Connecticut is at a critical crossroads and is searching for a way to improve its economic plight.

There exists a wonderful historical model that may provide a path for economic revival from a similarly sized country just across the Atlantic. Connecticut should look no further than Ireland in 1958. The historical similarities between the two are similar.

Today, the Connecticut economy is struggling mightily. Personal income grew by only 1.5 percent last year compared to 2.4 percent in Rhode Island and 3.3 percent in Massachusetts. Connecticut’s labor force has receded by 26,500 since January 2017 and the state economy shrank by 0.2 percent after adjusting for inflation.

Sixty years ago, Ireland faced a similar dark predicament. As 1958 began, the country faced economic depression, chronic out-migration and unemployment. Sound familiar?

T. K. Whitaker was named secretary of the Department of Finance and charged with making a plan to restart the Irish economy.

Whitaker’s plan, First Programme for Economic Expansion, 1958, transformed the Irish economy — from fiscal austerity, massive out-migration, near bankruptcy and political instability — to a country that is the envy of Europe and the world (9 percent growth this year, 5 percent forecast for next year) and provides a road map for the Nutmeg State.

Whitaker framed his challenge in stark terms that could be applied to Connecticut today: “We have come to a critical and decisive point in our economic affairs. It is only too clear that the policies we have hitherto followed have not resulted in a viable economy.”

The Programme, radical at the time, was a detailed, meticulous and practical framework outlining five specific change initiatives.

First, non-productive capital expenditures by the government were cut, and it was forced to balance the annual budget. Second, the new budget refocused spending to drive investment and created tax incentives to encourage capital investment in Ireland. Third, an aggressive free trade program was designed and implemented, and the protectionism was abandoned. Fourth, a target growth rate of 2 percent to 4 percent for the economy was established.

Fifth, was in economic development. Whitaker created two powerful and innovative economic development bodies that were outside the formal government structure: 1) The Industrial Development Authority was created to attract foreign investment in Ireland; 2) Córas Tráchtála, which became Enterprise Ireland, was to help business grow and sell out of Ireland into global markets. These twin pillars of Whitaker’s “new economy” continue today as flexible, innovative and responsive business support entities.

Whitaker’s plan brought prosperity along with profound social and cultural changes to what had been one of Europe’s poorest countries. Emigration substantially declined; access to education broadened; consumer spending increased and business growth ensued.

Today, Ireland is a stable, competitive, secure and pro-business country. As part of the EU Single Market, the Irish economy is the fastest growing in the Eurozone and the sixth most competitive in the world. Ireland has a highly skilled, educated, young and multicultural population of highly adaptable workers.

As in Connecticut today, with dramatic policy shifts and rapid technological change, Whitaker in 1958 correctly identified that agility is the key to economic growth and competitiveness.

His work could provide a framework for Connecticut to change course and become competitive again with an economic driven focus and by creating a similar two-pronged quasi-government agency economic development structure that promotes investment in Connecticut and provides support for in-state companies to export out.

Additionally, with the coming United Kingdom Brexit from the European Union, Connecticut has an opportunity to work collaboratively with Ireland to position itself (notionally) as the 28th member of the EU and “replacing” the UK after it leaves. With the ongoing commitment of Aer Lingus at Bradley and its many flights to Ireland and the EU, large new market opportunities abound.

The lessons learned from T.K. Whitaker 60 years ago, of identifying “potentialities” and “deficiencies” across the Irish economy and then quickly changing policy and business practices, will serve Connecticut well as it seeks to revitalize and restart its economy.

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Published On: October 1st, 2020 / Categories: Business /

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