Knowledge Economy Forum, 19-22 February 2002
Miracles do happen
The story of recent Irish economic growth
Tom Healy (Department of Education and Science, Ireland)
Key points
Late development
Economic-political-social-institutional “fundamentals”
Simple policy formulae do not apply
Trade, Investment & Convergence
Foreign Direct Investment
Importation of latest technology Spillovers Supply of graduates Nature of FDI
European Union
AIFTA - EEC (1973)
Income and capital transfers (ESF …) Geographical isolation no longer vital Gradual change in mentality
Demographic factors
Late developer Youthful population Changes in female labour force participation Return migration Construction boom
ANNEX TABLE Changes in annual average growth rates in Output per workingage person (1981-89 to 1989-97) broken down into various components Country Change in growth rate of GDP per capita (1980s1990s) 1.21 -.90 .34 .97 .01 -.15 -.64 -.23 .37 .04 -.19 .46 -.06 Due to changes in (ranked by unexplained residual) Investment share -.17 -.91 .1 -.04 .08 .25 -.19 .37 .37 .01 .19 .33 0 Human capital .54 .44 .20 .43 .44 .32 .42 .31 .45 .35 .07 .90 .57 Population Variability growth of inflation -.75 -.03 .03 .32 .05 .02 -.05 -.07 .17 .27 -.06 .46 .09 .35 .05 .07 .07 0 .42 -.20 .12 .26 .23 .13 .25 -.12 Government consumption .13 -.13 .01 .1 .03 -.20 .02 -.02 .06 -.02 .07 -.12 -.05 Trade exposure .46 .33 .22 .25 .25 .53 .33 .37 .24 .42 .65 .67 .54 Unexplained residual 2.71 .86 .84 .69 .37 .21 .12 -.06 -.06 -.30 -.70 -.94 -.47
Ireland Finland Denmark Netherlands UK Portugal Sweden Austria Belgium France USA Spain Greece
Multi-factor productivity
Traditional explanations don’t work so well
mushrooms or leaven effects?
quality of investments, policy combinations, institutional and social partnerships
The role of formal education
“free” secondary education 1968 Regional Technical Colleges (1970- ) University under-graduate intake high output of S&T graduates
Relatively more is spent on HE
Beyond formal education
Limitations of formal education and training
Return migration
Intel & Microsoft story
business start-ups and technology transfer
Social Partnership
Very difficult to assess/quantify Painful adjustments + working together ethos National Wage agreements (“Social Wage”) Bi-partisan political approach
local area partnerships
Social Capital
The mystery of the “unexplained residual” 0.8% more growth for 10 point increase in general trust (Knack and Keefer)
reducing transactions costs sharing knowledge and “communities of
practice”
Policy issues
More is not necessarily better general but applied education to 18? Informal learning partnerships
foster learning communities and organisations
quality of teaching practice all good things take time
Policy issues
don’t put all your eggs in one basket give attention to social inclusion as a priority before, during and after economic lift-off
foster synergies - FDI, training, high-skill mobility, flexibility, less red tape ….
Questions for the Irish
Will it last? What about social and natural environments? What about GNH?
What about the poor and excluded?
What about the future in a larger EU? How to use “learning partnerships” for LLL