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The Celtic tiger is difficult to discern in terms of productivity (Walsh 2000) Discuss.

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Introduction

The Celtic tiger is difficult to discern in terms of productivity (Walsh 2000) Discuss The Celtic tiger and the growth of productivity (real output per person employed) can be determined by a number of factors, all of equal importance. To discuss this issue I feel I must firstly look at each of them individually in an attempt to discover what effect they have had on the Irish economy. Firstly I will look at the economic boom in terms of GDP and GNP (Gross National Product and Gross Domestic Product). I will then look at how theorists such as dependency and modernisation would view these figures. Finally I will look at Foreign direct investment (FDI) and how low corporate tax rates have made Ireland a favourable environment and location for Trans-national companies (TNC's) to invest in and attempt to discover why it appears difficult to understand these figures. For the past few years Ireland has been experiencing an economic boom created by a combination of strong factors. Ireland's position as an educated, English-speaking estuary to Europe for US companies was one of the main factors. Another was the growing workforce of an intellectual capital and the increasing software and financial services industries were prospering. (Clinch, Convery and Walsh 2002) Between 1993 and 2000 GDP increased by some 8% while employment increased by 5 % per year. ...read more.

Middle

TNC's can generate extraordinary profits by importing pieces from high tax zones, assembling them and exporting again with an inflated price. This of course expands GDP and is the source of the argument over how real the GDP figures are. Trans-National profit rates are far higher in Ireland than elsewhere for the same processes, and when compared with similar Irish owned companies. Secondly, there is a low ratio between investment and profits. (Tovey and Share 2000) Full employment is sometimes referred to as a 'Tight labour market' we are almost at the point were there will be full employment and not be enough staff to fill vacancies. This was apparent recently in a restaurant in Dublin's city centre in which a notice in the window read 'Help wanted immediately, ability to speak English an advantage'. It is obvious from this sign there is such a staff shortage, that neither experience nor a capacity to converse in English are no longer required to gain employment in Dublin. (Clinch ,Convery and Walsh 2002 p.194) Female employment, which was initially quite low has also risen and is now on par with that of the European Union average. However Breathnach cited in Tovey and Share argues that the reason for this is that TNC's tend to employ more women in the workforce in the belief that women are more suitable to undertake lower skilled, lower paid employment. ...read more.

Conclusion

In conclusion I have shown that many factors are responsible for the reason that productivity has been difficult to discern in relation to the Celtic tiger. Primarily the unreliability of GDP and GNP figure's, accompanied by the fact that transfer pricing is uncontrolled in the Irish economy. Secondly TNC's continue to dominate Irish economy in a way that it would be impossible to estimate actual levels of unemployment. Thirdly the rising population/employment ratio is due to the growth of the working age population being assimilated into the labour market where prior to 1980's it would have been normal for them to emigrate. Immigration has also increased dramatically, a large percentage of these are returning immigrant's where in the past Ireland had been on the receiving instead of the sending end of the 'brain drain'. Finally women's participation in the workforce, particularly married women, has risen swiftly in the Celtic tiger because of the demand for low skilled, low paid jobs. The factors above show that although there may has been an acceleration in the labour force this does not necessarily mean that there has also been an increase in productivity levels. Because of the domination of TNC's it would be virtually impossible to really know the true figures for exports, profit's, or even employment. For this reason I would agree strongly with Brendan Walsh, the Celtic tiger is extremely difficult to discern in terms of productivity. ...read more.

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