Irish Regions

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Question: Examine the impact of EU expansion on Ireland's economy and/or culture. (30 Marks)

The EU accounts for 40% of all trade in goods and services worldwide. Ireland became part of this when it joined in 1973. Back then, Ireland was a nett beneficiary which meant we got significant financial funds to help us develop our country. e.g. (CAP or CFP or ERDF). As the 10 new states have joined the EU, Ireland has become a nett contributor. The funds we received are now aimed at developing the economies of the newer states, such as Poland. We will face increased competition for mobile investment. This is due to the newer countries having cheaper labour, low inflation and low tax rates, making it cheaper for MNC's to locate there rather than in Ireland. As we can see, many companies that have 'lower value' jobs have already begun to move away from Ireland to eastern periphery countries. Ireland will need to fight this competition and make the country more lucrative for MNC's by maybe providing tax breaks for example. For instance, labour costs in Poland average at €2 per hour but in Ireland they average €17.50.

However, EU expansion does have positive effects on our economy. THe new enlarged market will have an extra 75million people, bringing the EU population to over 450million, resulting in new prospects for Irish exports. Ireland needs to begin forging business links with the new member states like what AIB have already begun in Poland. THere is a huge new market out there and Ireland needs to exploit that soon before other countries do. Ireland is retaining its policy of allowing anyone in the EU to come and work in the country. This means companies will have more choice when it comes to choosing workers, with different skills and language abilities, requiring companies to adopt to the changes.

The new 10 countries will put a lot of strain on the CAP, as about 28% of the workforce are dependant on agriculture. Ireland's current income from the CAP will significantly drop due to the expansion. This could have serious implications on agricultural activities in Ireland, with many small farmers in the west of Ireland depending on EU funding to survive. Also, as structural funds will be focused on the underdevelped countires, Ireland's funding will be reduced. It is predicted that by 2007, Ireland's Structural Fund income will fall from €987 million in 2003 to €44.5 million in 2007. This will result in less funds being made available to go towards the development of the west of Ireland.

(This question is 30/30)