Ireland is commonly believed to have been a poor backward economy in the latter part
of the 19th century and early 20th century. But according to two economists from the
University of Ulster, Ireland ranked favourably with the world’s major economies:
seventh in terms of GDP per head in a league of the sixteen richest countries in 1871
and falling only as far as eleventh by 1911.
In the latest issue of the Economic Journal, Frank Geary and Tom Stark reveal that
Ireland was ahead of Italy on the eve of the First World War and only marginally behind
Germany and France. Comparisons by output per worker (productivity) are if anything
even more favourable to Ireland’s relative economic status at that time.
Levels of GDP per head 1871 and 1911
(in 1990 US dollar prices adjusted for purchasing power differences)
1871 1911 growth rate (% per annum)
USA 2508 5052 1.8
Germany 1800 3428 1.6
France 1881 3219 1.4
Italy 1476 2434 1.3
Great Britain 3571 4844 0.8
Ireland 2100 3018 0.9
Economies grow as a result of expanding inputs of machines, plant and people and
advances in the technology accompanying these inputs – technical progress or ‘total
factor productivity’ (TFP) as economists call it. In the period 1861 to 1911, Geary and
Stark show that Ireland grew faster than the rest of the United Kingdom in terms of
output per head and per worker.
What’s more, all of Ireland’s growth is accounted for by gains in labour productivity –
output per worker. This is in contrast to the United Kingdom as a whole where labour
productivity gains and the expansion of employment made roughly equal contributions:
‘Ireland’s contribution to UK growth considerably exceeded her share of UK output and
employment.’
After the famine of the 1840s, employment in Ireland fell dramatically and there was a
period of substantial emigration. Conventional academic wisdom has it that it was this
emigration that accounts for the rise in Irish output per worker. Geary and Stark dispute
this view and use their data to indicate that the more traditional sources of growth, such
as new technology with the construction of new plant and machinery etc., can explain
the Irish performance.
At best, the emigration factor only coincides with that minor proportion of Irish growth
that brought about ‘catch-up’ with Great Britain. The researchers present a number of
facts to support the argument that in terms of structural change, capital accumulation
and TFP growth, Ireland was ‘nearer that of the advanced western economies than is
currently accredited’.
Over-emphasis on the role of emigration in raising Irish living standards misses this
important insight. With such a background, the recent performance of the Irish economy
may be a lot less surprising than is thought and not without some historical precedence.
Controversy in these matters has arisen due to the lack of national accounts data for
Ireland for the period. With an imaginative and innovative manipulation of existing UK
data, census figures and scattered information on wages and employment patterns, the
researchers have estimated GDP for each of the four countries of the United Kingdom
for the census years 1861 to 1911. They concentrate on comparisons of Ireland with
the other three countries, i.e. Great Britain.
ENDS
Notes for Editors: ‘Examining Ireland’s Post-Famine Economic Growth Performance’
by Frank Geary and Tom Stark is published in the October 2002 issue of the Economic
Journal.
The authors are at the University of Ulster.
For Further Information: contact Frank Geary on 02890-366447 (email:
F.Geary@ulst.ac.uk); Tom Stark on 02870-324358 (email: T.Stark@ulst.ac.uk ); or
RES Media Consultant Romesh Vaitilingam on 0117-983-9770 or 07768-661095
(email: romesh@compuserve.com).