Ireland is today widely known as the “Emerald Isle”, but this successful branding hides a bitter history: until well into the 20th century, unprofitable agriculture predominated on the island, as farmers’ plots were too small and the large, predominantly absentee, land-owners neglected their estates. The potato, which grows even in the poorest soils, became the sad symbol of Irish backwardness. But the country lacked the raw materials, capital and tradition of tradesmanship necessary for industrialisation.

In the 18th century, the first large companies began to process agricultural products: Ireland exported wool until England, their largest trading partner, increased tariffs, forcing factories to switch to linen – a transition which proved most successful in the north-eastern province of Ulster. Meat, butter, grain products and whiskey were exported as well. The network of roads was expanded, and in 1756 the Grand Canal was opened, linking Dublin with the River Shannon, the north-south axis of the island. Belfast developed into a centre for trade, attracting first the textile merchants and then the banks – an early example of the divide between the predominantly English/Protestant northeast and the rest of the island.

With the proclamation of the United Kingdom of Great Britain and Ireland in 1801, the overwhelmingly powerful English economy drew even closer. The country enjoyed a brief upswing sparked by Napoleon’s Continental Blockade, before being plunged into the worst disaster in its history: the Great Famine of 1845-49, caused by the potato blight. Around one million people died, and another million were forced to emigrate.

The north weathered the crisis better, thanks to its factories. Cotton manufacturers in Belfast were already using steam engines, driven by coal imported from England and Scotland, or water power. Shipbuilding flourished, culminating in the construction of the luxury liner “Titanic” in the early 20th century. Belfast’s population quadrupled. Dublin, also a centre of trade thanks to its port, developed into an administrative and academic centre: in addition to the venerable Trinity College, the Catholic University, later University College, was established in 1854. The south and west continued to stagnate with modest food-products industries; successful major companies such as Jacob’s Biscuits and the famous Guinness Brewery in Dublin were the exceptions.

The opening of the Royal Canal in 1817 and the Ulster Canal in 1841 improved domestic transportation. From 1834, trains travelled between Dublin and Wicklow, and shortly after that to all the larger towns. Irish engineers designed economical locomotives and rail carriages, but the dependence on England stifled comprehensive industrialisation: the financially powerful English economy dominated the Irish market with technical products, but imported only food products and textiles from Ireland.

When the Irish Free State, later to become the Republic of Ireland, was founded in 1921, the heavily industrialised north remained a part of Great Britain. The state worked to expand the infrastructure and domestic market. In 1929, the hydroelectric plant in Ardnacrusha on the Shannon, the first large power station, went into operation. The government tried to stimulate domestic production with high import tariffs, and the country experienced a modest boom.

However, as export revenues continued to lag, the balance of trade slid deeply into the red in the 1950s, growth collapsed, and the government began offering subsidies and extremely low taxes to attract foreign investors. As wages too were very low, businesses in labour-intensive industries such as textile and shoe production and plastics processing soon set up shop. Following Ireland’s accession to the European Community in 1973, US companies started to use the island as a springboard to European markets, and finally began building factories for technically sophisticated products in the electronics, machine tool, pharmaceutical and medical technology sectors. However, as their suppliers were mostly abroad and the profits too flowed offshore, sustained industrialisation did not occur, and after 1980 the country once again slipped into a severe crisis. In response, the government attempted to stimulate the domestic economy. But when the next upswing commenced toward the end of the 20th century, particularly in information technology, this was once again driven primarily by foreign investors drawn by the low tax rates.