The bottom line is that real per capita income in the two countries was not very different in the early 1990s but became twice as large in Ireland by 2006. How could that happen?
The answer to this question may well matter since Ireland and Portugal in 1995 were in a situation not unlike that of some new Member States now (though, as we have seen, for some of them the starting point is significantly lower). 19 One approach to understanding the difference can be found in growth accounting exercises.