Jan. 19 (Bloomberg) -- These days, every economic textbook should finish with four words: ``Now go study Ireland.''

How so? Because in the last decade, the Irish economy has emerged as the most successful, and therefore the most interesting, in the world.

Most people are aware that the Irish have been getting richer. Last week, the Paris-based Organization for Economic Cooperation and Development confirmed just how much progress Ireland has made when it released figures on per-capita gross domestic product, based on purchasing power parities for 2002.

The list hadn't changed much since 1999, the last benchmark year, with one exception. Ireland was bumped up a slot, joining the small group of ``high income'' nations alongside the U.S., Norway, Switzerland and Luxembourg. The OECD flagged that as a ``remarkable development.''

Let's get this straight. Ireland, which was considered one of the region's poorer nations when it joined the European Union in the 1970s, is now among the five wealthiest places in the world.

Maybe it should be even higher. Dan McLaughlin, chief economist at Bank of Ireland Plc, says Ireland is now wealthier than the U.S. as well. He cites Irish per-capita GDP of 36,000 euros ($47,000) in 2004 compared with the U.S.'s $41,000.

Rankings aside, the most striking thing about the Irish success story is that the country possesses no special advantages. The U.S. is a superpower, with the world's reserve currency of choice; Norway has lots of oil, and not many people; while Switzerland and Luxembourg are secretive banking centers. Ireland has little to offer that other countries don't already have. It has even been lumbered with the euro.

Three Lessons

So what can Ireland teach the world about how to manage a modern economy?

``The big lesson is that you have to open up,'' said Danny McCoy, senior research officer at the Economic and Social Research Institute in Dublin in a telephone interview. ``The Irish economy really liberalized, and there was a lot of encouragement for foreigners to come in.''

There are three main lessons that other countries should draw from the transformation of the Irish economy.

First, history doesn't count for anything.

Few countries had, until recently, as dismal an economic history as Ireland. It was dominated by a colonial power and suffered from famine, civil unrest and mass emigration. So what? That hasn't prevented its transformation.

The next time someone points to the past as a reason why a country isn't prosperous, tell them to take a look at Ireland.

Geographical Isolation

Next, resources and geography don't count for much, either.

Ireland has few natural resources to speak of. And its geographic position isn't great. Stuck out on the western fringe of Europe, it's a long way from the region's main markets, and you need a boat or a plane to get there.

So, next time someone uses resources or geography as a reason a country isn't prosperous, tell them to take a look at Ireland.

Lastly, policy makes a difference.

Ireland got a few big things right.

It has lowered taxes. The corporate tax rate is just 12.5 percent, one of the lowest in the developed world. Income taxes are in line with European averages, with a top rate of 42 percent. Overall, government spending in 2003 was slightly more than 35 percent of GDP, about the same as the U.S. and relatively low by European standards.

In its 2005 report on economic freedom, the Washington-based Heritage Foundation ranked Ireland as the fifth-freest country in the world, just behind Estonia, and eight places above the U.S.

`No Conflicts'

Ireland has also encouraged companies from around the world to base themselves there. ``There are no conflicts between capital and labor here,'' McCoy said. ``There is a recognition that we are all in this together.''

Low taxes are just one part of the story. Those have been combined with excellent education, good infrastructure and a willingness to make global investors feel welcome.

For many years, Ireland had been playing catch-up with the rest of Europe. That phase is over. You can't play catch-up when you are already ahead of the pack.

Over time, the Irish economy may start to slow. Still, there isn't much sign of it. The Economic and Social Research Institute is forecasting 5 percent growth for the Irish economy in 2005, with unemployment below 4.5 percent. That will keep it close to the top economic performance in Europe. A few more years of 5 percent growth and Ireland may well be the wealthiest country in the world.

The punchiest lesson of the Irish miracle is also the simplest: There are no excuses.

If the Irish can work their way into the super-league of the world's wealthiest nations, there is nothing stopping others from doing so. Except maybe themselves.

To contact the writer of this column: Matthew Lynn in London at matthewlynn@bloomberg.net.

Last Updated: January 19, 2005 03:30 EST