), This included the setting up of specialised courts with special expertise in different types of the dispute. Ireland’s specialised Commercial Court has been a particular success+ aggressive promotion of foreign direct investment (1960 to date). Ireland’s Industrial Development Agency (IDA) has offices all over the world and has had particular success in attracting a disproportionate share of US investment coming to the European Union market, of which Ireland is an integral part. Were we not members of the EU we would not have been able to attract that investment, because our access to the EU market, and our input to EU rule making , would not have been guaranteed.
On the other hand, the factors which delayed Irish economic growth, notwithstanding the positive factors just referred to, were
+ the oil price shock(1974), This hit Ireland hard because we had few energy resources of our own. Ireland responded to the oil shock and the surge in inflation it caused by mistakenly introducing food subsidies, price controls and other forms of public spending which proved to be difficult to dismantle and led to a misallocation of resources+ irresponsible fiscal policies (1977 to 1981),In an attempt to boost the economy the then Government removed property taxes and boosted public employment. This proved to be a disastrously expensive mistake when there was the increase in international interest rates initiated by the US Federal reserve (early 1980’s), + exchange rate instability(1993).Before the introduction of the euro there was a period of exchange rate instability between the currencies of EU states. This led to uncertainty for business, high and volatile interest rates, which delayed the release of the pent up growth potential of the Irish economy+ Another important factor postponing economic growth until 1994/7 was demographic. Ireland had a very high birth rate up to the early 1980s. This kept women out of the paid workforce and added to the cost of education .By the mid 1990s, many of these children were entering the workforce, the birth rate had fallen, and women were freer to enter the paid workforce. As a result the available workforce in Ireland in the mid 1990’s was twice what it had been in the early 1980’s
+ if, since 1950, Brazil had had the same investment rate as Korea, it would be 18% richer today than it is, and+ he estimated that if it had made the same educational effort as Korea made since 1950, it would be 40% richer than it is today.