Theory, Evidence and Implications
Edited by Phillip H. Phan, Sankaran Venkataraman and S. Ramakrishna Velamuri
Chapter 6: A Comparative Analysis of the Development of Venture Capital in the Irish Software Cluster
1 Frank Barry and Beata Topa INTRODUCTION The dramatic economic progress achieved by Ireland over the course of the 1990s and beyond had seen this period come to be dubbed the ‘Celtic Tiger’ era. Over the course of a little over a decade, Irish real national income per head rose from less than 65 per cent of the Western European EU average to achieve rough parity by the end of the 1990s. Unemployment tumbled from a high of 17 per cent in 1987 to less than 4 per cent in the early years of the new millennium, and employment expanded by a dramatic 70 per cent, driven by the decline in unemployment, an increase in the proportion of married women in the labour force and a shift from massive emigration to substantial immigration. The series of beneﬁcial shocks – policy induced and otherwise – to which the economy was subjected in the late 1980s have been much explored. These included a change in ﬁscal strategy in 1987. The reining in of government expenditures at that time made room for future tax reductions. Successive governments used the newly emerged ‘social partnership approach’ – which sees government, unions and employers come together every three years to agree a general path for wages and working conditions over the course of the coming years – to purchase wage moderation via the promise of future tax cuts. Such tax cuts have been estimated to account for about one-third of the rise in real take home pay since the...
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