| Abstract: | Since the mid‐1980s, the economy of the Republic of Ireland has displayed a remarkable turnaround. Its Gross Domestic Product (GDP) has grown at a faster rate than any developed country in the world. The government's deficit has been cut severely and the debt‐to‐GDP ration sharply reduced. Average incomes have risen significantly, and the unemployment rate reduced dramatically. This article documents these changes. Its main purpose, however, is to provide a plausible explanation for the “Irish miracle.” While many factors have been important—support for the Economic Union's regional development programs, a favorable tax structure, locational and language advantages for attracting multinational corporations, strong education and training programs—these factors in themselves do not explain the emergence of the “Celtic tiger.” They were in place before the mid‐1980s when Ireland was suffering from a fiscal, economic, and political crisis. Instead, the article argues, it was the creative and innovative response of Irish leaders in government, industry, and labor movement and community organizations to the crisis, and the subsequent institutionalization of this response in a new form of governance, that has been the catalyst for the Irish success story. Based on the thorough background research of the Economic and Social Research Council, a farsighted group of leaders developed a strategic plan in 1987 that provided a blueprint for constructive economic and social change. This was then formally instituted for wage restraint on the part of labor in return for income tax and social supposed provisions by government. Irish social Partnership is modeled to some extent on Northern European corporatism. The article reviews corporatism as an early form of innovative governance, using classical corporatism in Sweden and competitive corporatism in the Netherlands to illustrate how this approach has evolved over the years. Dutch economic success in recent years is due in part to its new form of corporatism that has helped it become globally competitive. It is argued, however, that Irish social partnership goes beyond continental corporatism in several important ways. It is more inclusive, covering a large array of social interests; it is more strategic, with a well‐articulated integrated approach to social and economic development that is self‐corrective and articulated in a new national agreement every three years; and it is more firmly institutionalized in both government and nongovernment agencies in the country. Social partnership and the integrated approach have become part of the culture of the new Ireland. This innovative form of governance underlies the Irish turnaround and augurs well for the future. It can also serve as a model, with appropriate modification tailor‐made to each case, for other jurisdictions hoping to emulate Ireland's success. |
