Most experts agree that Ireland’s membership of the European Union has greatly facilitated our move from an agricultural based economy to one driven by hi-tech industry and global exports.
Back in the 1950s, while many other European nations were benefiting from a phase of rapid post-war industrial based recovery, Ireland’s economy was struggling badly.
Unemployment was rife leading tens of thousands of workers to leave home and seek employment overseas. Between 1951 and 1961 the net loss of Irish citizens to emigration was over 400,000 and the population dropped to just 2.8 million.
In a world where industrial trade and international co-operation was becoming the norm, Ireland’s mostly agricultural export market was completely dependent on selling to the UK, which itself was one of the slowest growing western nations after the war.
To make matters worse, while most countries protected their agricultural sectors Britain’s policy at the time was to allow overseas farm products into its market at low prices in order to keep food prices at a minimum.
Low food prices meant low wages and this helped the UK’s manufactured export industry remain competitive, but there was little advantage to Ireland in selling its farm produce at prices that left little room for profit.
In the 1960s Ireland had begun to move away from its traditional but outdated economic policy of protectionism, which restrained trades between states by way of tariffs, largely thanks to measures adopted from a study on economic development compiled in 1958 by officials at the Department of Finance led by one of Ireland’s greatest economists, Dr TK Whitaker .
The nation was preparing to move towards a free market economy, and being a part of the developing European Economic Community was seen as a crucial step in creating a new economy.
Despite moves to boost other industries, agriculture remained the country’s most important trade sector and EEC membership in 1973 meant it could prosper like never before.
The EEC’s Common Agricultural Policy provided farmers with a single price level for selling goods that was fixed at a much higher rate than what was available in the only market open to them at the time –the UK.
While improvement of the agriculture sector under EEC membership had been expected, its impact on the development of other parts of the economy was less anticipated.
The opening of continental markets to locally made industrial products enabled Ireland to attract substantial industrial investment in manufacturing while structural funds from Europe helped improve roads and public transport. There was also money made available for training schemes which helped upskill the workforce.
The economy began to develop and the net outward flow of emigration reversed. During the 1970s around 100,000 immigrant Irish workers and their families returned home and this coupled with a rising birth rate helped the population to grow by over 400,000 in ten years.
Jobs in protected industries were lost, but new and better paid work was created through foreign investment in manufacturing sectors like pharmaceuticals, metals and machinery.
This in turn led to more employment in business services and Ireland started to shift away from dependence on agriculture.
The new market environment together with decisions to introduce low corporate taxes and develop an Industrial Development Agency (IDA Ireland) to promote Ireland abroad enabled Ireland’s new economy to flourish.
Irish business was at last able to trade and compete on an equal footing in markets outside of the UK. And when the continental market was opened up to Irish goods, the country also became attractive to US owned multi-nationals investors and, to a lesser extent, investors from other non-EEC countries.
Like the rest of the EEC members, Ireland was not immune to global factors and two major oil crises in the 1970s, coupled with what were in retrospect poor budgetary policies by successive Governments led to a return to high unemployment and emigration.
However, with the help of funding from the EU, Ireland’s infrastructure had been substantially developed and education standards improved making the country even more attractive than in the 1970s for outside investment when financial policies changed and the world economic downturn reversed.
The current world-wide economic crisis is another challenge, but thanks to Ireland’s transformation into one of the world’s most successful economies during the late 1990s and the early years of the 21st century, the country is in a better position than most to benefit from recovery.
THE SINGLE EUROPEAN ACT
During the 1980s business and political leaders across Europe became increasingly discontent with economic policy discrepancies between the EEC family of nations.
The European common market, established by the Treaty of Rome in 1957, had made trade easier, but the creation of a single market would help remove barriers to the movement of labour, capital, goods and services between member states.
The Single European Act abolished national vetoes in areas relating to the single market and it gave more powers to the European Parliament. It was the beginning of the European Union as we know it today.The act was signed in Luxembourg on February 17 1986, and in The Hague on February 28 1986.
The Irish Government at the time, led by Charles Haughey , was eager to sign up to the act which was supported by most of the opposition parties as well as employers’ and farmers’ representatives.
However, a Supreme Court challenge confirmed that the constitution needed to be amended before the act could be brought into force and so the nation was asked to vote on the change.
A referendum on the issue held on May 26 1987 was passed, with 69.9 per cent of voters supporting the amendment.
The amendment was signed into law on June 22 and the Single European Act came into effect on July 1 1987.
The Single European Act committed member states to creating and developing the European Union as we know it today.