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Trade, Investment, Integration: The Economics of Irish Foreign Policy

Frank Barry
Trinity College Dublin
September 2011

IIIS Discussion Paper No. 381

Abstract
A country’s foreign policy is largely driven by what it perceives to be in its economic interests.  That this does not provide a complete picture is evidenced by the fact that Irish development assistance has never taken the form of tied aid.  Nor can the influence of powerful vested interests be discounted.   A case can be made that Ireland turned protectionist again once membership of the European Union had been achieved.  Agricultural and sheltered-sector interests have sought to stymie the liberalisation efforts of the WTO and the European Commission respectively.  A further complicating factor is that a society’s own economic interests can occasionally be miscalculated.  Joseph Lee has noted that “while the ‘political’ skills of Irish representatives in negotiating positions are widely acknowledged... there seems to be no comparable criterion for assessing the calibre of conceptualisation of the Irish case.”  Irish foreign policy through the years has nevertheless recorded many successes in defending the economic interests of the citizens of the state.

The paper considers the political and economic determinants of Irish trade policy, the evolution of its inward foreign direct investment strategy, and the country’s position on international migration and on the broadening and deepening of European integration.  A separate case study focuses on how successive governments have sought to defend and exploit the advantages of Ireland’s low corporation-tax regime in international negotiations. 




 


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