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Ireland’s Celtic Tiger: The Social Impact of Economic Growth Peadar Kirby Professor of International Politics and Public Policy University of Limerick Introduction 2007 election: people voted for ‘wealth over health’ • draws attention to social deficits Main ‘puzzle’ of Irish ‘boom’ • success in growth, employment, exports • failures in poverty, inequality, health provision Uncovers ambiguous nature of Ireland’s adaptation to globalisation • salutary lessons for other latercomers Social impacts Three principal forms: Inequality Multiple and reinforcing State helps produce it Social provision Decline in state spending as % of GDP/GNP: outlier in EU ‘Anorexic welfare state’ (Boyle, 2005) Social breakdown Violence, drugs, suicide Erosion of sense of belonging Accidental or structural? Nature of the Irish ‘model’: • • • • • Based on attracting high levels of FDI IDA as ‘hunter and gatherer’ Low corporation tax as key mechanism Contribution of education EU structural funds A low-tax model supplemented by EU social investment • Regressive nature of structure of taxation • Vulnerabilities of tax base Nature and role of the state An activist state • But a fragmented one For long industrial policy left to IDA • Captured by MNC interests In 1980s new spaces emerged for policy innovation • Helped by EU funding • Innovation smothered by neo-liberal tax cutting from mid 1990s What kind of state? A developmental network state or a competition state? Uneven nature of state capacity • Success in winning FDI contrasts with relatively weak state of indigenous industry • Very successful macroeconomic management contrasts with poor state of health services • Institution of social partnership hides highly elitist nature of policy making • Central logic informing state actions is economic competitiveness International comparisons No attention by Irish analysts to question of size • Neo-classical economists regularly compare Ireland to US! How does size constrain? How manoeuvre? • Benefit of comparative studies with other small states • Study of Ireland and Costa Rica (Paus, 2005) Facing the challenges ahead Ireland’s long-term development problems camouflaged rather then resolved Economic dependence: • Vulnerabilities of Irish model: failure to embed success in indigenous economy Social inequality: • Legacy of deepening social polarisation: failure to foster a more egalitarian society Role of the state: • Capacity developed but too fragmented: failure to balance regime of accumulation with strong regime of distribution Conclusions Ireland is a major success case if all we observe are growth indicators • • But economic growth is not an end but a means to a better society This requires a strong regime of distribution, usually fostered through an activist civil society Ireland has squandered much of its opportunity for development • • Now faces need to develop capacity amid cutting costs It is a warning of the social costs of economic success in this era of globalisation