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Catching The Celtic Tiger By Its Tail

Author

Listed:
  • Ferreira, Luisa

    () (European Investment Bank, Projects Directorate)

  • Vanhoudt, Patrick

    () (European Investment Bank, Projects Directorate)

Abstract

The paper attempts to assess the major sources behind the exceptional Irish growth performance in the 1990s. Contrary to other Tigers, Ireland's growth is due to efficiency gains, rather than capital deepening, but the causes for the swift growth in total factor productivity cannot be pinned down to a single factor. Human capital, foreign direct investment, Social Partnership agreements, sound budget and economic policies since the late 1980s, EU membership, all seemed to have interacted to produce this high-growth economy. This paper focuses on the two mostly quoted catalysts - i.e. FDI and human capital. It provides evidence that - although crucial as enablers for the Irish economic performance - neither the rapid expansion of the compulsory education system in the 1970s and 1980s nor the sheer volume of FDI inflows can by themselves explain why Ireland has grown so much faster than other world economies. Instead, it argues that higher education, especially the vocational/technical slant of educational provision, and the sector composition of FDI in favour of high-tech industries, were self-reinforcing factors and have been decisive for the Republic's extraordinary boom.

Suggested Citation

  • Ferreira, Luisa & Vanhoudt, Patrick, 2002. "Catching The Celtic Tiger By Its Tail," Economic and Financial Reports 2002/1, European Investment Bank, Economics Department.
  • Handle: RePEc:ris:eibefr:2002_001
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    References listed on IDEAS

    as
    1. Denny, Kevin & Harmon, Colm & Redmond, Sandra, 1999. "Wages and Human Capital: Evidence from the Irish Data," Papers 99/3, College Dublin, Department of Political Economy-.
    2. John FitzGerald, 2000. "Ireland's Failure-And Belated Convergence," Papers WP133, Economic and Social Research Institute (ESRI).
    3. repec:sae:niesru:v:160:y::i:1:p:63-75 is not listed on IDEAS
    4. John FitzGerald, 1999. "Understanding Ireland's Economic Success," Papers WP111, Economic and Social Research Institute (ESRI).
    5. John FitzGerald, 1998. "An Irish Perspective on the Structural Funds," Papers WP094, Economic and Social Research Institute (ESRI).
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    Citations

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    Cited by:

    1. Stewart, James, 2010. "The UK National Infrastructure Plan 2010," EIB Papers 6/2010, European Investment Bank, Economics Department.
    2. Bitsch, Florian & Buchner, Axel & Kaserer, Christoph, 2010. "Risk, return and cash flow characteristics of infrastructure fund investments," EIB Papers 4/2010, European Investment Bank, Economics Department.
    3. Michael Anyadike-Danes & Mark Hart & Helena Lenihan, 2011. "New business formation in a rapidly growing economy: the Irish experience," Small Business Economics, Springer, vol. 36(4), pages 503-516, May.
    4. Michael Anyadike-Danes & Helena Lenihan & Mike Hart, 2009. "New Business Formation: An Important Element of Ireland's Rapid Growth Experience?," Working Papers wp380, Centre for Business Research, University of Cambridge.
    5. Wagenvoort, Rien & de Nicola, Carlo & Kappeler, Andreas, 2010. "Infrastructure finance in Europe: Composition, evolution and crisis impact," EIB Papers 1/2010, European Investment Bank, Economics Department.
    6. Fay, Marianne & Iimi, Atsushi & Perrissin-Fabert, Baptiste, 2010. "Financing greener and climate-resilient infrastructure in developing countries - challenges and opportunities," EIB Papers 7/2010, European Investment Bank, Economics Department.
    7. Frank Barry, 2005. "Third-level education, foreign direct investment and economic boom in Ireland," Working Papers 200509, School of Economics, University College Dublin.
    8. Franck Barry, 2013. "The Knowledge Economy, Economic Transformations and ICT: Regional Dynamics in the Deployment Phase. Case study: Southern and Eastern Ireland," JRC Working Papers JRC83549, Joint Research Centre (Seville site).
    9. Helm, Dieter, 2010. "Infrastructure and infrastructure finance: The role of the government and the private sector in the current world," EIB Papers 5/2010, European Investment Bank, Economics Department.
    10. Frank Barry, 2008. "Ireland - politics, institutions and post-war economic growth," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(1), pages 23-34, April.
    11. Estache, Antonio, 2010. "Infrastructure finance in developing countries: An overview," EIB Papers 8/2010, European Investment Bank, Economics Department.
    12. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2010. "The economics of infrastructure finance: Public-private partnerships versus public provision," Documentos de Trabajo 276, Centro de Economía Aplicada, Universidad de Chile.
    13. Frank Barry, 2006. "Foreign direct investment and institutional co-evolution in Ireland," Working Papers 200603, School of Economics, University College Dublin.
    14. Barry, Frank, 2004. "Export-platform foreign direct investment: the Irish experience," EIB Papers 6/2004, European Investment Bank, Economics Department.
    15. Inderst, Georg, 2010. "Infrastructure as an asset class," EIB Papers 3/2010, European Investment Bank, Economics Department.

    More about this item

    Keywords

    Irish growth; Foreign Direct Investment; Human Capital; High Education;

    JEL classification:

    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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