Ireland's Lessons for the Real Economy

[marmar]

from YES! Magazine:



Ireland's Lessons for the Real Economy
What the collapse of the "Irish miracle" can teach us about export-oriented growth and financial regulation.

by Walden Bello
posted Dec 15, 2010


The financial collapse of Ireland, coming as the latest in a string of disasters, hardly shocks global public opinion. For people engaged in the development debate, however, it is resonant with meaning.

With the European Union and the International Monetary Fund now having to bail Ireland out to the tune of a whopping 85 billion euros, this is not the “Celtic Tiger” of recent lore. The Irish economy that drew the admiration of a whole generation of neoliberal economists and technocrats successfully rode the wave of globalization to become Europe’s fastest growing economy from the 1990s to the middle of this decade. In 1988, the Economist described Ireland as “the poorest of the rich.” By 1997, it pitched Ireland as “Europe’s shining light.” By 2005, the country’s per capita gross domestic product (GDP) was the second highest in the EU, after Luxembourg’s.

After the Asian financial crisis brought down Asia’s tiger economies in the late 1990s, Ireland remained, along with China, the stars of export-oriented growth, seen by orthodox economists as the road to prosperity in the era of globalization. China learned the lessons of the Asian financial crisis and kept its financial sector on a tight leash. Ireland did not, and paid the price when the Western financial system unraveled in 2007.

The “Irish Miracle”

Like South Korea and the Southeast Asian tiger economies, the Irish economy passed through two phases. In the first phase of export-oriented growth, Ireland experienced real growth, especially in manufacturing and services. The growth was foreign investment driven, particularly in high tech. As Irish Times economic columnist Fintan O’Toole notes, the country became the premier international location for U.S. investment in information technology, with Intel leading the pack with 5,000 employees, Dell with 4,300, IBM with 3,500, Hewlett Packard with 2,500, and Microsoft with 1,200. By the mid-2000’s, tiny Ireland, whose population was no more than 4.5 million, had become the world’s leading exporter of computer software and the source of a third of all personal computers sold in Europe. ...............(more)

The complete piece is at: http://www.yesmagazine.org/new-economy/irelands-lessons-for-the-real-economy