3 - Explaining the Celtic Tiger

Summary

THE ROCKY ROAD: THE VICIOUS CIRCLE OF UNDERDEVELOPMENT

Contemporary globalization appears to have found Ireland well before it found the rest of the globe. From the late 1950s forward, Ireland pursued an uninterrupted strategy of increasing integration into the global economy – actively pursuing foreign investment and becoming one of the most open economies in the world. Ireland is perhaps not so much a special case as a harbinger of other economies' experience of economic developmental strategy in a world where national restrictions on foreign investment and trade are increasingly difficult to sustain.

Upon (partial) independence from Britain in 1922, the largely agricultural Irish Free State (as it was then known) embarked on a strategy of free trade and fiscal conservatism. The Irish transition to independence was remarkable for the stability of the new state, with the losing party in the Civil War of 1922–23 entering parliament in 1927 and government in 1932. Indeed, this broadly populist party, Fianna Fáil, would dominate Irish politics until the present day, where it remains a major force. Emphasis was administratively placed on continuity with the old bureaucratic system inherited from Britain, with most of the personnel and procedures remaining the same (Breen et al., 1990).

When Fianna Fáil came to power in 1932, its economic ideology of national self-sufficiency dovetailed with international trends toward increasing protection.