Newfoundland and Ireland

Damian Penny of Daimnation! has an interesting post on possibilities for economic development in the Maritime provinces. One passage particularly caught my eye:

As Ireland and much of the Southern U.S. have proven, it is possible for historically poor, underdeveloped areas to break out of their rut and develop proserous economies. They've done it largely through favorable tax regimes which attract investment; high spending on education, to improve the skills of the local workforce; and, above all, shaking off the fatalistic attitude that they'll be poor forever.

I think the (possible) parallels between Newfoundland and Ireland are particularly striking. They are almost mirror images in many ways, though these ways do not (yet) include economic development. Ireland took advantage of several factors to attract lots of American and other companies:

1. High unemployment: lots of people eager for jobs.
2. Advantageous exchange rates. Most foreign currencies went a long way in Ireland, and still do in Canada.
3. Low population density. There is plenty of room for inexpensive electronics factories not too far from the international airport.
4. A population that is English-speaking and near-100% literate, with a large percentage of the population much more than just barely literate. (There are some monoglot Francophones on this side of the Atlantic, but there are a few monoglot Gaelic-speakers over there, and I imagine French is less of a barrier to international trade than Gaelic.)
5. Convenient locations on the main transAtlantic trade route. Lots of planes stopped in Dublin even when the place was an economic basket case, so building up trade was easier than most places. The same is true for the Atlantic provinces: the trick is to convince people to stick around for more than just refueling.

Of course, lots of places have the first three, it's numbers 4 and 5 that put Ireland (and could put Newfoundland) ahead of Cameroon and Estonia and Paraguay.

As I recall -- and Penny seems to agree, at least partially --, all Ireland had to do was cut taxes and regulations, and the foreign high-tech corporations started pouring in. It seems to me that Newfoundland is the Western Hemisphere's Ireland, and fulfills all five of the conditions listed. So why can't a similar takeoff be arranged?

I'm guessing that it's because of the one big difference: Ireland is an independent country and controls its own tax rates (though the EU is trying to change that). I suppose Newfoundland could cut provincial taxes and regulations, but there would still (wouldn't there?) be ridiculously oppressive national ones to worry about.

Posted by Dr. Weevil at May 30, 2002 11:01 PM