Ireland’s Experience with Regional Integration Alan Dukes. Black Sea Conference on Regional Integration and Inclusive Growth February 23-24, 2009.

Ireland’s Experience with Regional Integration. Ireland’s experience with regional integration is the history of its involvement with the EU. ► Joined EEC in January 1973 ► Participated in all economic, monetary and social programmes ► One of the 11 founding members of the Eurozone

Ireland pre-integration ► Independence from UK in 1922: Irish Free State becomes Republic only in 1947 ► Until 1998, Irish Constitution implied claim to sovereignty over Northern Ireland (part of UK) ► “Economic War” with UK in 1930s: Ireland did not “win” ► Economic protectionism until 1960s

Ireland pre-integration ► Economically dominated by large neighbour (UK) ► Currency union with UK until 1979 ► Underdeveloped agricultural sector was mainly a commodity supplier to UK market, prices determined by UK cheap food policy but without access to UK domestic price supports ► Indigenous industry sector stagnated behind tariff wall until 1960s

Ireland pre-integration ► Trade relations with UK skewed ► From 1957, Ireland was outside EEC tariff and levy wall for food products, tariff wall for industrial products ► Political relations with UK unequal ► Modernisation and opening of economy began in 1960s, accompanied by measures to attract FDI

First steps toward integration ► Ireland applied for EEC membership at same time as UK, motivated by - need to gain access to non-UK European markets - need to gain access to non-UK European markets - difficulty of being outside EEC once UK became a member - difficulty of being outside EEC once UK became a member ► Ireland and UK finally joined on Jan. 1, 1973

Effects of integration Significant European events and policies ► Common Agricultural Policy (CAP) ► Break with £Stg 1979 ► European Social Fund and HR development policy ► European Regional Development Fund, 1975 ► Direct elections to European Parliament, 1979

Effects of integration Significant European events and policies ► Cohesion Funds, 1986 (economic and social cohesion recognised as Treaty objectives) ► Single market programme 1992 ► Successive enlargements to 27 Members ► GATT Uruguay Round ► Successive CAP reforms

Effects of integration Significant European events and policies ► Maastricht Treaty 1992 sets up EMU, opens way to euro ► Euro introduced in 1999, currency comes into circulation in 2002 ► Energy policy and climate change policy become issues in EU domain ► EU takes on external security roles

Assessment of Irish experience of regional integration ► A small State has significantly reduced its economic dependence on a much larger neighbour ► A small State has been put on a politically equal footing with a previously-dominant neighbour ► A previously isolated State has become an active part of an influential bloc

Assessment of Irish experience of regional integration ► There have been major economic, social and political gains ► Public capital expenditure efficiency gained from external oversight ► Externally-imposed criteria in SGP supported prudent fiscal policy (until early 2000s) ► Close collaboration with UK in EU context helped to secure 1998 agreement in NI

Deficiencies in EU model of regional integration (unofficial view) ► Integrated monetary policy in Eurozone not accompanied by sufficiently integrated fiscal and economic policies ► Integration of foreign policy even weaker than that of economic policy Conclusion: EU is a good integration model but remains a significant under-achiever, both internally and externally.