Political Economy of Ireland - Essay Example

Running Head: POLITICAL ECONOMY OF IRELAND Political Economy Of Ireland Case study: Ireland in 2004 Submitted by: XXXXXXX Number: XXXXXXX Tutor’s Name: XXXXXXXX University of XXXXXXX Introduction: In the current times where the world is being faced with high levels of globalization and every company is trying to invest into different countries, the concept of political economy is becoming very important. There are several different definitions and meaning for globalization of which one simple meaning would be unification of the world into a single society which functions together. Globalization involves internationalism, which in a number of cases can be misleading as global generally means ‘one world’ whereas international can be construed to different languages, people, cultures, borders, economies, and even ecosystems (Patapan, 2007). This assignment aims at discussing the concept of political economy in the context of Ireland in 2004. The paper will firstly provide a brief overview of the concept of political economy followed by a brief overview of Ireland. Then a thorough analysis of the case of Ireland in 2004 will be made and the theory of political economy will be applied to the same. Political Economy: Globalization is the process of speedy yet steady change and integration of countries and the occurrences that happen with the use of foreign trade and a lot of foreign investments. Globalization can be expressed as newer opportunities and possibilities for action among people across the world. Here the location is not an issue and the social activities are not affected by the location of the individuals or the businesses. There have been a number of different definitions that have been provided for globalization, however none of these can be considered to be precise. However some of the definitions that have been provided by experts are discussed below. According to Stephen Gill, globalization is a method of reducing the costs in terms of transaction and Trans – border movements of, capital as well as goods and also the factors of production and goods (RobertC.Feenstra & Hanson, 1996). However Guy Brainbant (Aisbett, 2003) has described globalization to be a process which does not only includes the world trade, but also includes a number of other factors like the development of advanced means of communication, financial markets becoming internationalized, higher and growing importance to multinational companies, higher mobility of people, population migration, and mobility of other factors like goods, capital, data and also ideas. With the rapidly increasing connections across the world and a number of new integrations worldwide, there has been a shift in the pattern of studying politics of economic relations and also the political relations of the various nation states (Jevons, 2005). Globalization has led to an interconnected world and people now are interested in learning more about the political and economic conditions of not only their own countries but also other countries. In the earlier times, the theory of political economy was basically meant for the relationship between the production, distribution and consumption of goods (Economy Watch, 2010). In the recent times, the theory of political economy has been defined as, ‘A division of economics that focuses on how the combination of politics and economics influences the economy. For instance, the economy can shift in a different direction depending on the current political party in control’ (Investor Words, 2010). The basic theory of the political economy is based on the political and economic behavior of a country. In the recent times however the concept of political economy is referred to as the International Political Economy. As explained in Economy Watch, ‘This branch mainly draws on Marxian liberalism and realism from the theory of Political Science and Rational Choice assumption and also Game Theory from the field of advanced economics’ (Economy Watch, 2010). Overview of Ireland: Ireland is the third largest island of Europe and is the 20th largest island of the world. The island has been recognized and known for the global competitiveness that the economy has in the world and the attractiveness that is present for the investments in the country. The economy of the country has been referred to as the ‘Celtic Tiger’. The country has been recognized over the years for the excellence in the economic conditions, excellent living conditions and the high attractiveness of the foreign direct investments. Considering the countries size and the population of the country, it still is the fifth richest in terms of the GDP of the country. The next section will details a few discussion about the country based on the political economy of Ireland. The main aim of the Ireland, as seen in the case, has been to reduce the costs and national debt in order to become more favorable in terms of the foreign direct investment. The country has seen immense growth and improvements over the years and in the early 2000s it had been clearly noted that the government’s direct role in the country had been reduced to a great extent with just a few industries in hand, like the state owned airline Aer Lingus, the electricity and gas suppliers and similar companies. The main intension of the government was to try and privatize all the industries in the country. The GDP of the country had faced an increase at 9.9% and the US companies had contributed to almost 5% of the total employment in the country. With the high levels of globalization the country had been able to develop itself and to work towards a strong yet completely privatized country (Hill, 2007). The use of this techniques and strategy has led the country to be able to compete in the global marketplace. Looking at the GDP growth of the country from 2000 the government and political implications were present in the working of the country and in 2003, where major part of the companies were privatized, it is clear that there has been a clear increase and remarkable improvement in the working and functioning of the country. Also, considering the comparative study of the GDP and its growth with other countries, it is clear that Ireland has been able to improve upon its overall performance with the theory of political economy. The country has highlighted the interdependence of the politics to the economy and the laws followed within the country. The country had also seen a major lacking in terms of the exports industry when compared to the US and UK markets which were relatively free. The various laws and rules that had been set down for the country along with the intense support that the country had from the government has helped it develop and grow to great extents. The assistance from the government along with the onset of globalization led to the country becoming more successful each day. Globalization can be described as an integration of economics, finances, trades and communications across the world. It can also be referred to a way of opening up and moving beyond borders and nationalistic perspectives. Globalization provides for a broader outlook for inter – connected and inter – dependent world, where there is free transfer of capital, goods, and services across borders internationally (Mooney & Evans, 2007). It is essential to realize how the country had been faced with such high levels of improvements and to do so, it is necessary to acknowledge the efforts of globalization, which mainly helped in opening up the country to newer avenues and also new foreign direct investments as well. This was done by opening up the economy for foreign companies to invest in the various fields of economic activities. It also involves removal of the various obstacles that multinational companies might face to enter into Ireland and also for the Irish companies to enter into various foreign collaborations. This involved and provided Ireland with a chance of entering into joint ventures abroad and also carries out a numbers of imports and exports. Globalization also provides for the country to carry out massive liberalization of import programs and to move from quantitative restrictions into tariffs and import duties (Labonté, 2007). The various laws and the improvements in the labor markets also helped and provided a push to the overall foreign direct investment opportunities as well. Conclusions: As seen in the case, it is clear that the success of a country is not based on a single element of the country, however is a n interdependent effort of various elements like the government, laws and globalization. Ireland being relatively such a small country with such low population has been able to develop and gain the position where there is higher attraction for the foreign direct investments and an overall excellence (Ghemawat, 2001). Hence this clearly shows that the political economy of a country is a combined effort of the politics, economics and the laws of the country. One of the best examples for this theory is clearly the example of Ireland. References Aisbett, E. (2003). Globalization and Poverty: are the criticisms vague, vested or valid? University of California at Berkeley. Economy Watch. (2010). Political Economy Theory. Retrieved March 9, 2010, from http://www.economywatch.com/political-economy/political-economy-theory.html Ghemawat, P. (2001). Distance Still Matters: The Hard Reality of Global Expansion. Harvard Business Review , pp 137-147. Hill, C. (2007). International Business: Competing in the Global Marketplace 6/e (chapter 2). New York : McGraw-Hill Irwin . Investor Words. (2010). Political Economy. Retrieved March 8, 2010, from http://www.investorwords.com/8179/political_economy.html Jevons, W. S. (2005). Political economy. Adamant Media Corporation . Labonté, R. (2007). Towards Health Equitable Globalization: Rights, Regulation and Redistribution. Globalization Knowledge Network. Mooney, A., & Evans, B. (2007). Globalization: The key Concepts. New Edition: Routledge. Patapan, H. (2007). Globalization and Equality. Taylor & Francis Publications. RobertC.Feenstra, & Hanson, G. H. (1996). Globalization, Outsourcing, and Wage Inequality. American Economic Association Papers and Proceedings , 86(2), 240-245. Read More