Are Small Open Economies Still the Model? Denmark and Ireland in Comparative Perspective

May 18th, Iontas Building, Maynooth University

European small open economies have often been seen as offering a path to combining competition in a globalised economy with social cohesion and equality. With increasing attention being paid to inequality and the world trade order under growing pressure, it is timely to examine once more the small open economies of Europe and ask whether they still offer a pathway to economic openness with social protection and cohesion.

This conference draws together leading international scholars to explore the experiences of Denmark and Ireland, two of Europe’s most successful small open economies – albeit with very different definitions of success. Speakers include David Soskice, John Campbell, Darius Ornston, Bent Greve and Mary Murphy, Michelle Norris and Michael Byrne, Joe Ruane.

The conference also presents some key findings of the comparative research of the New Deals in the New Economy project, directed by Seán Ó Riain and funded by an ERC Consolidator Grant, 2012-2017.

Please register at: https://www.eventbrite.com/e/are-small-open-economies-still-the-model-denmark-and-ireland-in-comparative-perspective-tickets-33810848157

Full details below:

Denmark and Ireland both followed austerity in the late 1980s with “employment miracles” in the 1990s, while each became increasingly financialised in the 2000s, with Ireland in particular suffering a severe crisis after 2008. Both countries continue to move towards a post industrial trading economy, but face significant challenges. Nonetheless, each potentially offers a different path to the future, whether understood as coordinated versus market driven, social democratic versus liberal, hybrid or other forms of economy.

The conference explores a number of themes:
– The comparative politics of economic development, housing and welfare in Denmark and Ireland
– The institutional dynamics of the two political economies, particularly since the crisis of 2008
– The politics of production, predistribution and productive equality in each country
– A discussion of how best to understand the experiences and prospects of these small open economies in an uncertain Europe and a turbulent global economy

Programme:

Iontas Theatre, North Campus, Maynooth University; Thursday May 18th

9.00-9.30 Coffee

9.30-11.30 Small Open Economies in European Development

The Return of the National: Implications for Ireland’s Multiple Interface-Periphery Development Model
Joe Ruane, UCC

Financial circuits and the political economy of social housing in Ireland, Denmark and Austria
Mick Byrne and Michelle Norris, UCD

Denmark and Ireland – Assessing a decade of labour market trends and institutional reforms
Bent Greve, Roskilde University, and Mary Murphy, Maynooth University

11.30-11.45 Coffee

11.45-1.15 Institutions and Capitalisms

The Paradox of Vulnerability: States, Nationalism and the Financial Crisis
John Campbell, Dartmouth (co-author John A. Hall)

Good Governance Gone Bad: Lessons for Denmark and Ireland
Darius Ornston, Umiversity of Toronto

1.15-2.30 Lunch for all attendees

2.30-3.45 New Deals Research on Comparative Capitalisms

Politics, Work and Industrial Relations in Ireland and Denmark: Rethinking the Worlds of Capitalism
Seán Ó Riain, Felix Behling, John Paul Byrne, Maynooth University

3.45-4 Coffee

4-5 Discussion: Are Small Open Economies Still the Model?

David Soskice, LSE

9 thoughts on “Are Small Open Economies Still the Model? Denmark and Ireland in Comparative Perspective”

  1. Although both have roughly similar living standards now, there are considerable differences between the two countries in terms of their economic history, current population structures and recent political and social attitudes.

    Denmark did not enjoy the ‘benefits’ of being part of the U. Kingdom. Consequently, in the first half of the 20th century it was much wealthier than Ireland, over twice as wealthy (per capita) in the 1960s. Its population grew rapidly from 1841 on, while Ireland’s collapsed. In 1841 Ireland had a much larger population than Denmark (3 to 4 times as large), but by 1922 Denmark’s was larger. This trend continued, although at a slower rate, until 1961, by which time Denmark’s population was around 80% larger than Ireland’s.

    Since the 1960s these trends have been reversed. Ireland’s population has grown much more rapidly than Denmark’s since 1961 and is now within striking distance (about 15% less) of overtaking it. Since the 1980s Ireland’s economy has grown at 2-2.5 times the rate of Denmark and, not only GDP, but GNI per capita is now higher in Ireland. Indeed, Denmark’s economic growth since the 1990s has been quite sluggish, although from a very high base.

    There are other differences as well. In particular, the median age of population in Denmark is much higher than in Ireland and its percentage of population aged over 65 is much higher. Denmark has also been in the vanguard of political correctness (or ‘madness’, as it should be more accurately called), with legalised pornography, collapse of traditional marriage and family, abolition of gender distinctions and abortion on demand for decades. Under media pressure, Ireland is only now going down that route, but at such a rate that Ireland could well catch-up with Denmark in these areas by the end of the decade.

    May I suggest that the following be the subjects that the conference focus on:

    (a) To what extent is very high taxation in Denmark the reason for its slow growth (compared to Ireland’s) in recent decades?

    (b) Are the economic and population trends of recent decades likely to continue? If growth of the two economies in the next quarter century is even broadly similar to the previous quarter century, and population growth likewise, Ireland would be 60% wealthier than Denmark by 2040 and have a larger population (even excluding reunification). Is this realistic, or will something happen to bring their economic and population growth rates back together again?

    (3) How has Denmark coped with a rapidly-ageing population and lack of young people? One where there are far more people over 65 than under 20 and fewer births than deaths. Ireland hasn’t had that problem at all up to now, but with the recent media-driven triumph of militant anti-religion secularism over traditional religion in Ireland, it is certain to face it in the future. What lessons can be learned from Denmark in coping with it?

    (4) Why is high taxation in Denmark not leading to better outcomes in education and health? And is there a lesson there for Ireland?. Ireland’s (mainly) faith-based school system has totally outperformed Denmark’s wholly secular school system in all recent PISA tests. While life expectancy in Denmark is one of the lowest in western Europe, and significantly lower than in Ireland. Its mortality rates are correspondingly higher than Ireland’s. How can this be when it taxes so much more highly than in Ireland and we are told ad nauseoum that high taxation is the route to good services?

    1. Very interesting and provocative points JTO. It’s great to see anything that contradicts conventional wisdom. But I think you’re ‘casting your pearls among swine’ (metaphorically speaking) in that academics generally love high taxation and anything scandanavian.

      On your view that fewer births than deaths may be Ireland’s future my own non-scientific view is that relatively-large families is as much cultural now as religion-based. I am constantly amazed when I regularly meet couples who are expecting their fourth child. I say this as a parent of three.

      Also, as you appear to be a demographer/statistics guru, I wonder what your view is of Ireland’s high non-Irish born population and its impact on future growth prospects? One imagines that immigrants tend to be young, healthy and entrepreneurial. How do Ireland’s immigration statistics compare with Denmark? It should be trumpeted more loudly that we have high immigration in Ireland without any extremist political or social reaction. The last couple of years I found it fascinating to read down through the detailed list of schools and winners in the annual Young Scientist Exhibition. I found the following trends: (1) high number of ‘foreign’ names – including the cliche of Asian-sounding names as winners in the maths/science categories; (2) high number of faith-based schools (judging by the names e.g. ‘Mercy Secondary …, or Colaiste Choilm …) among the winners including students with ‘foreign’ names e.g. the girls’ convent school from North County Dublin that were winners in 2016; (3) the nominally-prestigious private boarding schools were very poorly represented across all categories. I had expected Blacrock, Clongowes, Mount Anville, etc. etc. to be widely represented. Not sure what to make of the latter other than the supposition that if your school is busy preparing its students for the professions and playing rugby/hockey they’re unlikely to devote much time to the Young Scientist competition.

      1. @Elia

        I should have made clear in my post that there are lots of things that Denmark does better than Ireland. One is related to planning permissions. Apple announced a couple of years ago that they intended to build data centres in Ireland and Denmark. The Danish one is now well-advanced, but last I heard the Irish one was being held up because a couple of cranks were objecting to it. Likewise, the Dublin Port Tunnel was delayed for years because objectors claimed that north Dublin would fall into the sea if it was built. Its now been up and running for a decade and none of the bad things predicted have happened. But a report out recently highlighted that it had saved lots of lives through reduced road accidents. Denmark seems to be much better than Ireland at pushing forward big infrastructural projects without every nut in the country delaying them with spurious and/or-fetched objections.

        I’m broadly in favour of immigration, but it depends partly on the type of immigration. I am no supporter of UKIP. When a country is experiencing net immigration its a good sign that its economy is working. Immigration to Ireland from other European countries has been definitely beneficial. Poles, Italians, Hungarians, Portuguese etc who come to live in Ireland are easily absorbed, even in the very high numbers they came in between 2000 and 2008 and probably again since 2015 (much less so obviously between 2009 and 2014). They are easily absorbed because they share a common cultural and religious heritage (whether practicing or not). Its interesting that so many in eastern Europe emigrate to Britain and Ireland rather than to the Nordic countries which are much closer.

        Mass immigration from Islamic countries is a different kettle of fish. I’m not opposed to it on a limited scale. Indeed, my best friend that I go skiing with is a (semi-practicing) Muslim from Iran (hates the regime there). However, combined with the collapse in their birth rates, mass immigration from Islamic countries on the scale of recent years to continental European countries is just asking for disaster. Its a clear threat to the 2,000-year-old European civilisation (which is why many on the left support it), not immediately but in 50 years time. Given Italy’s totally collapsed birth-rate, its proximity to north Africa and the middle-East, and the scale of immigration from those regions, ISIS boast that ‘we will take Rome’ is very realistic. Germany’s indigenous population is currently falling by half a million a year, but its immigrant Islamic population is rising by one million a year. One doesn’t have to be Einstein to do the maths. Similarly, looking at the contrasting demographics of the two countries, and the migration trends, its impossible to see Bulgaria being anything other than part of Turkey in 50 years time. Ditto for Greece and the rest of that region. I don’t have the exact figures, but Denmark seems to operate a more sane policy in regard to Islamic immigration than neighbouring Sweden does.

  2. Oh dear. Is this another leftwing academic rendition of “Oh why can’t be more like the Scandis?” to the tune of Noël Coward’s “Don’t let’s be beastly to the Germans”?

    The following data:
    http://ec.europa.eu/eurostat/statistics-explained/index.php/GDP_per_capita,_consumption_per_capita_and_price_level_indices
    should show that we aren’t and it shouldn’t require too much reflection to understand why we can’t or won’t. Clearly a good dose of Leprechaun economics has boosted Ireland’s GDP/capita in 2015 so that it is far ahead of Denmark’s, but even with all this dosh sloshing around Ireland’s Actual Individual Consumption per capita is still well below Denmark’s.

    Much of the economic activity in most of the advanced economies may be explained in terms of the pursuit and capture of economic rents. In Ireland it is taken to the extremes – and this is reflected in the data presented in the link above and in Gini coefficients, but there is a major re-distribution of a share of these rents that generally satisfies the various powerful and influential interest groups across the political spectrum, soothes the discontents of those at the bottom of the pyramid and serves to disguise the rip-off of the overwhelming majority in the middle.

    How long this arrangement will hold up is anyone’s guess. The refusal of sufficient voters to grant a governing majority to either of the usual mainstream combinations that have provided governance since the foundation of the state is an indication that it is weakening. The water charges debacle when many of the honest, law-abiding citizens in the middle of the pyramid caught a glimpse of the egregious rent capture by those exercising power and influence – coupled with opportunist and disingenuous whipping up of continuing discontent by deluded left-wing groupuscules – contributed to this weakening (and explains the amounts of political effort and capital that have been expended to put the issue to bed).

    It would be difficult to see something like this erupting in the Scandinavian countires. But,equally, it is difficult to envisage the emergence in Ireland of the significant minority “nativist” parties that may be found there. Ireland’s existing system seems to be able to absorb these reactionary, nativist, confessional urges. But at what cost to the process of governance?

    1. @Paul Hunt

      Its not just GDP. Take unemployment. From the figures out yesterday Ireland’s unemployment rate has caught up with Denmark’s. Its now 6.2% in both countries. However, its falling much more rapidly in Ireland and very likely to go below Denmark’s in coming months. Both are already below Sweden (6.4%) and much lower than Finland (where last time i checked it was around 9%). By the way, my prediction that I posted here 3 or 4 years ago that Ireland’s unemployment rate would hit 5% by September 2017 (it was then 12%) looks like being WRONG (but not my much).

      Your favourite theme here is the ‘comparative price level’ in Ireland v other EU countries. But, the comparative price level in Nordic countries is consistently much higher than in Ireland. Denmark’s is especially high. Ireland’s level is consistently higher than on other western European countries (except Britain where it varies according to the exchange rate), but consistently lower than in the Nordic countries. Based on price levels, Denmark is a lot less competitive than Ireland (but I agree that this isn’t the only factor and competitive in many other areas). So, if price levels are caused by ‘rent capturing’ (which I have no idea what it is, but will take your word for it that its the cause), then the problem would seem to be worse in Denmark and the other Nordic countries than in Ireland.

      1. Thank you, John. I’m sure you’re well familar with the ancient observation that “all comparisons are odious” – and that’s what I’m trying to highlight. It’s not that nothing can be learned from the experience of other countries, but so much of this “comparative analysis” in Ireland is either displacement activity (to avoid confronting specifically Irish challenges) or the projection of ideological fantasies – or sometimes both.

        And as for the point you raise about comparative prices, yes, of course, the much higher levels and incidence of taxation in Denmark feed in to higher prices. But this taxation facilitates much higher levels of actual individual consumption per capita.

        And I’m also sure you’re well aware that rent capture is simply securing rewards and returns in excess of those that would be generated by efficient competitive markets or the application of effective regulation. Nobody in Ireland, of course, will admit to the capture of rents. Every individual in this game believes he or she is perfectly entitled to the rewards and returns they secure. And so it goes on.

    2. @Paul Hunt

      Very true about left-wing academics viewing Scandinavian countries through rose-tinted spectacles.

      This morning they are agitated because Ireland won’t reveal how it voted re Saudia Arabia ay the UN

      But, it turns out that the feminist government in Sweden are doing exactly the same.

      https://theoldcontinent.eu/sweden-saudi-2/

  3. Small countries exert a fascination for a number of reasons. First, they are less studied than their larger counterparts, not least because they are assumed, on the basis of size and significance, to exercise less influence on the prevailing geopolitical system as a whole. Their relationship with larger more powerful states is invariably asymmetric – in trade, cultural and economic terms as well as military, or so-called ‘hard power’ capabilities.

    They have fewer resources, so must pick their issues – and battlegrounds – with considerable political acuity.

    In transnational settings they rely on alliances with larger states to achieve anything that synchronises with their own national objectives. Further, they find it difficult to co-ordinate their immediate national objectives with those of other smaller states with whom they may be (a) frequently in competition for markets, or influence, within the same larger contiguous entity; or (b) they may have particularised preferences of little significance beyond their own shorelines. Such is Ireland. Such is Denmark.

    For well over a century, however, both countries have long been the object of comparison; not least because of their competition for the British agri-products market, a competition in which the Irish generally fared less well to their Danish competitors despite obvious ties of geography, politics and culture with the ‘mainland’ to which they were politically co-joined for most of the period in question

    This 2004 piece by Kevin H. O’Rourke provides a useful overview of 19th and early 20th century experiences of Danish and Irish competition for the UK agrifoods market..

    http://www.tcd.ie/Economics/staff/orourkek/kordartmouthfinal.pdf

    From my own research perspective, one of the most interesting aspects of ‘small country’ power and influence in our current ‘uncertain’ geopolitical environment lies in small state resilience. In particular the capacity of small state to adapt quickly to changing circumstances. Further, small countries throw a an illuminating, if frequently unflattering, perspective on the broader context within which they seek to thrive; not least the deficiencies of political values, and political competencies, of their most immediate larger political neighbours.

    Comparing Ireland with Denmark is thus also about comparing models of broader continental integration – Denmark within the Scandinavian region. But also in its relationship with Germany as a potential ‘large country’state with hom it may ally in the pursuit of shared political objectives and common values in particular contexts ; and an Ireland, thus far at least, which remains locked into the economic , political and cultural ties of its relationship with the UK.

    I look forward to the forthcoming conference. Brexit isn’t explicitly mentioned. However, the implication of Brexit for Irish and Danish economic interests are, at this stage, well-flagged. The conference is timely and its outcome may shed some light into some dark and dusty corners.

  4. I don’t think there are too many dark and dustry corners in to which some light needs to be shed in either jurisdiction. While shady, citizen-abusing deals are concocted with official approval (and often official facilitation) among and between powerful special interests behind closed doors in all jurisdictions it is something of an art-form in Ireland. Once the deals are done the outcomes are presented as faits accompli and there is often a blizzard of information put in to the public domain. The combination of secrecy in the decision-making process and the subsequent optical illusion of transparency makes it very different from similar practices in Denmark or other north European jurisdictions. The protagonists in Ireland are confident that the deals can’t be unpicked and the volume of data deters scrutiny. It’s amazing how much is “hidden in broad daylight”. The media hacks are either insufficiently resourced or just too lazy and stupid to dig in to the material. And they are well aware that upsetting unnecessarily those exercising political or economic power is not career-enhancing.

    It is very rare, but on occasion one or more of the special interests involved lose the run of themselves before all aspects of the deal are in place and present publicly a glimpse of the stitch-up. This is what happened with the water charges – and the rest is history.

    Another important issue is the impact of the Leprechaun economics antics of the domestic political and economic players who facilitate and service the MNC enclave. This enclave is not fully integrated in to the economy – it wouldn’t be an enclave if it were. But at one end of a spectrum there is considerable interconnection that diminishes to a “brass-plate” existence at the other end. This does not surface very much as an issue in Denmark or other north European jurisdictions.

    But there is very little interest in examining these issues which characterise and define much of the activity in the Irish economy.

Comments are closed.