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Diversifying External Linkages: The Exercise of Irish Economic Sovereignty in Long-Term Perspective

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  • Frank Barry

    (Institute for International Integration Studies, Trinity College Dublin)

Abstract

Political independence is usually associated with an attempt to reduce economic dependency on the dominant or former colonial power. For most of the early period since Irish independence the attempt to reduce exposure to the UK was implemented through tariff protection and restrictions on foreign ownership, though Ireland and the UK maintained (and continue to maintain) a common travel area agreement. Inward orientation eventually ran out of steam, culminating in sustained emigration and deep recession in the 1950s. The genesis in the mid-1950s of Ireland's low corporation tax regime facilitated later trade liberalisation and diversified the economy away from the UK. Full convergence on UK and broader Western European living standards was eventually achieved in the 1990s. From 1979 the UK would diverge from most of the rest of Western Europe on exchange-rate policy and Ireland was forced to choose between irreconcilable options. The resulting difficulties can be ascribed to design flaws in the European monetary project and Ireland's failure to recognise the constraints that the new regime imposed.

Suggested Citation

  • Frank Barry, 2014. "Diversifying External Linkages: The Exercise of Irish Economic Sovereignty in Long-Term Perspective," The Institute for International Integration Studies Discussion Paper Series iiisdp448, IIIS.
  • Handle: RePEc:iis:dispap:iiisdp448
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    References listed on IDEAS

    as
    1. P. Honohan, 1997. "Currency board or central bank? Lessons from the Irish pound’s link with sterling, 1928-79," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 50(200), pages 39-67.
    2. Patrick Honohan & Gavin Murphy, 2010. "Breaking The Sterling Link: Ireland’S Decision To Enter The Ems," The Institute for International Integration Studies Discussion Paper Series iiisdp317, IIIS.
    3. N/A, 2009. "On the Recession," Local Economy, London South Bank University, vol. 24(3), pages 253-253, May.
    4. Frank Barry, 2011. "Foreign Investment and the Politics of Export Profits Tax Relief 1956," The Institute for International Integration Studies Discussion Paper Series iiisdp357, IIIS.
    5. William Hynes, 2014. "To what extent were economic factors important in the separation of the south of Ireland from the United Kingdom and what was the economic impact?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(2), pages 369-397.
    6. Frank Barry & Adele Bergin, 2012. "Inward Investment and Irish Exports over the Recession and Beyond," The World Economy, Wiley Blackwell, vol. 35(10), pages 1291-1304, October.
    7. O'Rourke, Kevin, 1991. "Rural depopulation in a small open economy: Ireland 1856-1876," Explorations in Economic History, Elsevier, vol. 28(4), pages 409-432, October.
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    Cited by:

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    More about this item

    Keywords

    Ireland; Economic History; Economic Development; European Integration; Foreign Direct Investment; Protectionism; Single Currency;
    All these keywords.

    JEL classification:

    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-

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