Finance

How Ireland Got ‘Rich’—And Why That Word Needs Air Quotes

Ireland looks dazzlingly wealthy on paper but much of that 'rich' is accounting smoke. Discover how EU access, low corporate tax, profit-shifting and a tiny population make GDP look bigger than everyday prosperity.

Dublin's 'rich' economy: a golden shamrock dissolving into ghostly profits.

How Ireland Got Rich And Why That Needs Air Quotes

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The question

If Ireland lost so many people to emigration and spent centuries under British rule, how did it end up looking so “rich” today?

The short answer

EU access: Joining the European Communities in 1973 plugged Ireland into the European Single Market.
Taxes: A low, predictable corporate tax regime made it a magnet for multinationals. See Corporate tax in Ireland.
Language and law: English-speaking, common-law system—easy for US firms to operate.
Stability and skills: Political stability, solid universities, and a business-friendly setup.
Tiny population: Even a small slice of EU-wide profits looks big when divided by 5 million people.

But a lot of that “rich” is accounting smoke

Headline GDP makes Ireland look off-the-charts wealthy. The catch? Multinationals shift profits there. That inflates GDP without all the money actually staying in the local economy—classic profit shifting/BEPS.

In 2015, a restructuring by big tech made Ireland’s GDP jump about 26% overnight. Economist Paul Krugman nicknamed it “leprechaun economics”. To get a truer picture, look at Ireland’s Modified GNI (GNI*), which strips out a lot of the phantom stuff. It’s lower than GDP and closer to what residents actually feel.

Quick rule: GDP shows what’s produced on Irish soil. GNI* is better for what actually sticks to Irish pockets.

How it actually happened

1970s onward: EU membership removed barriers to selling across Europe, making Ireland a handy base for global firms.
1990s–2000s: The Celtic Tiger years—big inflows of FDI, especially in tech and pharma.
US bridge: English language, compatible legal framework, friendly time zones, and great air links made Dublin a no-brainer for American HQs.
Tax plus talent: A low rate was the hook; a skilled, young workforce kept firms scaling.
Regulatory reality: Within the EU, tax policy is largely national. Some people say Ireland’s model thrived because it could veto EU-wide tax changes for years. The new global 15% minimum aims to narrow the gap, but Ireland’s ecosystem still matters.

What about the brain drain?

Yep, emigration shaped Ireland for generations. But during the boom, many moved back and new talent moved in. Once high-value jobs appeared, the flow shifted. In a small country, landing a few giant employers can move national stats in a big way.

Reality check for living standards

Good wages, high costs: Pay is solid, but housing and everyday costs bite. Not everyone shares the tech-and-pharma gains.
Concentration risk: Government revenue leans heavily on a handful of multinationals. If tax rules change or a giant relocates, that’s a wobble.
Read the right metrics: For Ireland, skip GDP per person. Use GNI*, median incomes, and cost-of-living data for a clearer view.

Want to dig deeper?

Bottom line: Ireland looks dazzlingly rich on paper because global profits flow through its books. It’s still genuinely prosperous, but the real story is a mix of EU access, smart (and controversial) tax policy, and a small, skilled nation punching above its weight.