Understanding Ireland’s Economic Growth PDF
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UNDERSTANDING IRELAND’S ECONOMIC GROWTH This page intentionally left blank Understanding Ireland’s Economic Growth Edited by Frank Barry Senior Lecturer in Economics Department of Economics University College Dublin First published in Great Britain 1999 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 978-1-349-40747-7 ISBN 978-0-333-98505-2 (eBook) DOI 10.1057/9780333985052 First published in the United States of America 1999 by ST. MARTIN’S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 Library of Congress Cataloging-in-Publication Data Understanding Ireland’s economic growth / Frank Barry. p. cm. Includes bibliographical references and index. 1. Ireland—Economic conditions—1949– 2. Income distribution– –Ireland. I. Barry, Frank, 1956– HC260.5.U53 1999 338.9415—dc21 98–44641 CIP Selection, editorial matter and his own text ©Frank Barry 1999 Rest of text ©Macmillan Press Ltd 1999 Softcover reprint of the hardcover 1st edition 1999 978-0-333-73362-2 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 10 9 8 7 6 5 4 3 2 1 08 07 06 05 04 03 02 01 00 99 Do mo thuismitheoirı´ This page intentionally left blank Contents Preface ix Notes on the Contributors x Introduction 1 Frank Barry 1 The Real Convergence of the Irish Economy and the Sectoral Distribution of Employment Growth 13 Frank Barry, Aoife Hannan and Eric A. Strobl 2 Irish Growth in Historical and Theoretical Perspective 25 Frank Barry 3 Indigenous and Foreign Industry: Characteristics and Performance 45 Frank Barry, John Bradley and Eoin O’Malley 4 Fiscal Adjustment and Disinflation in Ireland: Setting the Macro Basis of Economic Recovery and Expansion 75 Patrick Honohan 5 The European Dimension: The Single Market and the Structural Funds 99 Frank Barry, John Bradley and Aoife Hannan 6 Education and Growth in the Irish Economy 119 Joseph Durkan, Doireann Fitz Gerald and Colm Harmon 7 Wage Formation and the Labour Market 137 John Fitz Gerald 8 Income Inequality in Ireland in the 1980s and 1990s 167 Tim Callan and Brian Nolan vii viii Contents 9 The Persistence of High Unemployment in a Small Open Labour Market: The Irish Case 193 Brendan Walsh Index 227 Preface This book was commissioned when I delivered a paper to the Royal Economic Society Conference in Stoke-on-Trent in March 1997; the paperchartedthemassiverecentjumpinIreland’sshareofEU-bound foreigndirectinvestment.Itwasbecomingcleartotheworldjustthen that something quite dramatic was happening in Ireland; living stan- dards had converged rapidly on the European average while employ- ment, traditionally the weak point in Irish performance, had grown even faster than in the US in recent times, and far faster than in the UK or overall EU. Alongsidethiseconomicsuccess,solongincoming,thereseemedto be a strong popular interest in other aspects of Ireland. This was reflectedinahugeincreaseintouristnumbers.Irishdancinghadjoined IrishliteratureandIrishmusic,bothtraditionalandnot-so-traditional, inattractinginternationalattention;theIrishfilmindustrywasboom- ing; even the Irish soccer team had found some equally long-awaited success, while the Eurovision Song Contest, its hour come round at last, seemed to slouch frequently towards Ireland. Sunder Katwala, Macmillan’s commissioning editor, felt that the time was ripe for a book on the changing Irish economy. As the sunshine on that mid-March morning appeared propitious, I agreed. ThecolleagueswhomIapproachedrespondedwithenthusiasmandso the book came together rapidly, with substantial cross-fertilisation of ideas as the chapters were being written. My thanks to all the con- tributorsformakingtheeditingofthisbooksuchaneasyandpleasant task.My thanks also,for assistancewith the data,to severalpastand presentemployeesofForfa´s(FinbarrTumelty,AidarMeylerandDenis Slater), to William Beausang of the Department of Finance, and especially to Fergal Shortall of the Economic and Social Research Institute. FRANK BARRY ix
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