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News : Irish Economy Last Updated: Jan 23, 2015 - 2:16 AM


Irish economic performance since 1922 and Scottish independence
By Michael Hennigan, Finfacts founder and editor
Aug 28, 2014 - 8:54 AM

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Queen Elizabeth in Cork, Ireland, May 2011. She was the first British monarch to visit Ireland since independence in 1922.

Frank Barry, professor of International Business and Economic Development at Trinity College, Dublin, is the author of a paper for a special issue of Oxford Review of Economic Policy on the question of Scottish independence. He was asked to reflect on Irish economic performance since independence in 1922, including the exercise of fiscal and monetary sovereignty, and on migration policy, without saying anything about Scotland.

This is my response on the issue:

1. Prior to the 1950s it was rare for a poor country without lots of natural resources to become rich. But then, a single industry always has a timeline.

A century ago, thanks to the lush Pampas grasslands and the innovation of refrigerated steamships, Argentina was among the 10 richest economies in the world, after the likes of Australia, UK and the US, but ahead of France, Germany and Italy.

A quarter of the workforce in Wales worked in coal mines in 1900.

2008: Commission on Growth & Development Report: 13 countries sustained high growth - defined as 7% per year or more for 25 years or longer; Highlights four sets of countries where growth has stalled

2. The most important policy decisions since Irish independence were made in the 1950s when emerging globalisation was embraced. Cutting of international trade tariffs had began soon after 1945.

3. There is a myth in Europe that poorer countries can reach the top wealth rankings but if it happens at all, it can take a century or more. However, research shows that convergence is more likely to a regional level.

Economic convergence is a myth in Europe and in emerging economies

So comparing the performance of different countries or regions is subject to lots of caveats.

4. Using the metric Actual Individual Consumption per capita, based on Purchasing Power Standards that eliminate price differences, the Irish along with the Spanish and Italians are among the poorest in the Eurozone with Germany, Austria and Sweden on top (ignore Luxembourg  as a chunk of its workforce lives in neighbouring countries).

German living standard highest in Europe; Irish, Italians, Spanish among Eurozone's poorest

5. In the 1911 UK Census, the percentage of the Irish workforce employed in the manufacturing sector was down to 20% from 33% in 1841 and 36% in the UK as a whole in that year.

In 1901 38% of the UK workforce were in manufacturing.

The concentration of significant Irish manufacturing was in the north-east, now part of UK-ruled Northern Ireland. I don't know if research on the impact of partition on trade has been done.

6. The UK remains a key trading partner for Ireland and vice-versa.

When we joined the European Economic Community in 1973, the UK accounted for 55% of total exports. In 2012 that ratio was 18% (services location data for 2013 not yet available).

The UK remains the largest market for indigenous industrial firms at about 45% of exports.

The UK Trade & Investment  agency says:

Ireland is the UK’s fifth largest export market and imports more from the UK than any other country. The UK accounts for 34% of imports into Ireland. In 2012, total trade in goods and services from the UK to Ireland was £27bn.

Ireland is the UK’s largest export market in food and drink, and second largest market in clothing, fashion and footwear. Trade in other sectors continues to grow. Two way trade stands at €1bn per week."

Ireland had a goods trade deficit of €2.6bn in 2013: exports were valued at €14bn and imports amounted to €16.6bn.

Ireland had a €7bn services surplus in 2012 but €4.5bn of computer services mainly related to Google "exports'; the transport surplus of €2.2bn mainly relates to Ryanair and Aer Lingus; there was a slight deficit in travel/tourism while insurance/financial/business services/royalties mainly net out.

7. Even though indigenous tradebale exports account for just 10% of headline exports, direct employment in these firms is greater than in the foreign-owned exporting firms.

8. Post independence, the UK has been the main destination for Irish emigrants.

9.  This line in the paper may mislead non-Irish readers

Though a large majority of the Irish population voted for the separatist Sinn Féin party in the 1918 UK general election..."

This was a pre-partition Ireland election and Sinn Féin won 73 of the 105 seats using the past-the-post British voting system.

According to Wikipedia, the vote was as follows:

Sinn Féin: 46.9%

Irish Unionist 25.3%

Irish Parliamentary Party: 21.7%.

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