Exploring the 'Celtic Tiger' Phenomenon

Abstract

The economy of the Republic of Ireland has experienced continuously high growth rates in the 1990s, after a period of severe difficulty in the previous decade. As a result, Ireland is now within sight of exceeding average EU living standards, a situation which would reverse Ireland's traditional status as a peripheral European economy. The main purpose of this article is to examine the factors which have contributed to this apparent economic miracle, which has earned Ireland the 'Celtic Tiger' appellation. Particular importance is attached to the role of inward investment, which has grown in quantity and changed in quality in the last decade. These changes are attributed to general developments in the locational behaviour of transnational corporations, especially the need for access to skilled workers in an increasingly high-tech age. Such workers have become readily available in Ireland due to demographic change and state investment in education. However, while foreign branch plants have been upgrading their skill levels and their range of functions, they generally lack strategic responsibilities and independent decision-making powers. Additional contributors to Ireland's economic growth have been macroeconomic stabilization, EU funding, and expansion of tourism and indigenous industry. However, growth has not been shared equally, but has been accompanied by increasing social polarization between those in skilled employment and those who have unskilled jobs or no jobs at all. This polarization could threaten the system of moderate national wage agreements which has played an important role in promoting peaceful industrial relations and in holding inflation to very low levels. There has also been growing spatial polarization, with the great bulk of the recent growth being concentrated in the main cities, especially Dublin. The current growth phase is expected to continue at least for the medium-term future, but could come under pressure from the emergence of competing pools of skilled labour in other parts of Europe.