Characteristics Of The Celtic Tiger

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The Irish economy is famous worldwide, from its rapid growth in the 90’s to the massive crash of the late 00s. This essay will look at the main characteristics which led to the substantial growth sustained during the Celtic Tiger period. The answers to the mystery of the Celtic Tiger are not easy ones to explain and are rooted in the economic history of the country. It was not one simple act or decision in the 80s which set the ball rolling, but a myriad of factors the developed through decades of economic history and eventually culminated in a ‘perfect storm’ leading to massive growth.
There are various theories on the area but these will be briefly discussed at the beginning. What has been clear from the literature on the topic
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that poorer economies will catch up with the richer economies as long as good fiscal and monetary policies are maintained (Ó Gráda, 2002, Honohan and Walsh, 2002). However there is another theory whereby some of these small economies can be seen more like large regions of bigger countries. The key characteristic of a regional economy is that its labour force moves more freely than a national one. “The economy of a region is typically far more open to and dependent on external trade than that of a nation. Labour flows much more freely into and out of a regional economy than they do in most national economies. The economy of a nation is all macroeconomics and mainly productivity.” (Krugman, 1997). Indeed, Krugman argues that Ireland be thought of as a regional economy, due to our unusually high numbers of emigration. He says job numbers are determined by labour demand, rather than, as in a more typical national economy, by labour supply creating new jobs via wage pressure. He also states that the problem with regional economies is that, just as they can grow more dramatically than national ones, so also can they decline more rapidly. This can be seen in the table below which shows similar-sized regions in Europe and their growth levels. It shows that regions of these countries well outperformed their national economy, giving some evidence to the regional economy…show more content…
It is now believed that Ireland initially made a mistake by not investing in education in the post-war period like the rest of Europe, and as a result did not make the same gains in growth that the other European countries did. The 1965 report Investment in Education was the main driver to government change in this area and huge investment was made in in education in 1967. Ireland made secondary level education and transport free to all pupils. In 1965 only 20% of children completed second-level education, but 30 years later the figure had risen to 80%. This long-tailed impact of the change in educational policy is not surprising. Many of the other countries which invested heavily in education in the immediate post-war years saw rapid rates of growth up to and including the 1970s. Ireland began 20 years late and is seeing the benefits of the investment 20 years after its Northern European counterparts (Koman and Marin,

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