CATCHING THE CELTIC TIGER BY ITS TAIL

Luisa Ferreira () and Patrick Vanhoudt ()
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Luisa Ferreira: European Investment Bank, Projects Directorate

No 2002/1, Economic and Financial Reports from European Investment Bank, Economics Department

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.

Keywords: Irish growth; Foreign Direct Investment; Human Capital; High Education (search for similar items in EconPapers)
JEL-codes: O20 O40 O50 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2002-03-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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