(Bloomberg) -- President Javier Milei aspires to reform Argentina’s economy in the way Ireland turned around its fortunes over the past three decades. The Irish see more nuance to their own story.
The libertarian outsider, who swept to power last year, has taken to invoking the European country in his fiery yet frequently academic speeches. While gross domestic product in the crisis-prone South American nation is set to contract 3% this year, it’s expected to rebound strongly into growth in 2025 as Milei’s austerity plan begins to pay off.
“My model is similar to Ireland,” Milei said in a keynote address to an October business conference in the Argentine resort city of Mar del Plata. “Ireland went from being the most miserable European country 40 years ago to today having GDP per capita 50% higher than in the United States.”
Ireland took notice of its newfound attention in Argentina. Its embassy in Buenos Aires hosted economist Alan Barrett, director of the Dublin-based Economic and Social Research Institute, this week to speak with Argentine press, policymakers and the public about how Ireland achieved its economic gains.
Since Milei started referencing Ireland, officials there have seen “sustained interest” from Argentines that “tended to focus on Ireland’s GDP, its business friendly environment and its open economy,” according to an Irish foreign affairs department spokesperson. “The purpose of the visit was to share insights on Ireland’s economic model, including both its challenges and successes,” the spokesperson added.
Although Milei focuses on GDP per capita, Barrett clarified that Irish economists don’t consider it the most accurate picture of the economy because the figures are so inflated by corporate income — particularly from foreign multinationals that are based there. It doesn’t reflect the country’s real or domestic income.
Instead, Barrett said, Ireland tends to focus on gross national income, or GNI*, a metric that tries to capture Ireland’s economic performance while stripping out the corporate income effect.
“GDP doesn’t really reflect the lived reality in Ireland,” Barrett said in an interview a day after he spoke at Argentine think tank CIPPEC in Buenos Aires. “It’s still the case that if you look at GNI*, Ireland is still doing quite well. It’s not as extraordinarily well as if you look at GDP per capita.”
While Ireland’s GDP is up 87% since 2015, GNI* is up 72% over that time, according to the country’s statistics agency. The Irish finance ministry has also been using modified domestic demand to calculate underlying activity that covers personal, government and investment spending in the country.
Barrett acknowledged that comparing some aspects of Argentina and Ireland are like apples and oranges. Ireland benefits from major corporate investments and its European Union membership, while Argentina remains a protectionist country that depends on commodity exports. They do share cultural ties, however: Argentina is home to the largest community of Irish descendants in Latin America.
The Irish economist also underlined that, on top of reducing its corporate tax rate, the government’s public investments over decades in education and infrastructure — two areas in which Milei has aggressively slashed spending — became pillars of Ireland’s recruiting pitch to major multinationals like Apple Inc. and Meta Platforms Inc., which have their European headquarters there.
“In Ireland, a lot of government expenditure improves the productive capacity of the economy,” Barrett said. “Education expenditure is seen as one of the ingredients in the Irish success story.”
