Recent economic circumstances
The state described today as the Republic of Ireland seceded from the United Kingdom of Great Britain and Ireland in 1922. The state was plagued by poverty and emigration until the 1980s. The 1990s saw the beginning of unprecedented economic success, in a phenomenon known as the "Celtic Tiger", which ended with the onset of a severe recession, the 2008–2011 Irish financial crisis
After the War of Independence, 26 counties of Ireland gained independence from the United Kingdom as a dominion called the Irish Free State – but the 6 north-eastern counties remained in the UK as Northern Ireland. In 1937 the Irish Free State was re-established under its current name, Ireland.
There had already been a significant economic divide between the northeast 6 counties and the rest of Ireland, but following partition both regions further diverged. In the short term, this was accentuated by the nationalist policy of boycotting northern goods in response to attacks on Catholics and nationalists in Northern Ireland.
Partition had a devastating effect on what became Ireland's border area. County Donegal, for example, was economically separated from its natural regional economic centre of Derry. The rail network struggled to operate across two economic areas, finally closing across a vast swath of Ireland's border area (the only cross-border route today is between Belfast and Dublin).
However, overall it has been judged that, "the economic effects of partition were probably slight, certainly less significant than other economic forces, both national and international".
The Free State had the advantage, not possessed by Northern Ireland, of fiscal independence but the violence and disruption of the years 1919-1923 had caused a great deal of economic damage. As a result of the Civil War of 1922-23, the Free State started out with a very serious budget deficit, which was not fully cleared until 1931.