For many decades Ireland's output per capita ranked about twenty-fourth among the world's industrial nations. Suddenly, in the mid-1990's Ireland started to move up, from twenty-second in 1993 to eighteenth in 1997 and an amazing ninth in 1999. The many facets of Irish success over these years, from a disproportionate representation in popular music to the largest current account surplus in the industrial world, caught the public imagination at home and abroad. This article examines the startling turnaround in Irish economic performance that began in the mid 1980's. Ireland is not alone in having experienced severe macroeconomic imbalances in the past quarter century, but their amplitude has been greater than in almost any other OECD country. The early 1980's saw the worst extremes. In 1981 inflation was 21 percent, the current account deficit was about 15 percent of GNP. and public sector borrowing was running at an even higher rate. The attempt to rein in the twin deficits caused taxation to jump by 10 percentage points of GNP in seven years, while overt unemployment soared to 16 percent of the labor force in 1986 and net emigration approached 1 percent of the population.
