The goblins behind Ireland’s record growth figures

A small number of goblins prowl the streets and sidewalks of Silicon Docks, in Dublin. The sentence with which this chronicle begins contains two metaphors that help to explain the spectacular growth figures of Ireland, whose GDP increased by 5.9% in 2020, while that of Spain fell by 10.8% or that of Germany by 4, 6% – this year, it will add another 14.6%, according to Brussels forecasts. The first metaphor is the term Silicon Docks, reminiscent of California’s Silicon Valley. Around the area of Grand Canal Dock (the Grand Canal pier) in the Irish capital are the headquarters of Facebook (now Meta), Google or Trip Advisor. From there to the center, east and south of the city, you can find Microsoft, PayPal, Amazon or Twitter, among many others. Nine of the top ten US tech companies have their European headquarters in Ireland. The world’s ten strongest pharmaceutical companies are there, as well as eight of the top ten financial services companies.

The second metaphor is that of the goblins, those mythological beings of Irish folklore that, according to legend, the Celtic Druids sent against Saint Patrick to thwart their evangelizing efforts. The Nobel Prize in Economics Paul Krugman baptized with the term “goblin economics” (leprechaun economics) to the distorting effect on the national statistical figures of Ireland (and many other tax shelters) caused by the multinationals that had come there in search of reduced taxes. Ireland charges 12.5% ​​Corporation Tax, compared to 25% in Spain or France, 26.5% in the US or 30% in Germany.

“Is Ireland really the most prosperous country in Europe?” Asked in February this year, through an open letter, Patrick Honohan, who was Governor of the Central Bank of Ireland from 2009 to 2015. Despite the attempt to This correction implies giving more relevance to GNP than to GDP when measuring the country’s wealth, in order not to account for the huge profits of some companies that end up going abroad – N is for National – these corporations continue to create distortions in the figures as voluminous as themselves, either through the depreciation of their capital assets (patents, above all) or through undistributed dividends. In both cases, they go on to swell Irish accounting. “Ireland is a prosperous country, but not as prosperous as is often believed, due to the inappropriate use of conventional statistics,” Honohan concludes.

Goblins aside, the bets of certain sectors for Ireland have paid off during the pandemic. “Covid-19 has been good to us. All three pillars of our economy have performed well during this period. The pharmaceutical industry, it is evident, has been the strongest. The industry of software [en tiempos de teletrabajo] has shot up. And the agri-food industry, Ireland’s powerhouse for dozens of years, has also thrived. People have continued to eat, ”sums up Eohgan Corry, who runs the country’s largest tourism magazine, Travel Extra, and knows better than anyone the strengths and weaknesses of the “Celtic tiger.” “Despite accounting distortions, these sectors contribute like no other to the wealth of the country, with the tax revenue they generate and the trade surplus they help create,” defends Corry.

The coin has another side, however, not so stimulating: they are companies that create highly qualified but low employment. Barely 7,000 people, many from other countries, are those goblins that prowl every day for Silicon Docks. Sectors with more capacity to create labor, such as services or foreign tourism, have been devastated by the pandemic.

Few people know that Aer Lingus, The historic national airline, rose from the ashes with a brilliant idea. The Irish Government managed to agree with Washington that a small team from the US Border Patrol (Border Police) will set up headquarters at Dublin airport. In this way, the immigration control of entry to the United States is carried out there, so that you can fly directly to any local American airport, from Minneapolis to St. Louis. With 35 million Americans claiming their Irish ancestry, this quality and rental tourism was a gold mine for the country. “And now it is in ruins. It has been reduced to just over 10%. Ireland has had its doors open to all Americans with a full vaccination schedule since July, but the State Department continues to advise against traveling here, ”Corry complains.

Ireland has the competitive qualities of a small country that knows it must show its claws to survive. A very young population (33% are under 25 years of age), highly educated thanks to a university very focused on economics and business. Very stable and healthy public accounts (its public debt is 58.40% of GDP, compared to 122% in Spain; its deficit, 4.9% compared to 10.95% in Spain), and a flexible labor market.

“What I learned from the Irish is a fighting attitude in the face of difficulty. They don’t sit around regretting their luck, but rather immediately wonder what their next project is going to be, ”enthuses Zaryab Malik. This Pakistani from a wealthy family, who studied at the elite British school in Eton (the same as Boris Johnson), fell in love with Ireland 25 years ago. Your social events companies, Zab Events and Social Tag Me, are claimed for all those multinationals with money to spare and a desire to retain talent. The same organizes selfies 360º, with a rotating camera, which prints the name of the client company on the foam of the cappuccino or Guinness beer. “The flow of Europeans and Americans that has come to Ireland in recent years has changed the perception of the country,” defends Malik.

But the internal political game has also changed. Housing in Ireland, with prohibitive prices, was the central theme of the last general election. And the inequality in the distribution of wealth is intense. That is why the great result of the Sinn Féin, the party that was the political arm of the terrorist organization IRA and that today represents a radical and social message of the left to which a population is paying more and more attention to which it is no longer enough for the country to prosper. He also wants that prosperity to reach everyone.

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The goblins behind Ireland’s record growth figures