Celtic Tiger in Collapse

Kirby, an Irish academic who had written critically about the Celtic Tiger during the boom, revised his earlier book after the 2008 collapse.

His argument is that the Irish growth model was structurally flawed in ways the boom concealed. Growth from the late 1980s rested on foreign direct investment attracted by low corporate tax, English language, European Union market access and an educated workforce. Kirby argues this produced a two-tier economy: a highly productive foreign-owned export sector with weak linkages to domestic firms, and a domestic sector that was much less productive. Measured output overstated Irish income because a substantial share of the foreign sector's recorded profit belonged to foreign owners, which is why Irish gross national product diverged from gross domestic product.

His second argument concerns the state. Kirby holds that Ireland built a low-tax, low-spending model that delivered growth without building the social infrastructure that would have distributed its benefits, leaving inadequate health, housing, childcare and public transport, and high poverty and inequality relative to European peers during a period of rapid growth.

His third argument is that the later phase of the boom, from about 2001, was not export-led growth at all but a domestic property and credit bubble funded by bank borrowing in wholesale markets, which the government encouraged through tax incentives for construction and which the regulator did not restrain.

The analysis of the property bubble and of the regulatory failure has been amply confirmed. Kirby writes from a critical political economy position and the treatment of the foreign investment model gives less weight to its genuine achievements. Ireland's post-2010 recovery, driven again by the foreign-owned sector, complicates the structural argument.