The dilemma of Irish economic development: perspectives on the evolution of Ireland's public finances and economy from the early-1960's to the mid 1980's

Abstract

In this paper we take a broad retrospective look at aspects of the evolution of the Irish public finances and the economy over the last 25 years or so. In particular, we attempt to rationalise that evolution in terms of the underlying dilemma of the Irish economy as set out by Dr Whitaker in his seminal paper entitled "Capital Formation, Saving and Economic Progress" to this Society on the 25th of May 1956 - what he termed the "Dilemma of poorer countries". "Less developed countries, being at the disadvantage of starting from a lower standard of living, find it more difficult to set aside even the same fraction of income for capital building as the more highly developed countries. Yet, unless they make more rapid strides in other means of raising output, it is precisely those countries which must set aside a relatively greater fraction if they are ever to catch up in living standards". This paper is essentially about the budget, meaning the financial activities of public authorities, at an aggregate level, in the macro-economic context. It does not set out to examine, except where this is unavoidable or necessary to set the scene, the detail of public expenditure or taxation which has been exhaustively examined in other fora and publications in recent years. Neither does it look at the specific policies which the budget plays a major part in implementing, but the reader will, we hope, be tempted to ask whether the overall thrust of budgetary policy in the period reviewed was compatible with the objectives which these 'micro' policies were seeking to achieve. The views expressed are, of course, personal views.