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The Irish Growth Miracle: Can Latvia Replicate?

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  • Morten Hansen

    (Department of Economics, Stockholm School of Economics in Riga)

Abstract

Ireland's economic development since the late 1980s has been remarkable: From languishing at the bottom of the EU to one of the top spots in income capita. It is thus not strange that the Irish "miracle" has attracted much attention among the New Member States in Eastern Europe. Some similarities with Ireland of the 1970s and 1980s are glaring: Small, open, poor economies on the periphery of Europe. This paper reviews the driving factors behind the Celtic Tiger and asks to what extent a similar development may be possible for Latvia, currently the European Union's poorest member. A classification of the reasons behind Ireland's growth paints a somewhat pessimistic picture for Latvia: Many features have long been implemented (e.g. macroeconomic stabilization) but several are unique to Ireland (e.g. language and substantial FDI from the US). Worse still, necessary reforms successfully introduced in Ireland are either difficult to implement in Latvia or the consensus is that they have, largely, been implemented (e.g. education and research). The idea of Latvia as an "Ireland copycat" is thus very deceptive which should send a strong policy signal.

Suggested Citation

  • Morten Hansen, 2005. "The Irish Growth Miracle: Can Latvia Replicate?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 3-14, July.
    • Handle: RePEc:bic:journl:v:5:y:2005:i:2:p:3-14
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    File URL: https://www.tandfonline.com/doi/epdf/10.1080/1406099X.2005.10840420
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    More about this item

    Keywords

    Convergence; growth; transition;
    All these keywords.

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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