What did we do right?

The Irish experience still has a number of lessons for Israel.

By RORY MILLER, MICHAEL O’SULLIVAN
Ireland 311 (photo credit: AP)
Ireland 311
(photo credit: AP)
What did we do right? When it comes to the global economic situation, it’s not a question that many people are asking themselves at the moment.
And why would they?
The global economy remains under severe strain. Debt is piling up while governments attempt to make amends for years of runaway spending, and an absence of regulation or long-term planning.
This is especially true in Ireland, home of the Celtic Tiger and not so long ago the darling of Israeli leaders on both sides of the political divide.
Indeed, from the mid-1990s onward, proponents of the free market like Binyamin Netanyahu praised Ireland’s success in replacing “a welfare ethic with a business ethic,” while those impressed by the Irish Social Partnership Agreement between employers, workers and the government shared Amir Peretz’s hope that Israel could “mimic the Irish economy.”
WITH THIS in mind, between July 1999 and December 2008, 17 high-level delegations from Israel visited Ireland; not simply representatives of the Ireland-Israel Chamber of Commerce but the ministers, directors-general and chief scientists of numerous ministries, as well as the chairman of the Israel Center for R&D, the head of the Histadrut and Israel’s accountant-general to name a few.
At the height of Ireland’s boom in 2006, an Irish economist was flown in to tell the annual get-together of movers and shakers at the Herzliya Conference the secrets of Ireland’s success.
The following year, on the eve of the then-Irish foreign minister’s visit to Israel, an Israeli Foreign Ministry press release on the visit explained that the “unprecedented growth” of the Irish economy in recent times has not only “positioned the country as a leading world economy,” but also as a “role model for other small countries.”
How things have changed.
The Celtic Tiger is no more. The mood in Ireland is now one of confusion, anger and growing bitterness at the financial follies of the past few decades, and the economic burdens they have now wrought for generations to come.
Moreover, while most other developed economies are in recovery, the Irish economy is still very much in rescue mode. Growth is negative, the government-supported recapitalization plan for the banking sector is barely operational, and the banking system looks like it may need more infusions of taxpayers’ money to stay afloat.
Irish people are now casting around for solutions to their economic troubles. In this context, Yanky Fachler, an Ireland-based Israeli businessman, notes in his contribution to our new study, What Did We Do Right? Global Perspectives on the Irish ‘Miracle,’ that there are increasingly many things that Israel can teach Ireland.
Most notably, as Ireland sets out on the task of rebuilding its economy, it would do well to learn from Israel in the areas of innovation and entrepreneurship, in particular its development of the world’s most advanced technology incubation program and its success in building cutting-edge companies from scratch.
But as Scotland’s First Minister Alex Salmond underlines in his contribution, other countries now, perhaps more than ever, can still learn from such Irish experiences.
So what can the Irish experience teach Israel today?
First and foremost is the value of “intangible” factors like education, economic openness, a friendly business climate, while realizing that a purchase on the economic actors driving global growth (in Ireland’s case, US multinationals) are necessary ingredients in spurring economic development.
The benefit of Ireland’s experience also suggests that strong institutions are necessary pillars of a strong economy and a healthy public life, but importantly that these institutions need to be continually reinvigorated and reinvented. This did not occur in the later part of Ireland’s boom.
Two other factors are important.
One is to achieve a harmonious combination of local “assets” with international conditions, while at the same time putting in place local buffers to powerful international forces, such as the side effects of global interest rates and capital flows.
The other – again with the benefit of Irish hindsight – is to integrate economic policy-making with social elements of policy.
Unless we understand what we did right at a time when almost everybodyonly wants to recall what we did wrong, we will miss an opportunity tofind a constructive starting point in the debate on the way forward.
And that is a debate that all of us need to have right now.
The writers are the editors of What Did We Do Right – Global Perspectives on Ireland’s ‘Miracle’ (Blackhall Press 2010).