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Social policy and macroeconomics : the Irish experience

Author

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  • McCarthy, F. Desmond

Abstract

The remarkable performance of the Irish economy in recent years has attracted much attention. Within a 10-year period the economy went from an 18 percent unemployment rate to nearly full employment, while the ratio of debt to GDP fell from 120 percent to less than 50 percent. Inevitably, this success was also accompanied by problems, as infrastructure came under increasing stress, environmental difficulties became more evident, and a changing social structure resulted in some groups becoming increasingly marginalized. What worked and what did not? In particular, are there lessons that may be relevant for other countries facing similar difficulties, especially in Asia and Latin America? McCarthy focuses on three features of Ireland's economic achievements. Two of these features are external: the opening to Europe and the role of foreign direct investment. The third and perhaps most"exportable"feature is domestic: the role of a social pact. This pact was initially between employers, trade unions, and the government. Subsequent pacts were extended to include a variety of other groups. McCarthy discusses the far-reaching impact of this series of pacts on health, poverty, employment, education, and social welfare. Ireland now faces a number of challenges, including the slowdown in the global economy, a fall in resource transfers from the European Union, and the potential effects of the entry into the EU of Hungary and Poland.

Suggested Citation

  • McCarthy, F. Desmond, 2001. "Social policy and macroeconomics : the Irish experience," Policy Research Working Paper Series 2736, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2736
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    References listed on IDEAS

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    1. International Monetary Fund, 1999. "The Netherlands; Transforming a Market Economy," IMF Occasional Papers 181, International Monetary Fund.
    2. Barry, Frank & Devereux, Michael B, 1995. "The 'Expansionary Fiscal Contraction' Hypothesis: A Neo-Keynesian Analysis," Oxford Economic Papers, Oxford University Press, vol. 47(2), pages 249-264, April.
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    Cited by:

    1. World Bank, 2004. "The Road to Sustained Growth in Jamaica," World Bank Publications, The World Bank, number 15014, June.
    2. Roper, Stephen & Hewitt-Dundas, Nola, 2015. "Knowledge stocks, knowledge flows and innovation: Evidence from matched patents and innovation panel data," Research Policy, Elsevier, vol. 44(7), pages 1327-1340.
    3. Ivan Angelov, 2004. "Accelerated Economic Development – Theory and Practice," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 3-33.
    4. World Bank, 2009. "Macedonia - Moving to Faster and More Inclusive Growth A Country Economic Memorandum : Main Report and Annex," World Bank Other Operational Studies 3067, The World Bank.

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