Published by EH.Net (May 2013)
Andy Bielenberg and Raymond Ryan, An Economic History of Ireland since Independence.? New York: Routledge, 2013. xxii + 282 pp. ?85/$145 (hardcover), ISBN: 978-0-415-56694-0.
Reviewed for EH.Net by Frank Barry, School of Business, Trinity College Dublin.
This is a very comprehensive and hugely satisfying survey of its subject matter.? It begins with British Prime Minister Lloyd George?s last-minute offer of full fiscal autonomy during the Treaty negotiations that led to independence in 1922, and takes us right up to the bank guarantee of 2008 that would lead to the loss of fiscal sovereignty to the Troika of funders (the IMF, the EU and the European Central Bank) two years later.? It has been a rocky road, as the title of a previous short economic history of Ireland puts it.
The study proceeds in three parts.? Part 1 provides a chronological account of the Irish experience from 1922 to the present, broken down appropriately into pre-EU and post-EU membership phases.? (Ireland joined the then-EEC along with the UK and Denmark in 1973.)? Part 2 analyzes separately developments within agriculture and natural resources, industry and services.? The sub-title of the services analysis ? ?from good haircuts to bad bankers? ? reminds us of the heterogeneity of the sector.? The Irish services sector is particularly complex in that it includes huge MNC-dominated exports of international financial services and computer services as well as huge debit-side items ?royalties and license fees ? that are associated with the heavy presence of foreign manufacturing MNCs.? The importance of foreign multinational corporations to the modern economy and the possibilities open to them of shifting profits across jurisdictions hampers the interpretation of Irish output data. The book reviews all of these issues.? Part 3 slices the pie along three different dimensions, focusing in turn on international trade (chapter 6), investment and credit (chapter 7), and demography and the labor force (chapter 8).?
The chronological account in Part 1 is thoroughly enjoyable to read, while the material in Parts 2 and 3 is necessarily more dense, containing a treasure trove of useful reference material.? That said, the quality of the writing throughout the book is high.? I was surprised at first to find that charts are everywhere eschewed in favor of tables of figures, until I remembered how valuable it is to researchers to have the raw data to hand.? And yet the book is so beautifully produced that it would fly off the shelves in Ireland if a paperback edition were published.? The cover features an Aer Lingus advertising poster from 1956 that shows Dublin in its glory, with ?the brewery tugs and the swans on the balustraded stream,? as MacNiece has it.
There is much to appeal to the layperson as well as the researcher in this book.? All of the judgments offered, even those pertaining to the most recent events that have traumatized the body politic, seem fair and balanced.?? And the authors appear equally at home over all the phases, from the targeted protection of the 1920s to the full-blown protection of the 1930s and beyond, from the progressive opening up of the economy to the debt crisis that followed the oil shocks, and from the long Celtic Tiger boom that finally brought convergence on Western European living standards to the bursting of the property bubble that will leave the economy mired in austerity and debt for years to come.?
The authors at the outset offer a number of competing models as prisms through which these developments might be observed and understood.? The one that will be most familiar is the ?delayed convergence hypothesis? ? the notion that a long series of policy errors (delayed trade liberalization, delayed educational expansion, misguided fiscal policies) inhibited convergence for most of the period up to the late 1980s, with rapid convergence occurring when these errors were ultimately rectified.? An alternative perspective is offered by the ?regional economy model.?? In this view, in which all factors of production are highly mobile internationally, ease of access to outside labor markets (predominantly the UK since the early 1930s) placed a floor under Irish real wages, inhibiting industrialization.? Only some unconventional policy, such as the export profits tax relief scheme introduced in 1956 (the forerunner of today?s low corporation tax regime) could kickstart sustainable industrial development, in this case by drawing in export-oriented foreign industry.?
The authors explore the merits of both of these models but towards the end of the book focus primarily on a third ? that of the ?micro state.?? Very small states share some advantages: they can respond more rapidly, more flexibly and more wholeheartedly to external changes than larger states can, and of course attracting a single major FDI plant ? as in the case of Intel, in Costa Rica as well as in Ireland ? generates stronger ripples than it would in a larger pond.? But micro economies display particular vulnerabilities as well.? As the authors point out (p. 197), ?small and cohesive social elites are especially vulnerable to corruption and regulatory capture.?? To this may be added the problem of ?group think? alluded to by one of the independent reports into the causes of the recent Irish banking crisis.? Similar criticisms have been made of how Iceland functioned in the lead up to its own catastrophic crisis.?
The authors are Andy Bielenberg, a senior economic historian at University College Cork, and Raymond Ryan, who worked as a post-doctoral researcher on the project.? Both are to be commended for achieving so much on a topic that has taken them well beyond their own specialist areas.
They make much of the need to embed institutional learning from previous policy errors.?? Ireland seems better able than some of the other crisis countries to handle the current austerity medicine prescribed for having failed to embed such lessons in the past.? The MacNiece poem of the late 1930s quoted earlier above offers a chilling scenario that might yet be played out in some of our EU neighbors:
But oh the days are soft,
Soft enough to forget
The lesson better learnt,
The bullet on the wet
Streets, the crooked deal,
The steel behind the laugh,
The Four Courts burnt.
Frank Barry is Professor of International Business and Economic Development at Trinity College Dublin. (Frank.Barry@tcd.ie).?? Two of his recent papers on 1950s Ireland and the birth of the modern economy are ?Foreign Investment and the Politics of Export Profits Tax Relief, 1956,? Irish Economic and Social History (2011) and (with M. ? Fathartaigh) ?The Industrial Development Authority, 1949-59: Establishment, Evolution, Expansion of Influence,? IIIS discussion paper No. 407 (September 2012), Trinity College Dublin.
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|Subject(s):||Economywide Country Studies and Comparative History|
|Time Period(s):||20th Century: Pre WWII|
20th Century: WWII and post-WWII