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The Sources of Irish Growth

Author

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  • de la Fuente, Angel
  • Vives, Xavier

Abstract

This paper explores the sources of Ireland’s relative growth performance. Using panel data for a sample of OECD countries, we estimate a convergence equation and use it to conduct a growth accounting exercise which provides quantitative estimates of the immediate sources of Ireland’s growth differential vis-à-vis the OECD average and the other ‘cohesion’ countries of the EU. While we find that fiscal consolidation has contributed significantly to Ireland’s improved performance, we are not able to fully account for the ‘Irish miracle’ in terms of the standard growth theory variables. This finding supports the extended view that some peculiar features of the Irish economy (such as its success in attracting high-quality foreign direct investment) have played a crucial role in recent years. We conclude with some reflections on the need for structural reforms as a way to ensure the sustainability of Ireland’s rapid growth.

Suggested Citation

  • de la Fuente, Angel & Vives, Xavier, 1997. "The Sources of Irish Growth," CEPR Discussion Papers 1756, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1756
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    Citations

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    Cited by:

    1. Sebastian Hauptmeier & Martin Heipertz & Ludger Schuknecht, 2007. "Expenditure Reform in Industrialised Countries: A Case-Study Approach," Fiscal Studies, Institute for Fiscal Studies, vol. 28(3), pages 293-342, September.
    2. Eichengreen, Barry & Kohl, Richard, 1998. "The External Sector, the State and Development in Eastern Europe," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt22r0x8qk, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    3. Franck Barry, 2013. "The Knowledge Economy, Economic Transformations and ICT: Regional Dynamics in the Deployment Phase. Case study: Southern and Eastern Ireland," JRC Research Reports JRC83549, Joint Research Centre.
    4. Lars P. Feld & Jan Schnellenbach & Thushyanthan Baskaran, 2013. "Creative Destruction and Fiscal Institutions: A Long-Run Case Study of Three Regions," Economic Complexity and Evolution, in: Guido Buenstorf & Uwe Cantner & Horst Hanusch & Michael Hutter & Hans-Walter Lorenz & Fritz Rahmeyer (ed.), The Two Sides of Innovation, edition 127, pages 187-207, Springer.
    5. Séan Ó Riain, 2004. "State, Competition and Industrial Change in Ireland 1991-1999," The Economic and Social Review, Economic and Social Studies, vol. 35(1), pages 27-53.
    6. David E. Bloom & David Canning, 2003. "Contraception and the Celtic Tiger," The Economic and Social Review, Economic and Social Studies, vol. 34(3), pages 229-247.
    7. Tiago Neves Sequeira, 2002. "The "Iberian Tigers" versus The "Celtic Tiger": Economic Growth Paths in an Economic History perspective," Nova SBE Working Paper Series wp416, Universidade Nova de Lisboa, Nova School of Business and Economics.
    8. Frank Barry & Michael B. Devereux, 2006. "A Theoretical Growth Model for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 37(2), pages 245-262.
    9. Ivan Angelov, 2004. "Accelerated Economic Development – Theory and Practice," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 3-33.
    10. Jesus regstdpo-Cuaresma & Neil Foster & Robert Stehrer, 2011. "Determinants of Regional Economic Growth by Quantile," Regional Studies, Taylor & Francis Journals, vol. 45(6), pages 809-826.
    11. Barry, Frank, 2004. "Export-platform foreign direct investment: the Irish experience," EIB Papers 6/2004, European Investment Bank, Economics Department.

    More about this item

    Keywords

    Competition Policy; Growth; Ireland;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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