Piaras Kelly PR - Public Relations in Ireland

John Naughton highlights commentary from Gary Becker on whether China will become the leading economy of the 21st century. Reading the passages highlighted by Naughton, I couldn’t help but draw a comparison between the commentary and the Irish economy. Becker states:

Countries invariably discover that it is much easier to grow rapidly when they are economically way behind since they could then import the knowledge embodied in technology and human capital developed by leading countries. As a country begins to catch up to the knowledge frontier, a simple transfer of knowledge is no longer productive. It then has to participate in the generation of new technologies and approaches, which is far harder than simply using advances made elsewhere.

Ireland has benefited immensely over the past thirty years from foreign investment and multinationals, but we’re stuck at a crossroads in our attempt to become a knowledge based economy. All of a sudden we have to participate in “the generation of new technologies and approaches“, but we’re being stifled by a number of factors such as falling numbers of science and technology graduates.

Interestingly, there is also a similarity in his commentary between Germany and Ireland. Becker points out that:

Germany supposedly discovered a new way to organize economic society- a social contract among workers and companies- that would propel that nation past Americas old fashioned capitalism.

…

A more intangible but important factor is that as countries get richer, they often introduce policies that retard further progress. This happened in Germany with legislation that made labor very costly, and ossified its labor and retirement markets.

This is something that is being experienced in Ireland right at this very moment. As a result we’re losing the battle of competitiveness with emerging countries like Poland. However while many people think we’re competing with Poland simply on cost, the Eastern European country also brings a number of other benefits to the table like a good education system and infrastructure that isn’t crippled by the boom.

However, the crucial factor which could be the deathnail in the Celtic Tiger is our culture which stifles innovation. Becker points out that the US “provides a good environment for new companies, flexible labor and product markets, sizeable investments in human capital and technology, and an open attitude to new ideas, immigrants, and different ways.” Entrepreneurship isn’t exactly flourishing in Ireland, just look at Auctomatic, a new internet startup which has received backing from some of Silicon Valley’s leading investors after being unable to secure funding in Ireland (Full story in the Irish Times - subscription required). More worryingly our education system by its very design limits creativity in the classroom. If it isn’t on the syllabus, teachers don’t want to know as everyone is obsessed with getting high points on their Leaving Cert.

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