‘The Devil is in the Detail:
The Underbelly of the Celtic Tiger’
Professor Peadar Kirby
School of Law and Government, DCU
Introduction
 Ireland’s economic boom has attracted worldwide attention
 Seen as a model of success in a globalised world:
o Upgrading the technological base of the economy
o Using activist social policies to combat poverty and social exclusion
o State played a key role, apparently contradicting neo-liberal approaches
 Yet serious grounds for doubting this account
 This lecture
o Outlines the nature of Ireland’s success
o Examines the means used to achieve it
o Draws on data to show that all is not what it seems
Model of success
Growth
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
GDP
1.9
3.3
2.6
5.8
9.5
7.7
10.7
8.9
8.5
10.7
9.2
6.2
6.1
4.4
4.3
5.9
5.7
GNP
2.5
1.9
2.6
6.3
8.0
7.2
9.0
8.1
7.7
8.5
9.5
3.9
2.7
5.1
3.9
4.9
6.5
Job creation
Year Labour
force
(000s)
1992 1,364
1993 1,386
1994 1,423
1995 1,452
1996 1,498
1997 1,560
1998 1,645
1999 1,713
2000 1,767
2001 1,810
2002 1,845
2003 1,882
2004 1,920
2005 2,015
2006 2,108
Employment rate
among 15-64 year
olds (%)
51.1
51.7
53.0
54.4
55.4
57.5
60.6
63.3
65.2
65.8
65.6
65.1
65.5
67.1
68.1
Unemployment
rate (%)
15.4
15.6
14.3
12.3
11.7
9.9
7.5
5.6
4.3
3.8
4.3
4.6
4.4
4.2
4.3
Jobs in high-tech areas
Changes in employment by sector, 2002-2006 (‘000s)
Sector
2002 2006 % Change
Agriculture
124
117
-5.6
Production industries 309
291
-5.8
Construction
187
269
+43.9
Services
1,156 1,362 +17.8
Total at work
1,777 2,039 +14.7
How was it achieved?





Attract high levels of FDI, especially from US
Role of IDA
Low corporation taxes and other supports
Contribution of education
EU funds
 Innovation of social partnership
o Corporatist or concertative policy deliberation among range of social partners
o Backed by work of NESC
o Extension of social partnership approach to regional and local levels
Highlighting vulnerabilities
 How high-tech?
o Assembly line production of high-tech goods
o Moving to lower-cost locations
o Difficulties of upgrading factors of production: investment in R&D
o Weakness of indigenous industrial base: lower productivity and exports
o Major decline in productivity throughout the economy: growth in low-wage
areas
 Three growth areas of Irish economy (three Cs):
o Construction
o Consumption:
o public debt falling from 28% of GDP to 25.5% (2006-08)
o private debt grew from 160% of GDP in 2005 to 192% in 2006
o Civil service
 Fostering social exclusion rather than social inclusion
o Big growth in inequality and relative poverty
Evolution of households in ‘consistent’ poverty,
1994-2001 (% in poverty)
Poverty lines
1994 1997 2000 2001
40% average income 2.4
3.1
2.7
2.5
50% average income 9.0
6.7
4.5
4.1
60% average income 15.1 9.7
5.8
5.2
Sources: Whelan et al., 2003, p 38
Evolution of relative household poverty, 1994-2001
(% in poverty)
Poverty lines
1994 1997 2000 2001
40% average income 4.9
6.3
10.6
9.8
50% average income 18.6 22.4
23.7
23.8
60% average income 34.2 34.3
32.0
32.2
Trends in poverty, inequality, 2000-05
2000 2001
Relative at-risk-of-poverty 19.3 20.7
gap
30.2 30.3
Gini coefficient
4.7
4.8
Income distribution
Source: CSO, 2006
2003
21.5
2004
19.8
2005
20.8
31.1
5.0
31.8
5.0
32.4
4.9
Trends in wage share as % of GDP, EU and Ireland
EU-15 Ireland
1980-1990
71.8
71.2
1991-2000
68.7
62.3
2001-2007
67.3
54.3
Source: European Commission
o Highest rate of poverty in EU
o Declining welfare efforts
 Ireland’s ‘anorexic welfare state’: prefers short-term low-cost solutions