Introduction

Economic growth has made a welcome return to the headlines in the economics profession. Technical advances have made it possible to model the growth process rigorously in the presence of externalities and increasing returns, and this has spawned a vast literature formalizing many of the intuitions about growth previously held by applied economists and economic historians. Whether or not there are diminishing returns to capital, it seems clear that there are diminishing returns to theory, in this field at least. Theory urgently needs to be supplemented with empirical work, be it multicountry regressions or case studies, if the field is to retain its present vigour.

We believe that Irish economic history offers many potential lessons for students of economic growth. While Dowrick and Nguyen (1989), Mankiw et al. (1992) and Freeman (1989) incorporate Ireland1 in their work, Ireland is excluded from consideration in well-known studies such as those by Calmfors and Drifrlll (1988), Crafts (1992) and Barro and Sala-i-Martin (1991). The last-mentioned (p. 151) go so far as to exclude Northern Ireland from their study on the grounds that it is 4a substantial outlier for the United Kingdom’! This seems to us mistaken: many of the theoretical issues explored by growth economists have resonances in the Irish experience. In this century, Ireland has swung from extreme protectionism to extreme openness. Its development strategy has at times favoured the exploitation of its comparative advantage in agriculture, at other times has been based on import substitution, and most recently has relied on the capital inflows and technology transfer associated with (heavily subsidized) foreign multinationals.