Dynamics of the SME sector in Ireland: A driver of growth in the Irish economy since 1994?

Helena Lenihan, Briga Hynes and Mark Hart INTRODUCTION The extraordinary growth trajectory of the Irish economy (the ‘Celtic Tiger’) since 1994 has attracted a great deal of interest, commentary and research both within and outside of Ireland. The Central Bank of Ireland reports for 1992 and 1999 clearly highlight the scale of this transformation. In the 1992 Annual Report it states ‘Real GNP growth seems likely to be in the region of 2 per cent in 1993 slightly higher than the 1.75 per cent estimated for 1992… The standardised Live Register unemployment rate will probably average 17.75 per cent for 1993 compared to 16 per cent in 1992' (Central Bank of Ireland, 1992, p. 9). By the summer of 1999, the assessment had changed dramatically ‘The Irish economy continues to expand at a very rapid pace… the volume of GNP is estimated to have grown by about 8 per cent last year and further growth of about 6.5 per cent is projected for 1999, with a similar rate of growth likely next year’ (Central Bank of Ireland, 1999, p. 5). Irish GNP per head in 1987 stood at 59 per cent of the EU15 average, largely unchanged from its 1960 position, but by 1997 it had risen to 88 per cent (Barry, 1999, p. 1). This growth was clearly transmitted to the labour market as over the same period the numbers at work increased at an annual average rate of 2.1 per cent, and the unemployment rate fell from 17.1….