Irish prosperity and social networks

by Chris Bertram on August 26, 2003

As I said in an earlier post, I’m a bit reluctant to say much of substance about Ireland because, as a mere ten-day visitor I’m bound to get a lot wrong and there are participants on this blog who will notice! So I’ll just restrict myself to two of the many things I found myself thinking about apart from the extraordinary civility and kindness of the Irish people we encountered (as opposed to the harrassment, hurry and rudeness of normal English life – on the English, see Theodore Dalrymple passim).

The first was just how prosperous the place is. I’m sure it is possible to find places (especially around Dublin) where this isn’t so, but it mas a remarkable strong impression nonetheless. Around the edge of every town were vastish housing estates under construction and “new road layout ahead” signs. Now of course I’d heard of the “Celtic Tiger”, but it is one thing to read reports of a Wirschaftswunder in the Guardian and quite another to see direct evidence of it. Before I went, I chatted to an economist colleague about my forthcoming trip and he told me that when he visited the west of Ireland thiry years ago, the single village shop might stock a few tins of beans and vegetables. Those we visited seemed to contain a remarkable diversity of products (such as many different oils for cooking, salad dressing etc – a good index of prosperity if you ask me). Henry remarked in a post just the other day:

bq. Ireland was then regarded (with some justification) as a bucolic, pre-industrial backwater. Of course, Ireland has since developed a world-class technology manufacturing and software sector, skipping past the industrial revolution without any alien intervention worth talking about ….

So what is the explanation for Ireland’s rapid development? I’m not really competent to say, but I’ve heard two: (a) massive subsidies from the European Union and (b) encouragement of inward investment by multinationals. I guess there’s also, a third possibility, namely a combination of the two. But suppose that aid from the European Union *is* an important part of the story, that would be an important counterexample to those who say that development aid is just wasted, just provides opportunities for elites to skim off the cash etc. So is EU support part of the explanation? And if so, are there good reasons why such support would work for Ireland and not elsewhere?

The second thing that I’ve found myself musing on is what looked like a civil society that was at the same time both much more alive and much more structured and uniform than is the case in the UK. In the UK, social life for many people is organised by their market relationships (as employee or consumer), their relationship to the state, and whatever ad hoc social networks they happen to be hooked into (I generalise outrageously, of course, but England is much more, for want of a better world, atomised). In Ireland there looked to be far more in the way of institutionalised social life. I’ve only really got two sorts of evidence for this. The first arises from a conversation I had after looking in shop windows in Abbeyleix, Laois (I’m a great reader of notices, lists, private ads etc). In some shop windows there were private advertisments for debutante’s ball-gowns and there was one shop that seemed to specialise in selling them. In England, “debutantes” are high-society girls who are presented at coming out balls (I say “are”, but despite revival attempts, I think this is really a pre-1950s practice). We therefore assumed that Abbeyleix must be a particularly up-market place, but, when we questioned people, we were told that the gowns were just for graduation balls that are common all over Ireland and which everyone takes part in (so no social exclusivism). It is hard to think of an shared rite-of-passage institution at all in England. The second bit of evidence concerns the apparent all-pervasiveness of the Gaelic Athletic Association. Now we were visiting at a time when some important Gaelic football fixtures were coming up, but even so, all over the country seemed to be signs by the roadside (sponsored by small businesses) wishing this or that county team the best of luck. There also seemed to be (small ads and notices again) a very large number of other events, such as raffles and dances organised by or through the GAA. Needless to say, sporting teams and institutions have nothing like this relationship to their public in England: Premier League football (soccer) teams are enterprises selling a product to individualised punters with the aid of Mr Murdoch’s Sky TV.

So am I right about the social networks? Is the GAA as important as it seemed? If so, what are the social and political implications?



Jane Galt 08.26.03 at 1:04 pm

Most discussions of Ireland’s growth that I’ve heard include the fact that it slashed its corporate tax rate to 10%, and its personal income tax later.


John Sheehy 08.26.03 at 1:05 pm

EU funding can’t have hurt but it’s not a good reason. They are only worth around 1% of GDP or less. Compare Greece or Portugal which receive 3-5% of GDP in EU funding yet have not had the same growth performance. Your second reason is better, but there’s certainly a third (and probably more): good governance. Since the 1970s, Ireland has been much better governed. In particular, it has opened up its markets, partly because it was obliged to when it became an EU member state. Thirty years ago in “the west of Ireland …. the single village shop might stock a few tins of beans and vegetables”, not just because people were poorer but also because they weren’t allowed to import much (and they were poorer because they couldn’t trade much). Thirty years ago, Ireland economically was much more like Albania pre-1990, today it is much more like Hong Kong.


John James 08.26.03 at 2:24 pm

As to Ireland’s recent prosperity, I’d add the following contributing factors to the list: (a) decades of investment in education,(b) having a youthful population at a time when the rest of Europe is ageing, (c) the use of English as a first language, and (d) the support (both economically and culturally) of a well-organised and financed diaspora. It was, I think, the happy coincidence of these and the other factors referred to above, that resulted in Ireland’s decade of rapid economic growth.

The fact that you find Ireland ‘non-atomised’ in comparisson to the UK may only be a temporary, if not illusory, phenomena. If the cause of atomisation is the individualism that comes with market based prosperity (as you seem to imply), there is no reason to suppose that some unique aspect of the Irish character will prevent it from going that road (whatever that may lead).

Your image of Ireland seems to have been coloured by your experience of Irish rural life. Granted, it may give the impression of social cohesion (while also disguising ignorance and bigotry), but is hardly representative of modern Ireland, a third of whom live in the capital, Dublin. Ireland is now predominantly an urban society, but, unlike most other developed European countries, was a rural one in its very recent past. This transformation, along with the collapse of church authority and increased exposure to Anglo-American culture leaves little space for your romanticised view of Ireland. Not a bad thing, either.


Val 08.26.03 at 2:34 pm

Perhaps Ireland, in its own way, is treading the path of success opened by Singapore, Hong Kong, Taiwan, Chile, New Zealand and others. Hope that “harmonization” doesn’t stop it.


Gabriel 08.26.03 at 2:57 pm

What John James said, plus the improvements in technology to enable the education to be utilised in terms of call centres, assembly and distribution etc.

As for civil society, Dublin has now probably reached Northern English levels of atomisation.


Doug 08.26.03 at 4:01 pm

Chris, an interesting comparison will come from watching the Baltic republics over the next ten years or so. I’ve just come back from a trip there much like yours to Ireland – fifteen days for all three, but strongly concentrated on the rural parts (we traveled by bicycle from Vilnius to Tallinn via Klaipeda, Liepaja, Riga and Parnu).

Similar sized populations, similar sense of hope invested in EU membership, possibly similar levels of subsidies. Differences may come in government effectiveness (three countries thus better for comparisons), English as a first language, proximity to global trade, and size of diaspora. Although on the latter, the proportion of diaspora persons committed to the ‘old country’ may be higher, and the percentage of re-immigrants is probably higher.

Anyway, signs of improvement are already clear, especially compared with my last visit nine years ago. Grocery stores (a keen interest of bicyclers) were often better than the ones I’m forced to shop at in Munich. On the other hand, the transportation infrastructure – paved roads and train connections (two more keen interests of bikers) – lags far behind other ECE countries.

By the time there are no more countries in Europe to transform, the process will probably be well understood.


ttam117 08.26.03 at 4:04 pm

Nothing about Hurling?


Conor 08.26.03 at 4:34 pm

Chris, I think we’ve probably got most of the “critical success factors” covered at this stage. However, nobody has mentioned membership of the euro.

This did not cause the increase in living standards, but it has assisted greatly in the meteoric pace of increase in wealth. Once the markets were confident that the euro would happen and that Ireland would be a founding member, the cost of money in Ireland plummeted. Since 1999, this has fallen further. If borrowing costs are 3-4% and inflation is running at 5-6%, it doesn’t take a genius to figure that the economy will enter a feeding frenzy when real interest rates are negative.

Even though all the other factors cited above may have “caused” the boom (with low personal and corporate taxes being most important), it was the monetary position the euro created that fuelled it from 1997 to 2002.


jennifer eccles 08.26.03 at 10:49 pm

I presume the “Ireland” referred to is the Republic of Ireland. The description does not ring true for Northern Ireland.


bob mologna 08.26.03 at 11:02 pm

“Is the GAA as important as it seemed?”

No, much more important than that.


Henry 08.26.03 at 11:44 pm

I’m with Chris rather than John James on the recent changes to Irish society. The changes to Dublin over the last 10 years have been extraordinary – the city has been transformed, for better or for worse, into a relatively normal West European city. But in the smaller and mid-size towns, the GAA and similar organizations still play a vital role, which hasn’t really changed that much.


James W. O'Sullivan 08.27.03 at 2:01 am

John James’ comments, and others, relating to Ireland’s prosperity offer what I consider important supporting explanatory factors. However, there is more to the story: Since the late 1960’s, and particularly the immediate post-EU membership period of the early 70’s, the pyschology of success and confidence took hold in Dublin and a few other important urban areas. At about the same time an appreciation of the distinctive qualities and international appeal of Irish culture was evident. In short the country began to believe in and value itself.

It was not so much exposure to American culture and influence, but more an acceptance of the difference of the Irish experience within the English-Speaking North Atlantic community together with the confidence that the Irish “slice” of that community occupies an assured, distinctive, niche.

England too had been swept along by the American wave, but earlier than Ireland it created and emphasised its assured niche of distinctivness. Canada still struggles.

Anglo-American culture leaves little space for your romanticised view of Ireland. Not a bad thing, either.


zizak 08.27.03 at 6:11 am

Awhile back I met a Brit resident in the U.S. and he said something like “It’s funny. The Irish have been successful everywhere they’ve migrated to, but not in Ireland”. (He meant the U.S. and Australia.) I couldn’t tell if he was expressing bigotry or sympathy.


Chris 08.27.03 at 8:10 am

“Anglo-American culture leaves little space for your romanticised view of Ireland. Not a bad thing, either.”

Hmm. Whether I’m right or wrong in my observations, to say that Irish social networks are denser (for want of a better word) and more uniform than they are in England and that society seems less individualistic doesn’t seem, ipso facto, to be romanticising anything.

Nor did I want to suggest that having civil society organised thusly is unqualifiedly good – such structures can exclude people (and types of people) too. (On community – see this recent post by D^2 on his other blog).

On EU support – so it is less than 1% of GDP. That seems not insugnificant to me, since it isn’t like governments have the discretion to spend 100% of GDP just as they like! Given the need to spend on/upgrade infrastructure (such as roads) the availability of EU support would also permit such spending being combined by lower (than otherwise) taxation.


Doug 08.27.03 at 8:27 am

Another possible cultural or psychological side effect of EU membership: the change in national, and sometimes personal, self-definition from a negative (not British, not English) to a positive (European).


John Sheehy 08.27.03 at 9:26 am

I wasn’t trying to say that at 1% of GDP, EU funding was irrelevant, just that it isn’t one of the two most important factors. Talking about “massive subsidies” gives the impression that Ireland has been flooded with EU funding, which is just not the case (even if signs by new motorways give the impression that it is). Inward investment, for example, your second explanation, averages 8% of Irish GDP. Put that on the scales with EU funding and you can see that the latter must have relatively (considerably) less impact.

Obviously, EU funding could not have cut taxes by more than 1% of GDP either (and even that’s debatable as EU money comes with strings – “additionality”: whatever EU money is used to finance must be matched by domestic money, which puts upward pressure on government spending, paid for by taxes).

Taxes in Ireland are low because it hasn’t got a big welfare state (which might also explain why it is still characterised by more social bonds than the UK – they’re more essential!)

The euro has helped to fuel Ireland’s remarkable growth, but it came too late to be its cause. If that didn’t start to kick in until 1997, what’s the explanation for the previous five or more years?


Richard 08.29.03 at 11:37 am

My impression is that EU funding has been rather important in that it allowed Ireland to invest in certain areas of infrastructure (including things like education) while maintaining relatively low rates of income and corporation tax. It’s that particular combination, which would be difficult without the EU, that was initially important.


Hooper Chris 01.21.04 at 11:51 pm

Rebellion to tyrants is obedience to God.

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