Transcript Ireland’s Celtic Tiger: The Social Impact of Economic Growth

Ireland’s Celtic Tiger:
The Social Impact of Economic
Growth
Peadar Kirby
Professor of International Politics
and Public Policy
University of Limerick
Introduction
 2007 election: people voted for ‘wealth over
health’
• draws attention to social deficits
 Main ‘puzzle’ of Irish ‘boom’
• success in growth, employment, exports
• failures in poverty, inequality, health provision
 Uncovers ambiguous nature of Ireland’s
adaptation to globalisation
• salutary lessons for other latercomers
Social impacts
 Three principal forms:
 Inequality
 Multiple and reinforcing
 State helps produce it
 Social provision
 Decline in state spending as % of GDP/GNP: outlier in
EU
 ‘Anorexic welfare state’ (Boyle, 2005)
 Social breakdown
 Violence, drugs, suicide
 Erosion of sense of belonging
Accidental or structural?
 Nature of the Irish ‘model’:
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Based on attracting high levels of FDI
IDA as ‘hunter and gatherer’
Low corporation tax as key mechanism
Contribution of education
EU structural funds
 A low-tax model supplemented by EU social
investment
• Regressive nature of structure of taxation
• Vulnerabilities of tax base
Nature and role of the state
 An activist state
• But a fragmented one
 For long industrial policy left to IDA
• Captured by MNC interests
 In 1980s new spaces emerged for policy
innovation
• Helped by EU funding
• Innovation smothered by neo-liberal tax cutting
from mid 1990s
What kind of state?
 A developmental network state or a
competition state?
 Uneven nature of state capacity
• Success in winning FDI contrasts with relatively
weak state of indigenous industry
• Very successful macroeconomic management
contrasts with poor state of health services
• Institution of social partnership hides highly elitist
nature of policy making
• Central logic informing state actions is economic
competitiveness
International comparisons
 No attention by Irish analysts to question of
size
• Neo-classical economists regularly compare
Ireland to US!
 How does size constrain? How manoeuvre?
• Benefit of comparative studies with other small
states
• Study of Ireland and Costa Rica (Paus, 2005)
Facing the challenges ahead
 Ireland’s long-term development problems
camouflaged rather then resolved
 Economic dependence:
• Vulnerabilities of Irish model: failure to embed
success in indigenous economy
 Social inequality:
• Legacy of deepening social polarisation: failure
to foster a more egalitarian society
 Role of the state:
• Capacity developed but too fragmented: failure to
balance regime of accumulation with strong
regime of distribution
Conclusions
 Ireland is a major success case if all we
observe are growth indicators
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But economic growth is not an end but a means to a better
society
This requires a strong regime of distribution, usually fostered
through an activist civil society
 Ireland has squandered much of its
opportunity for development
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Now faces need to develop capacity amid cutting costs
It is a warning of the social costs of economic success in
this era of globalisation