Most assessments of Irish economic performance since independence in 1921-2 are gloomy. The present Republic has kept pace with the UK, but the latter grew slowly by European standards, and its initial per capita income was much higher than Ireland's, which might therefore have been expected to grow faster and `converge'. In Discussion Paper No. 975, Research Fellow Cormac Gráda and Kevin O'Rourke use the OECD and Penn Mark V data sets to assess Irish growth since 1950 against that of other European economies to show that Ireland's relative performance was very poor indeed in terms of the growth rates of real GDP and GNP per capita in the 1950s and has remained below the European average since then.

These data reveal the presence of a European `convergence club', with most poorer economies catching up with their richer neighbours in the period since 1950, although Ireland remains an exception throughout the period. This pessimistic result remains robust even when the growth rates of GDP per worker or GDP per employed worker are compared instead. Curiously, growth of GDP per capita since the early 1970s appears satisfactory according to the OECD's data but very poor according to Penn Mark V, although Ireland has underperformed since 1973 by either measure if GNP is used in preference to GDP. Ireland's post-war economy has indeed `failed'.

Gráda and O'Rourke then assess some common explanations of this poor performance, which include policy-related explanations such as protectionism, an inflated government sector, an inappropriate wage-bargaining structure, as well as those which stress such `exogenous' factors as location, endowments, the large agricultural sector, and the small size of the economy. They assess these explanations in isolation and then test them in a comparative framework to show that protectionism appears to have inhibited growth in the 1950s, while the large share of agriculture in the economy, its small overall size and its structure of industrial relations appear to have impeded growth in the longer run.

Irish Economic Growth, 1945–88
Cormac Gráda and Kevin O'Rourke

Discussion Paper No. 975, June 1994 (HR)