New policy consensus Macroeconomic stability Trade liberalisation Competition Trade openness
Statistical and Social Inquiry Society of Ireland
McAleese, D. 'Economic policy and performance: the Irish experience'. - Dublin: Journal of the Statistical and Social Inquiry Society of Ireland,Vol. XXVII, Pt. V, 1997/1998, pp3-32
Journal of the Statistical and Social Inquiry Society of Ireland Vol. XXVII, Pt. V
This year we celebrate not just the 150th anniversary of the Statistical and Social
Inquiry Society of Ireland (SSISI). The session 1997-98 also coincides with the 40th
anniversary of the founding of the European Community, and the 25th anniversary
of Ireland’s accession to membership. As such, it is timely to take stock of the
economic effects of the change in policy orientation signalled by the deepening
commitment to integration both within Europe and between Europe and Ireland. In
so doing, we shall also assess the challenges that the process of globalisation may
pose for the Irish economy into the next century. This address is discursive in nature and focuses on broad themes related to Ireland’s
economic development and Europe. It is divided into five sections. First the shift in
thinking about economic policy over the past two decades is outlined. The new
policy paradigm has been described by some as the Washington consensus, but its
origins are only partly attributable to the international agencies in Washington DC
and for this reason I call it the New Policy Consensus (NPC). The NPC has three
pillars: competition and the market system; macro-economic stability; and trade
liberalisation and openness.
Second, the response of Irish economic policy to the NPC is sketched. Particular
attention is devoted to the openness pillar, where Ireland gained first-mover advantages. Openness is defined in a broad sense to include free international
exchange of goods, services, capital and labour.
Third, the reasons for Ireland’s adoption of the NPC are analysed. The sequencing
of how the different pillars were introduced is an important aspect of this discussion.
Fourth, the effect of adopting the NPC on Ireland’s economic performance is
assessed. Policies of integration are directly linked to the explosive growth of Irish
exports, the influx of multinationals, the liberalisation of foreign exchange markets,
and the virtual disappearance of the balance of payments constraint and, for Ireland,
the novel problem of inward migration.
Finally, the implications of Ireland’s adoption of the new policy consensus are
explored. An independent Irish government has voluntarily relinquished the use of
trade protection and restrictions on foreign investment as an instrument of economic
development, the Irish pound is being replaced by the euro, and fiscal independence
has been eroded. Meanwhile steps towards even deeper European integration
portend further centralisation. Ireland has to a large extent reverted to the small
regional economy it was one hundred years ago, except that now Brussels has
replaced London at the core of the system. What does this mean for Ireland’s future
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