John Pennington recommended
Inside the Celtic Tiger: The Irish Economy and the Asian Model, Denis O'Hearn, Pluto Press, 1998
Which I reviewed for Revolution, as follows:
American Investment Bank Morgan Stanley first suggested that Ireland had become a Celtic Tiger, citing impressive growth figures in the first half of the 1990s (Kevin Gardiner, 'The Irish Economy: a Celtic tiger', MS Euroletter, 31 August 1994). In 1996 the Scottish National Party leader Alex Salmond embarrassed the British government by eliciting figures from the House of Commons Library to the effect that Ireland would 'become more prosperous that the UK and Scotland by the year 2000' (O'Hearn, p.65).
For a country that has lived for years in the shadow of the old oppressor, Britain, the news was a boost, especially as it indicated that the occupied North of the country, too, was falling behind southern growth rates. What better rebuttal to the failed politics of Unionism and British imperialism?
Denis O'Hearn of Queen's University, Belfast and the West Belfast Economic Forum is an Irish republican by instinct who takes no pleasure from talking down Eire's economic success. His book is a relentless demolition of the case that Ireland is a Celtic Tiger that indicates the real story of the Irish economy: subservience to foreign capital.
O'Hearn shows that the South's growth falls well below that of the East Asian tigers, averaging around 4 per cent a year in the first half of the decade compared to an East Asian average in excess of twice that. Moreover East Asian tigers earned the name for sustained growth over thirty years where Ireland's growth follows decades of poor economic performance. It is only relative to the slow growth of Europe that Ireland stands out.
But even the growth that has taken place, argues O'Hearn, is deceptive. Alex Salmond's intervention drew on EU statistics that showed Ireland's GDP per capita was outstripping Britain's and even exceeded the EU average. But this estimation of GDP is not in one currency, but what the Euro statisticians call 'purchasing power parities', i.e. units that would purchase the same services and goods in each country. This measure has a tendency to equal out inequalities between poorer Southern European economies and richer Northern ones. Measured in ECUs the equivalent figures show Ireland's GDP at about 82 per cent of the EU average in 1995, not quite the evidence of convergence that was trumpeted.
O'Hearn also argues that growth in Gross National Product, which excludes 'profits, dividends and interest that are removed from the country' (p62) would be a more telling measure than GDP. 'Ireland is unique in Europe to the degree that its GDP exceeds is GNP' he points out, indicating that a great deal of the surplus is being exported: 'By 1996, southern Irish GNP was more that 13 per cent lower than GDP' having consistently diverged since 1980 (p.63).
Much of the recorded growth is due to foreign investment accounting for half of Ireland's Industrial output and employment, and three quarters of its maufactured exports and imports according to a 1994 OECD study (quoted in 'The Irish Economy' New Zealand treasury working paper Sarah Box). But O'Hearn argues that this is deceptive, since a lot of the recorded output of foreign firms is fixed to take advantage of Ireland's low taxes on FDI (ten per cent according to Box) and favourable government grants (around $69 million per annum according to Box). O'Hearn shows that foreign firms import components and raw materials at artificially low prices from parent companies, and assemble them in Ireland to redistribute profits within her favourable tax regime. O'Hearn notes that many US firms operating Irish subsidiaries are investigated by US tax authorities for such price fixing.
The effect of this phantom growth - noted by Reuters under the headline 'Elvis lives Irish trade data' - is that firms record growth without any noticeable investment. Indeed income statistics show that wages, investment, government spending all falling, while the value of exports rises exponentially. This, suggests O'Hearn is the disguised repatriation of profits through internal price-rigging by foreign investors.
The discussion of the Irish economy has been ill-informed in recent years with most contributions impressionistically welcoming the emergence of a modern Irish economy. O'Hearn has returned to a critical examination of the subordination of the Irish economy to international capital. In a country where the foreign share of fixed capital investment rose from about 60 per cent in 1988 to 75-80 per cent in the 1990s (p.70), this is a well-made point. O'Hearn's highlighting of the problem is the first step to redressing it.
-- James Heartfield
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