The Rise and Fall of Ireland's Celtic Tiger: Liberalism, Boom and Bust
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In 2008 Ireland experienced one of the most dramatic economic crises of any economy in the world. It remains at the heart of the international crisis, sitting uneasily between the US and European economies. Not long ago, however, Ireland was celebrated as an example of successful market-led globalisation and economic growth. How can we explain the Irish crisis? What does it tell us about the causes of the international crisis? How should we rethink our understanding of contemporary economies and the workings of economic liberalism based on the Irish experience? This book combines economic sociology and comparative political economy to analyse the causes, dynamics and implications of Ireland's economic 'boom to bust'. It examines the interplay between the financial system, European integration and Irish national politics to show how financial speculation overwhelmed the economic and social development of the 1990s 'Celtic Tiger'.
exceptionally low level of employment among 25–54 year olds. Once more, we see a surge through the 1990s, with Ireland’s employment rate increasing to that of the EU-15 by 2000. Through the 2000s, a period of signiﬁcant immigration, Ireland’s employment rate did not increase above 36 Ireland: between development and crisis the EU-15 average. Ireland never managed to close the gap on Denmark (or even the UK). From 2007 onwards, Ireland’s employment rates dropped disastrously once more, falling
sectoral growth of ﬁnance and the accumulation of power within the economy. Figure 3.1 outlines trends in the proﬁts of the ‘ﬁnancial intermediation’ sector (banks and other ﬁnancial institutions, but not including insurance, real estate and other business services) for the years for which OECD statistics are available. The statistics reveal some interesting variations in Irish banking proﬁts. Despite their lack of contribution to economic development (Honohan, 2006), Irish banks were
IFSC’ (Irish Times, 20 January 2006). Others viewed the light regulation less benignly, describing the international reputation of the IFSC as part of the ‘wild west’ of ﬁnancial (de)regulation (O’Brien, 2006). With a weak regulator, little ability to steer long-term investment using taxes and the removal or marginalisation of public agencies shaping capital allocation, the ﬁeld of domestic investment was ripe for banking dominance. With little historical role in productive investment and
markets in the long run. Indeed, the European scale of politics has increasingly been seen by left-leaning parties across Europe as the scale at which social 140 Europe: between market and diversity democracy could be realised – including by the Social Democratic Party (SPD) in Germany and even, occasionally, the Labour Party in the UK. This took a further twist in the 1990s as social democrats (albeit in centrist clothing) went in search of a new growth model, with Tony Blair and Gerhard
system to build a national presence and to establish itself as the ‘natural party of government’ meant that Ireland proved to be an outlier once more as a society with a highly developed proportional representation electoral system and a very weak party of the left. The turn to foreign investment during the 1960s added a second wave of liberalisation to the Irish political economy, with a renewed focus on free trade and the attraction of FDI as the building block of an export-oriented economy.