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issn 1822 – 8402 european integration studies. 2009. no 3

ECoNoMICAL AND REGIoNAL DEVELopMENT - IRISH STATE 
DEVELopMENT EXAMpLE foR pERIpHERAL EuRopEAN uNIoN STATES

Baiba Rivža
Sanda Čingule

Latvia University of Agriculture, Faculty of Economic

Abstract

In Baltic States, since the 90’s of the last century, when was getting independent of state’s, attention is 
increasingly paid to country’s regional development and problematic of economical potential. Worldwide, 
in European union and so in Latvia the features of ongoing socioeconomic crisis make draw attention to 
activization around decentralization and focus on questions of regional development more intensively, 
particularly on search of solutions for research and analysis of a more efficient economical potential and its 
use in regions and counties.

Economical development is the goal not only in Estonia, Latvia and Lithuania, but also worldwide, in 
particular, in peripheries, in ulterior territories of countries – in regions. Economic growth of regions and 
municipalities depends on several factors. one of the most important core factors is reasonable use of the 
economical potential, using the opportunities of increasing financial capital, attraction of investments to the 
administrative territory of the municipality or increased economical potential. Regions and counties economic 
potential mostly depends on actions and activities of the certain county, how well organized, strategically far-
reaching and reasonable the available nature, infrastructure , financial, social and other resources are used. 
Example of state Ireland verifies that approximately during the past 25 years the state has carried out very 
proper macroeconomical policy, remarking also the fact that many countries had the favourable conditions, 
but not all of them were able to use them. State of Ireland can be mentioned as a positive state economical 
and regional development example, as it is also located in remote part of Europe, nevertheless with help of 
a proper macroeconomic policy and ability to create favourable economical relations with other countries 
(also outside Eu), it is one of the most developed countries in Eu. In Ireland’s development period three main 
directions of economical policy can be marked: fiscal stabilization, open conditions of trade and investments, 
and industrial policy that also applies to attraction of foreign investments (especially in IT sphere). Irelands 
experience witnesses that participation in Eu has given additional potentialities for economical and regional 
development. It ensured increase of investments and capital flow, new work places, greater stability and 
wherewith higher welfare. To great extent success of this state depended on the way it used the Eu offered 
opportunities. Ireland is one of economically most developed, industrial and trade-oriented countries, which 
till now was able to use the Eu structural funds resources most effective. The resources that were gained from 
Eu support funds have considerably stimulated state’s economical growth. The stress has to be made on the 
ability to pass the projects successfully and to make the National development plan successfully, which is the 
core document to gain funding. Baltic States could learn from Ireland’s economical and regional development 
example how to develop its relations with other countries concerning economical issues.

The experience of Eu countries has proved – the stronger the municipality and regions, the bigger the 
chance of regional development. Effective municipality reforms stimulate regional development, however, each 
regional development policy has at least two aspects – economic and social. Statement question of regional 
development policy is on the base of choice of regional development instruments. State’s determined, chosen 
instruments outline and define the regional policy outlook of every certain state.

Keywords:  

Regional development, regional policy, regions, economical potential.

Introduction

In Baltic States since the 90’s of the last century, 
attention is increasingly paid to country’s regional 

development and problematic of counties’ economical 
potential. Worldwide, in European Union and so in 
Baltic States too, the features of ongoing socioeconomic 
crisis make draw attention to activization around 



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135

decentralization and focus on questions of regional 
development more intensively, particularly on search of 
solutions for research and analysis of a more efficient 
economical potential and its use in regions and counties.

Economical development is the goal not only in Baltic 
States, but also worldwide, in particular, in peripheries, 
in ulterior territories of countries – in regions. State of 
Ireland can be mentioned as a positive state economical 
and regional development example, as it is also located in 
remote part of Europe, nevertheless with help of a proper 
macroeconomic policy and ability to create favourable 
economical relations with other countries (also outside 
EU), it is one of the most developed countries in EU. 
In Ireland’s development period three main directions 
of economical policy can be marked: fiscal stabilization, 
open conditions of trade and investments, and industrial 
policy that also applies to attraction of foreign investments 
(especially in IT sphere). Irelands experience witnesses 
that participation in EU has given additional potentialities 
for economical and regional development. It ensured 
increase of investments and capital flow, new work 
places, greater stability and wherewith higher welfare. 
To great extent success of this state depended on the way 
it used the EU offered opportunities.

Aim of the research: 
To identify and make analyse of the economical 

potential of regions, counties, and to make states’ 
comparison analysis: development of economical 
potential of regions and municipalities in Ireland and 
Latvia.

The aim has certain subordinate objectives:
To identify the economical potential of regions 	
and counties;
To explore state of Ireland development example;	
To carry out comparison analysis of states of 	
Ireland – Latvia for increase options of economical 
potential of regions and local governments

The research was created on base of Latvia’s Republic 
laws, government’s normative documentation, special 
literature, personal experience of the author in work of 
local governments, development of Ireland country  and 
other materials.

Used research methods: monographic, methods of 
analysis and scientific induction and deduction

Definition of counties’ economical potential

Economical development is aim not only in Baltic 
States, but also worldwide, especially in peripheries, 
in more distant territories. The creation of regions and 
counties, doubtless, is increasing the possibilities of 
concentration of financial means. Focusing the financial 
means creates an opportunity to attract qualified 
specialist, to increase the professionalism of employees, 
who can improve the work of municipality in their field, 
attract additional financial funds, investigations and 

stimulate the overall development of the municipality. It 
also means that these specialists with their professional 
activity will attract more finances and investigations in 
favour of the municipality.  For example, to prepare a 
good project application to some of the EU funds, it is 
necessary to be a quite proficient and good specialist, 
because there is a large competition in Latvia to attract 
the Europe’s offered investigations. Municipality is the 
state level structure that is closer to the inhabitants. 
Every municipality needs to care for interests and welfare 
of inhabitants of its territory, in that way developing 
infrastructure of the municipality and increasing the 
opportunities for inhabitants to raise their welfare. Every 
municipality is responsible for national economy in its 
territory. 

The economic growth of the municipality depends on 
several factors. One of the most important core factors 
is reasonable use of the financial potential, taking the 
opportunities of increasing the financial funds, attraction 
of investigations for administrative territory of the 
municipality or raise of economical potential.

The economical potential of counties is formed as a 
complex structure in all fields of county’s activities and 
competences. Author of the work distinguishes the main 
alternatives of raising the economical potential:

Development of infrastructure	  – the mentioned 
alternative includes development of technical 
infrastructure (improvement and development 
of roads, streets, public transportation, water, 
sewerage system etc. in accordance with present-
day requirements and quality); development of 
municipalities social structure.
Development of entrepreneurship in field of 	
innovation – the mentioned alternative includes 
stimulation of the environment of entrepreneurship 
on regional or local municipalities level (creation 
of entrepreneurship centres, business incubators, 
technological parks, help to the entrepreneurs 
concerning  prequalification or training of the 
employees, cooperation of businesses, high schools 
etc.); Stimulation of cooperation among other 
municipalities, non government organization’s 
and structures both, in counties, regions and 
abroad (stress on cooperation of borderland 
municipalities, municipality with on average 
equivalent indexes of the particular municipality); 
Elaboration of field strategies for problem regions; 
Elaboration and implementation of cities (places’) 
marketing conceptions.
Development of entrepreneurship environment 	
in field of finances – the mentioned alternative 
includes state and interstate organizations, 
fund subsidies and granting of credits to 
municipalities for creation and development of 
production, social and ecological infrastructure; 



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International organizations, investors, state 
and municipality funding and loans to private 
enterprises; Regionally differenced subsidies and 
loans to private enterprises to stimulate creation 
of new productions or expanding of production, 
development in the problem regions; rational use 
of nature resources; Appropriate tax policy for 
particular territories; Creation of free and special 
economical zones.
Raising the intellectual capacity	  – the mentioned 
alternative includes dislocation of new and existing 
state (or state governed) enterprises and government 
agencies in problem regions; Development of 
culture. Help to develop innovative activities in 
problem regions (grants for scientific researches, 
for carrying out researches etc.)

As a result of the mentioned alternatives of increasing 
the economic potential, counties can develop faster, 
with a higher quality, attracting new financial and social 
resources, thereby improving the overall development of 
the county.

The main indexes of county’s territory economic 
potential growth result are:

Increased number of inhabitants;	
Growth of GDP;	
Increased tax income;	
Increased amount of active enterprises;	
Increased number of new working places;	
Integration of business and education;	
Investor contributions;	
Increased social level;	
Increased value of Immovable property tax.	

It is important to define the directions and aims of 
territorial development, as well as to implement them 
purposefully, because the elaboration of the development 
plan is only a successful precondition of development, 
but it is not the development itself. Development of a 
county is implementation of “the development plan”. 
Municipalities when establishing counties need to 
elaborate development strategies for newly established 
counties, and as much as possible – they need to 
implement hem. 

Essentially is for every county to raise attention 
and concentrate not only to the development and raise 
of economical potential of county’s own territory, but 
it is also important to adapt oneself into regional and 
state processes, in that way building a harmonious, 
developed, economically and socially attractive state in 
general. Long-term development of the territory needs 
to be reviewed in connection with core statements and 
regional development, where the regional development 
is implemented accordingly mutually integrated planning 
documents.

The main development directions have to be defined 
on basis of social interests – what kind of municipality 

do inhabitants want to see in the future? What are the 
primary problems that they spot and which of the fields, 
directions in the primary one that should be solved 
and developed? These questions need to be regarded 
while exploring, analyzing every county individually, 
and while looking into region’s, county’s development 
possibilities - in accessibility and practicability of 
economical potential instruments. Ireland politic 
Finnegan say: “Social interests are neither state interests, 
nor the simple sum of personal interests. (..) They are 
total field between the harmonized personal interests of 
citizens and state interests”.  

The economical potential of counties mostly depends 
on the work and activities of the region or county itself, 
how well organized, strategically far-reaching and 
reasonable the accessible nature, infrastructure, financial, 
social and other resources are used.

States’ comparison analysis: development 
of economical potential of regions and 
municipalities in Ireland and Latvia

Ireland is one of the most centralized countries in 
Europe, sovereign, independent state. The republic has 
liberal democracy with parliamentary government system. 
It encloses approximately 80% of Island of Ireland and 
since 1973 it is European Union (EU) member state. The 
capital city of Ireland is Dublin, the territory reaches 
70 300 square kilometres with 3.6 million inhabitants. 
The main natural resources are zinc, lead, natural gas, 
barites, copper, gypsum, limestone, dolomite, peat, and 
silver. Bunreacht na hEireann („Irish constitution”) 
of 1937 determines general principles, that build the 
ground of Irish legal framework. And the amendments 
in Constitution of 1999 confirmed the constitutional 
status of municipalities. The municipality system is in 
fact created in one level, still it is quite complicated. 
The main units of municipality system are 29 provincial 
(shire) councils and 5 city councils. Vanags and Vilka 
(2005) explain, than in Ireland in total are 5 municipality 
groups, as well as 5 district corporations, 49 provincial 
councils and 26 city deputies – together 114 local 
governments, where the municipalities of the three latter 
groups are not subjected to district boards. The regional 
issues have become outstanding in the 90’s of the past 
century, when in Ireland in 1994 already officially 8 
regional institutions were established (their members are 
deputies of district councils and city councils), where the 
main tasks of these institutions are coordination of public 
services on regional level and control of the use of EU 
structural funds. So the two biggest regional authorities 
were established in 1999, they are also called regional 
assemblies and their main task implementation of EU 
programs. As well on municipality level in the end of 
the 90’s strategic policy committees were established, 
and they include not only deputies and representatives of 



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social partners, but also non-governmental organizations 
and other interest groups.

By the side of power of attorney of Latvia’s 
municipalities, the municipalities of Ireland have 
low level of autonomy, where their main range of 
activities are physical planning; housing fund and 
civil engineering; road construction and maintenance; 
water supply and sewerage; territorial development; 
environmental protection; recreation. District councils 
and city councils are in response of the abovementioned 
functions, but the municipalities of the other groups – 
only of part of the functions. In contradiction to Ireland, 
Latvia municipalities’ functions additionally include, 
for instance, ensuring of educational, cultural and 
social services, family court functions, that makes a 
remarkably larger level of authority and responsibility 
of municipalities. To compare with Latvia’s situation, 
municipalities in Ireland are much larger, but they 
have less power than in Latvia. Analyzing economical 
development activities in Ireland, a conclusion can 
be made, that the Irish people have strengthened their 
local authorities especially for a better use of European 
Union help. Exactly for this purpose reform was made 
and all the municipalities were merged in eight regions. 
(Concerning the area and number of inhabitants very 
similarly to Latvia’s planned five counties). Only task of 
regional authority is coordination of high scale projects 
in-between shires and Brussels - this work is managed 
by only three clerks and for maintenance of every 
region’s new administration state spends from 70 up 
to 140 thousand lats in a year (budget of a small rural 
municipality in Latvia).

Ireland and Latvia have much in common and 
many differences too. Latvia could learn from Ireland’s 
action and development experience how to recover 
from economical crisis and to gain benefit from EU, 
how to use the available resources more efficient and 
appropriate, as well as the economical potential, through 
developing it as much as possible and using with far-
reaching development consequences in the future.

Ireland is a state that regained its independence 
from its neighbour country Great Britain only in the 
20’s of the last century. Only in a little bit more than 
20 years the state reached its economical growth and its 
result of the last years shows, that it is EU state with 
the highest gross domestic product (GDP) increase in a 
year. In official Latvian Republic newspaper “Latvijas 
vestnesis” are found information than common with 
Latvia, also Ireland is located on margin of Europe, it 
is small, peripheral country, which 25 years ago was a 
backward remote part of Western Europe and its only 
economical engine was agriculture. In the country was a 
deep economical stagnation, mass emigration (especially 
of the youth) happened to other EU countries and 
United States of America (USA). In the EU countries’ 

community more poor were only Portugal and Greece. 
The main barriers of Ireland’s economical development 
growth in different periods of time can be considered 
emigration of inhabitants able to work in the seventies, 
state’s debt crisis in the eighties and lack of qualified staff 
in the nineties. Nevertheless at the moment since 1988, 
due to hard-line budget policy, the budget deficit has not 
exceeded 3% of GDP as set in Maastricht criterions, and 
since 1998 budget incomes exceed budget expenses. 
Currently state’s debt is the smallest among EU countries, 
that’s agreed Ireland politic and man of science Finnegan 
(2001).

In 1950’s Ireland passed modernization process, 
which brought increase of industry and urbanization 
and smoothing of demographical models with Europe 
and USA. This process facilitated and helped also in 
ass communications sphere that favoured involvement 
in different international organizations and stimulated 
attraction of investments to the state. The process was 
supported by all political parties and different strata of 
society. The country’s development proceeded step by 
step, and already in the 1960’s government passed hard-
lined policy that was oriented onwards – core idea – to 
attract foreign industry investments. In 1973 Ireland 
entered European Community (EC), now – EU. Since 
that moment trade links with continental Europe and 
with other countries started to increase substantially, at 
the same time they decreased with Great Britain, but 
with a tendency of improvement of relations in-between 
both countries, that’s agreed Vaidere, Vanags e., Vanags 
I., and Vilka (2008). Wherewith the former dependence 
from Great Britain was replaced by a much wider trust on 
EU an other countries that are connected with Ireland’s 
economical growth and policy.

General comparison, analysis of Ireland and Latvia 
are being carried out based oneconomical potential 
increase alternatives created by the author: general 
analysis of economical situation – common and common 
features and differences and counties’ of Latvia state 
potentialities to develop some certain alternative, taking 
into consideration Ireland’s action and development 
examples: 

Development of infrastructure	  – the road, 
street infrastructure in Ireland in the 80’s of the 
last century was still in a very bad state – narrow, 
bumpy, crumbled roads, streets. Nonetheless as the 
leading official of Municipalities and environment 
protection ministry Kevin Callen says, 1,2 billions 
pounds of Ireland’s and EU money or 852 million 
lats in five years (from 1994 until 1999) were 
invested in national Ireland’s road program for 
renovation and reconstruction. If to evaluate the 
situation in Latvia, equivalent resources for road 
improvement are invested during 25 years. In the 
past years, road infrastructure in Ireland is being 



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improved and developed fast, especially highway 
infrastructure of state’s national importance, 
increasingly new speed section highways are 
build, their construction is carried out in rapid 
speed. In the same way also in rural areas roads 
without asphalt cover are of a rare occurrence, 
even small roads that lead to the largest fields 
have asphalt cover. Nevertheless the width of the 
existing roads (new roads within limits are built 
wider) is and after their reconstruction stays the 
same, because the value of land (especially the 
one of agricultural land) is high enough, and as 
well it is almost not possible to widen them – there 
is no space free, because everywhere on both sides 
stretch endless pasturable fence piled of stones, or 
centenarian, thorny and picturesque hedges. Irish 
lifestyle culture manners and traditions need to be 
taken into consideration there, because the Irish 
even have proclaimed the hedges national wealth; 
therefore, for their maintenance in an exemplary 
order, owners even get paid small subsidies.
Irish municipalities do not have big authorities as 
it is in Latvia, for example, in internet site www.
impro.lv about Ireland says: “Local authorities do 
not have equal power regarding public services, 
for example, public transportation issues, as 
well as regarding ensuring order and health 
protection. Municipalities maintain local roads, 
but central governance gives the money to do 
that. Municipalities in Latvia have more to do. For 
instance, they coordinate the traffic of route buses 
etc.” Ireland has a comprehensive state financed 
social care. Provider of the Health Service 
Executive (HSE) is a state institution, which is 
responsible for leading the whole Ireland’s society 
health and social care. HSE is responsible for: 
hospitals, social health care, mental health care, 
old people care, Services for people with special 
needs, children and families health care, register 
of born, deceased and marriages in Registry 
Office, organization of marriage ceremonies, 
environment health services, review and delivery 
of allowances and for many other health and 
social services for private persons. Evidently, in 
Latvia municipalities or district councils carry out 
most part of the abovementioned. Ireland’s HSE 
system is common all over the country and it has 
common rules in any municipality – in Latvia 
every municipality decides by itself about many of 
the abovementioned issues of social infrastructure 
– to implement them or not (if the law allows to 
choose), how and how many resources to allocate 
them from municipality’s budget, what kind and 
what amount of allowances to grant, if to create 
old people care centres or not, etc.

Development of entrepreneurship environment 	
in sphere of innovations – Development of 
entrepreneurship environment in sphere of 
innovations is usually performed with help of 
regional assemblies and regional authorities. 
Practically every greater city has its own 
industrial, technology park, where development of 
entrepreneurship environment is being stimulated in 
regions (shires). Social and family affair department 
is responsible for workforce requalification or 
training issues. One of Ireland’s leading forces 
that enable economical growth is with law created 
business environment, which stimulated inflow of 
foreign capital. “About 40% of all the employed in 
manufacturing industry work in enterprises owned 
by foreigners” – that said Vaidere, Vanags E., 
Vanags I., and Vilka (2008). Social partnership is 
also successfully developed – since 1987 all social 
partners – entrepreneurs, trade unions, farmers 
and government, are involved in economical 
planning process. On Ireland’s municipalities’ 
level in the end of the 90’s strategical policy 
committees were created, their structure includes 
not only deputies and representatives of social 
partners but also non-governmental organizations 
and other interest groups, which shows the tight 
cooperation between municipality and non-
governmental organizations, and interest groups. 
The influence of non-governmental organizations 
and interest groups to resolutions of municipalities 
is remarkable – their interests are being taken 
into consideration very seriously and a feedback 
is being carried out, cooperation in a variety 
of events, local level projects (Environmental 
activities, for instance, common park cleaning 
events. Salvation of the disabled problems, e.g., 
funding of the disabled associations’ events, etc.), 
in salvation of problematic issues.
Since 1999 government’s policy is directed on 
public private partnership. It means, that a part 
of public sector functions (projecting, planning, 
funding and building spheres) entrusted to the 
private sector. Houston (2004) think, that the main 
aims of public private partnership are to develop 
infrastructure more rapidly and to save resources. 
One of Ireland’s rapid economics origins is also the 
fact that Ireland’s government in the 80’s f the past 
century started to invest high level investments 
into education and training, a large part of which 
is financed by EU structural funds. Because of a 
targeted policy, education level in Ireland in 2004 
was higher than on average in EU. Vanags E., 
Vanags I., Vaidere I., and Vilka I. (2008) agree  - 
high qualified work force provides contemporary 
manufacture structure and world level services.



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Facilitation of entrepreneurship environment on 
local municipalities’ level was performed also 
thanks active work of Ireland’s capital city. Dublin 
turned into International Services Centre, which 
aims to perform such financial transactions as bank 
services, administration of other companies, deals 
with securities, insurance services and investments 
and action of investment funds outside territory of 
Ireland, and consequently it enabled an increase 
of information technologies export. Wherewith 
research and consultative enterprises were 
activated, and they operate not only in capital city, 
but also in regional municipalities.
Cooperation with foreign countries takes places 
mostly within EU – “In 2004 approximately 64% of 
total Ireland’s export was export to EU participating 
countries” (Vaidere, Vanags E., Vanags I., Vilka, 
2008). Remaining export is mostly to such 
countries as North Africa, Australia, the Middle 
East and the Far East. Participation in EU favoured 
diversification of Ireland’s foreign trade partners. 
Latvia’s situation in this sphere unfortunately 
is weak, a low developed export, undeveloped 
cooperation with foreign countries. Due to EU, 
cooperation with foreign countries, mostly with the 
closest neighbour countries (Estonia, Lithuania), 
is started, mostly with financing of EU funds, 
especially in culture and social sphere. As well 
with help of EU funds’ support are created several 
entrepreneurship centres, business incubators, 
support to entrepreneurs is being provided 
concerning requalification or training of their 
employees, cooperation between enterprises and 
high schools, but still the results are weak. It can be 
explained with the common world, state economical 
crisis, lack of stimulation and development support 
for entrepreneurship, agriculture in regions and 
general politic disbalance in the country.
Development of entrepreneurship environment 	
in financial sphere – Ireland developed mainly 
due to efforts of central institutions in large 
infrastructure development projects: - for 
development of certain sphere state created 
special agencies that prepare projects to gain 
Brussels money. For instance, West region agency 
works successfully, it tries to create favourable 
conditions for attraction of entrepreneurs to state’s 
most depressive region, as well as Information 
technologies agency, which cares specifically 
for support to computer business. Also in Latvia 
there are established regional (Latgale, Zemgale 
a.o.) development agencies, still the minimum 
funding for their maintenance, hiring of specialists 
causes feedback – the result is weak. It has to 
be mentioned that in Latvia these development 

agencies are maintained not by state as it is in 
Ireland’s example, but by local municipalities.
The main trump of Irish economics – it is its 
tax policy, it was modelled knowingly through 
changing the previous system radically, in that way 
to develop state’s entrepreneurship environment. 
Wherewith a fast economical growth in Ireland 
started right after entering EU, due to Ireland 
government’s courageous decision until 1981 to 
cancel profit tax for foreign entrepreneurs, and 
from 1981 until 2000 to set it very low – only 
10 percent. The state decreased taxes as well to 
preserve salaries nominal increment, on the one 
hand helping the state become more competitive, 
and on the other hand – increasing the effective 
revenue of the employed. This budget foreseen tax 
decrease helped the government to harmonize the 
so-called Boom and justice program that brought 
the expected results. Ireland created favourable tax 
climate for both, development of entrepreneurship 
and favourable investments. General tax relief, 
as well as special ones – for development of high 
technologies in the country, compose an important 
part of the stimulant measures body that, which 
are available to national and foreign companies, 
state of Latvia lacks that all at the time. Tax policy 
was an excellent effect for attraction of foreign 
investments, which gave an opportunity to facilitate 
manufacture development without increase of 
state’s external debt. In the end of the seventies and 
in the beginning of the eighties of the last century 
companies of more developed countries started to 
invest into countries with cheap labour force and 
low taxes. Ireland became a magnet for enterprises 
of USA, Canada and Japan. Ireland managed to 
attract approximately 40% American capital that 
was invested in foreign spheres of electronics. 
Arrival of first transnational companies get started 
an avalanche, and hundreds of competitors rushed 
to Ireland, as well as enterprises from associated 
spheres. When the first computer producers entered 
and gained success, soon after that many other 
computer producers, programmers, advertising 
companies, banks followed them. These were 
mostly USA companies, number of which at 
the time exceeds a thousand. Main reasons that 
caused interest in the companies were the low 
taxes, English speaking educated labour force, and 
closeness of European market. However, foreign 
companies did not create threats for national 
enterprises, but gave them opportunity to meet 
the demand in inner market. At the time, when the 
local entrepreneur got strong enough, Ireland’s 
government was ready to give for privatization 
strategically important objects with an idea, that 



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the main role there will have the local capital. 
In its turn in Latvia everything happened as a 
“shock therapy” and so privatization of Latvia’s 
enterprises was made inefficiently and irrationally. 
The privatization of Ireland’s enterprises happened 
comparatively slowly and advisedly – effectively 
working state enterprise provided income to state 
budget, but less effective were sold, so giving 
additional income.
Increase of intellectual capacity	  – a substantial 
factor of Ireland’s economics is knowledge based 
initiatives – this factor is largely stimulated 
by direct investments of foreign countries. In 
the past years state expenses for research and 
development have noticeably increased in Ireland, 
especially for research in the field of information 
and communication technologies. Concerning 
innovations it can be concluded, that the results 
would greater if a deeper and wider approach 
would be used. The expansion and deepening of 
innovation approach would include strengthening 
of the link between research institutions and 
enterprises involved in economics, increase of 
investments for applied researches and ensuring of 
managerial measures in order to start higher level 
education.
Grants for scientific research and performance of 
researches are implemented through successful 
attraction of EU funds. In Latvia part of researches 
and grants for scientific research of course also 
are being implemented due to resources of ES 
structural funds, nevertheless Ireland’s experience 
shows, that a more successful resource attraction 
from EU depends on the performance of state 
institutions and state government’s involvement 
in maximum resource attraction, that is on a quite 
low level in Latvia at the time – the total amount of 
assigned finances of EU funds is one of the lowest 
among EU countries. By the side of Latvia’s 
action experience, Ireland the most investments 
for entrepreneurship, intellectual development, 
increase of capacity, development of innovation 
diverts to backward regions.

Carrying out a general analysis of Ireland’s economical 
and regional development example, there is a conclusion 
that in the past 25 years the mentioned country has chosen 
a right macro economical policy – many countries had 
favourable conditions, but not all of them used them. In 
Ireland’s development period three main directions of 
economical policy can be marked: fiscal stabilization, 
open conditions of trade and investments, and industrial 
policy that also applies to attraction of foreign investments 
(especially in IT sphere). Irelands experience witnesses 
that participation in EU has given additional potentialities 
for economical and regional development. It ensured 

increase of investments and capital flow, new work 
places, greater stability and wherewith higher welfare. 
To great extent success of this state depended on the way 
it used the EU offered opportunities.

Ireland’s development is the most successful example 
among EU member states: at the moment of alignment 
in 1973 the level of its gross domestic product on one 
inhabitant reached only approximately 60% of the 
average EU level, in 1990 this rate increased to 75% and 
after another ten years it exceeded the average EU level 
for already 20%. It has to be taken into consideration 
that Ireland’s economics substantially depends on the 
global market fluctuations, and it is influenced also by 
situation in USA markets more than other European 
countries. Thereby Ireland was not able to avoid the 
decline of economical development rate. For example in 
the period of time from 2000 until 2005 there is a fall 
of Ireland’s GDP increase rate (view Table1) to observe. 
From Ireland’s Central Statistics data can be concluded, 
that in 2001 the increase of GDP compared to previous 
year was 12,2%, but in 2005 compared with 2004 this 
increase was only 1,9%. Nevertheless after 2004 positive 
changes can be observed – the rate of GDP increase 
started to grow again.

Table 1. Ireland’s GDP in period of time from 2000 
until 2005

Year GDP(mill.EUR)
GDP increase 

compared to previous 
year,%

2000 104379.0 -
2001 117114.1 12.2
2002 130515.4 11.4
2003 139097.0 6.6
2004 148556.5 6.8
2005 160322.0 7.9
2006 177286.0 10.6
2007 190603.0 7.5

Source: Ireland’s Central Statistics board data

To ensure increase of GDP the most important spheres 
are industry, commercial services and finances, trade, 
transportation and communication services. Important 
external component of Ireland’s success is participation 
in EU, which considerably enforced competition, 
expanded market spheres and stimulated increase of 
efficiency. And additionally Ireland has a privileged 
status in EU already for some while. In framework of 
the last programs Ireland after 1989 gained remarkable 
funds, this retained demand and facilitated adaptation 
process by an open competition. These additional funds 
stimulated development of state’s infrastructure and 
increased its attractiveness to foreign investors.

Baltic States could learn from Ireland’s economical 



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141

and regional development example how to develop its 
relations with other countries concerning economical 
issues. Although the Irish are trying to regain the place in 
economics that is hold by foreign entrepreneurs, however 
mostly thanks to them the society was able to get out of 
decline. State of Latvia should control these processes 
harder and allow such kind of enterprises to enter our 
market, create Latvia as an attractive state for investors, 
at the same time developing agricultural sphere and 
industry, which would stimulate return and not outflow 
of labour force from the country (especially youth, that 
is also intellectual potential). Latvia also should start to 
export goods or services with a higher added value, not 
like it is, for example, for wood, to balance at least a little 
the deficit of current account.

Conclusions

The experience of EU countries has proved – the 
stronger the municipality and regions, the bigger the 
chance of regional development. Effective municipality 
reforms stimulate regional development, however, each 
regional development policy has at least two aspects – 
economic and social. Statement question of regional 
development policy is on the base of choice of regional 
development instruments. State’s determined, chosen 
instruments outline and define the regional policy outlook 
of every certain state.

Common economical growth in Ireland, which 
appears as a tremendous increase of GDP, has formed 
from a sum of such factors as: stable macro economical 
environment, government’s ability to decrease its 
expenses, decrease of unemployment, increase of export 
ability in sphere of high technologies and expanding of 
trade partners. Achievements in industry and agriculture 
also have to accented, because they enabled Ireland to 
turn from agricultural state to developed export-oriented 
state.

Economic growth of regions and municipalities 
depends on several factors. One of the most important 
core factors is reasonable use of the economical potential, 
using the opportunities of increasing financial capital, 
attraction of investments to the administrative territory 
of the municipality or increased economical potential. 
Regions and counties economic potential mostly depends 
on actions and activities of the certain county, how well 
organized, strategically far-reaching and reasonable the 
available nature, infrastructure , financial, social and 
other resources are used.

The main conclusions, while exploring and evaluating 
the successful example of economical and regional 
development in state of Ireland:

There are several factors that build the development - 
of Ireland: persistent macroeconomical 
environment, radically decreased government’s 
expenses, collective labour contracts that 

increased the labour force growth in economics, 
considerable investments of foreign investors, 
rapid tax decrease, growth of export ability in IT 
sphere and expansion of trade partners, as well as 
reliance on new and trained labour force. Average 
age of labour force in Ireland is 30 years, by the 
side of the average labour force age in the rest of 
Europe that is over 40 years.
The main impact on trade diversification has the - 
marketing strategy of foreign businesses that was 
tended towards Europe and more distant states. 
Lately Ireland is strengthening trade ties with states 
of the Middle East and several underdeveloped 
countries, where mainly foodstuffs are exported 
to.
Remarkable achievements are to observe in industry - 
and agriculture, which has let Ireland turn from 
an agrarian into a developed and export-oriented 
state. As the core elements for such a development 
scenario programs and plans are created, as well 
as government’s ability to implement a significant 
part of its plans.
Ireland is one of economically most developed, - 
industrial and trade-oriented countries, which 
till now was able to use the EU structural funds 
resources most effective. The resources that were 
gained from EU support funds have considerably 
stimulated state’s economical growth. The stress 
has to be made on the ability to pass the projects 
successfully and to make the National development 
plan successfully, which is the core document to 
gain funding.

Example of state Ireland verifies that approximately 
during the past 25 years the state has carried out very 
proper macroeconomical policy, remarking also the fact 
that many countries had the favourable conditions, but 
not all of them were able to use them. There are three 
directions of economical policy in Ireland in this period: 
fiscal stabilization, open regime of trade and investments, 
and industrial policy that applies to attraction of foreign 
investments, especially in sphere of information 
technologies. 

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The article has been reviewed.

Received in March, 2009; accepted in April, 2009.