At 5:00 AM 11/28/95, Terrence Mc Donough wrote [in response to me, citing
the IMF and OECD's celebration of Ireland as a model of "fiscal
consolidation"]:
>It's not clear what these institutions mean to accomplish with this
>reference to Ireland, aside from pointing out that in certain unusual
>circumstances its possible to reduce your budget deficit as a
>percentage of GDP.
They mean to accomplish this: deep, rapid reductions in government red ink
are possible, and have few nasty side effects.
>The reason for this is the role of multinational
>investment. Ireland has been experiencing a phenomenal growth rate.
>My memory says the last yearly figure was around 6.5%. This is
>mostly due to the activities of MNC's.
Here's a bit of something I just posted to the Post Keyensian Thought list
along these lines:
BELGIUM & IRELAND
structural fiscal balance and trade balance
(percent of GDP)
Belgium Ireland
----------------- -----------------
structural trade structural trade
balance balance balance balance
1983 -10.9% +1.8% -9.1% -2.8%
1986 -7.5% +3.9% -7.5% +2.3%
1994 -3.8% +5.2% -2.2% +13.6%
1983-94 +7.1% +3.4% +6.9% +16.4%
1986-94 +3.7% +1.3% +5.3% +11.4%
So, the FDI boom has led to an export boom. How many other countries could
reproduce this?
Ireland's charms from the MNC point of view are clear: low wages, a high
unemployment rate, an educated, English-speaking labor force, and inside
the EU tariff wall. Perfection itself.
Doug
--
Doug Henwood
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