Ireland’s Trading Patterns Within The EU

• From 1922-1973, Ireland’s trade was small, dependent on the British market (which was responsible for 96% of Irish exports) and composed of the exports of cheap food and raw materials.
• Ireland was in the grip of neo-colonialism, meaning that they had become economically dependent on a dominant (Britain) economy.
• Ireland imported more than exported, which caused an unfavourable balance of trade. Every year, there was a deficit in trade.
• Between 1973 and 2006, there have been huge changes in Irish trade.

Changes in the Value of Irish Trade

• Between 1973 (the year that Ireland joined the EU) and 1986, Ireland still had a trade deficit.
• This deficit was caused by high cost of imported energy, in particular oil, and the low value of food exports and manufactured goods produced in branch plants of MNCs (multi-national corporations).
• From 1987, Ireland has had a favourable balance of trade. Ireland now has a trade surplus.
• This is because of reduction in energy costs, until 2005. Since 2005 until 2008, energy costs have risen. Production of high-value products in the plants of MNCs such as Dell and Intel have also contributed to increased exports.
• There has been an export led economic development policy in the last 20 years in Ireland, and improved infrastructure (transport and communications) has reduced costs. These developments took place during the era of the “Celtic Tiger” economy.
• In 1975, Ireland imported €3 billion worth of goods, but exported only €2.5 billion. In 2005, Ireland has a trade surplus of €28 billion.
• As stated earlier, up to the 1970s Britain was Ireland’s major trading partner (dominant/dependant relationship). Most of Ireland’s imports still come from Britain, but the percentage of imports from Britain is falling.
• Most of Ireland’s exports go to the rich, developed world. The changes in Ireland’s trading patterns reflect Ireland’s entry to the EU and the influence of MNCs in exporting high-tech products to developed markets, e.g. electronic, chemicals and pharmaceuticals.
• Until 1973, Ireland’s exports were dominated by agricultural products, which accounted for approximately 40-45% of all Irish exports.
• There have been great changes in recent years as a result of EU entry, a small home market, export-led economic development and the influence of MNCs.
• Despite the benefits of the EU CAP, the decline in the importance of agricultural exports has not been halted.
• Between 1980 and 2000, the value of chemical exports grew from €0.1 billion per year to €17 billion. Pharmaceuticals grew from €0.1 billion to €9 billion annually.
• Data Processing Machines and Electrical Machinery grew from €2.3 billion and €0.3 billion to €22 billion and €9 billion annually respectively.