In the Washington Times Kishore Mahbubani, a former Singapore diplomat and author of “The New Asian Hemisphere – The Irresistible Shift of Power to the East”: “…being globalized has its downside – when the world economy stutters, the more open economies feel the pain first.” It also has this to note from Michael Hennigan, founder of the Irish financial Web site Finfacts.com, which echoes some of the conversation in last Friday’s podcast:
“Huge inward investment from the U.S. triggered the Celtic Tiger, but it was allowed to develop into an out-of-control property boom, rather than focusing on developing a domestic exporting sector. Between 2000 and 2007, employment in Ireland expanded by 40 percent – in construction, public services, retail and distribution – while employment in the international tradable goods and services sector fell.”
Alan Barrett, economist at the Dublin-based Economic and Social Research Institute, saw few viable options in the short term for Irish policymakers. “Ireland needs to regain its competitive edge so that it can position itself to participate in the global upturn. This means getting our cost structure into line with our competitors and will involve wage cuts,” he said.
Such cuts are a touchy subject in Ireland, as in most of EU states. While private enterprise is cost cutting, Mr. Barrett paints a different picture of Ireland’s public sector, saying, “The government will have to bring the unions around to this line of thinking.”
More upbeat is Robert E. Kennedy, executive director of the William Davidson Institute and a professor at Michigan’s Ross School of Business:
“…the success over the past 20 years of Singapore and Ireland is a sign that globalization is working. Traditionally, having a large home market was extremely important for development. Ireland and Singapore have outperformed the global economy by a large margin over the past 10 to 20 years.
“Ireland is very well positioned to be the services workshop of Europe and should hold on to and strengthen its position as the EU headquarters of many global firms. I am bullish on Ireland´s future. The present gloom is an overreaction.”
He also issued a cautious warning to Singapore:
“Offshoring and outsourcing are opening up next opportunities for firms and new competitive risks. Singapore has advantages in being close to China, but it’s a tough neighborhood, with lower-cost rivals with domestic market advantages, such as Malaysia, Philippines and Vietnam, ardently pursuing services exports.”
Simon Roughneen concludes:
Ireland and Singapore “got it” better than most during the past 15 to 20 years, but it seems to be an even bet on whether these recent bellwethers of globalization and prosperity get it going forward.