Professor Alan Barrett, Director of the Economic and Social Research Institute in Dublin, Ireland’s leading think tank, gave a succinct account of the Irish model at CARI (Consejo Argentino de Relaciones Internacionales) last Monday evening – what to copy, what not and what cannot be copied.
Introduced by Irish Ambassador Gerard McCoy, Barret began on a personal note – in 1989 he left the country never to return, as he then thought, with only one of his five siblings remaining in Ireland. A lost cause – Ireland had always been an outward-looking economy since the 1960s but too many policy errors and fiscal crises with not even joining Europe in 1973 proving any immediate game-changer.
Nevertheless, European Community (now Union) membership was to become absolutely central to Ireland’s success story, once accompanied by sensible policies learning from past mistakes in general and a 12.5 percent corporate tax in particular (with luring foreign direct investment the top priority) and the “Celtic tiger” was born in the last years of the past century. Ireland became the gateway into Europe for the United States although Barrett argued having a third of your economy based on FDI made for a certain vulnerability – not least with a Donald Trump presidency around the corner.
The euro likewise a double-edged sword – lowering both exchange rate risk and interest rates but Barrett insists that the housing bubble bursting in 2010 could have been better controlled without the euro depriving monetary policy of flexibility and without the huge sums borrowed from German banks although Ireland quickly emerged from that crisis.
But the Economic and Social Institute director did not want to ignore social aspects either. The Irish government has always been at pains to spread the money inflow around to maximise income equality, not only by creating a social safety net with direct cash payments but also by investing heavily in education.
Some probing questions from economic consultant Marcelo Elizondo then deepened the analysis while Guillermo Stanley asked him for an opinion on the EU-Mercosur free trade agreement – Barrett admitted that Ireland’s powerful farm lobby was frankly opposed but argued that it should be faced down for the greater benefits of the agreement.
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