Small States as Financial Centres
Social Science Research Institute is co-organiser, with the Centre for Small States Studies, of a special session at an international conference in Reykjavik 14 September 2007 on “The Source of Wealth in Small States”. In the session, Professor Hannes H Gissurarson of the University of Iceland, Professor Brendan Walsh, Professor Emeritus at University College, Dublin, and Dr Georges Baur, Embassy of Liechtenstein, Brussels, discuss the experiences of Iceland, Ireland and Liechtenstein, respectively, in attracting foreign capital by low corporate and personal incomes taxes and other incentives.
Ireland has been called “The Celtic Tiger”, as it has recently performed just as well as “The Four Tigers” of Southeast Asia, Hong Kong, Singapore, South Korea and Taiwan. For centuries, Ireland was one of the poorest countries in Western Europe, and in the shadow of, and subject to, Great Britain. But it was a historical moment in 1996, when GDP per capita in Ireland went above what it was in the United Kingdom. Ireland is rapidly becoming one of the richest countries in the world.
It was predicted in the late 1980s, that Iceland would at the turn of the century become one of the poorest countries in Western Europe, as it had been in the beginning of the 20th Century. But in 1991, the course was altered. Generous subsidies to loss-making enterprises were cut, the currency was stabilised, the deficit became a surplus over a few years, many large companies, including the commercial banks, were privatised, taxes were cut, and a system of semi-private property rights developed in the fisheries. The Icelandic economy is now one of the freest ones in Western Europe, and now Iceland is sometimes called “The Nordic Tiger”.
