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

1. Ireland’s Celtic Tiger: The Social Impact of Economic Growth Peadar Kirby Professor of International Politics and Public Policy University of Limerick

2. 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

3. 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

4. Accidental or structural? • Nature of the Irish ‘model’: • 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

5. 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

6. 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

7. 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)

8. 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

9. Conclusions • Ireland is a major success case if all we observe are growth indicators • 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 • 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