Irish export model needs nurturing

One of the biggest mistakes policymakers made after 2000 was to disregard the notion that Ireland is, first and foremost, an exporting nation that would never have a domestic market of sufficient size to sustain itself.

Unfortunately, we bought in to the notion that the external didn’t really matter and that, because of favourable demographics, we could increasingly sustain an economic model based on domestic demand and particularly on the notion that it made sense to import workers to build houses that they themselves would rent. It was a totally stupid and unsustainable notion and it took the mother of all economic crises to force us to reconsider and hopefully to mend our ways.

There is an old saying to the effect that one should never waste a good crisis. Hopefully, the lesson we will have learned from our crisis is that becoming too inward-focused is a dangerous mistake. Ireland is a textbook example of a small open economy where two-way trade accounts for a massive proportion of national output. Our policymakers need to ensure that we increasingly focus on policies that will enhance the growth potential of the economy in a sustainable way and create a high-value-added, dynamic, innovative and productive economy, with strong exports feeding into, and supporting, the domestic economy.