ABSTRACT
Foreign trade is particularly important for small countries: ceteris paribus they tend to participate in international trade to a greater extent than large countries, in order to reap the benefits of specialisation and exchange, which large countries can partly achieve by trading internally. The ratio of exports plus imports of goods and services to GNP in Ireland was about 80 per cent in the 1920s. This was a high figure in comparison with other countries at this time, and arose from the small size of the economy and the fact that Ireland had free trade for a century prior to independence. As described in earlier chapters, Ireland switched to a policy of protection in the 1930s but has gradually returned to free trade in the period since the Second World War. In this chapter we explore this experience in more detail. Section 9.1 outlines developments in merchandise trade; section 9.2 discusses invisibles and the balance of payments; and section 9.3 considers key aspects of Ireland's trade performance and its relation to economic development.
