Lessons from the Irish Collapse: Taking an International Political Economy Approach

Abstract

In analysing the causes and implications of the collapse of the Irish economy in 2008, this article takes an International Political Economy approach to examine the structures of interlinked economic and political power that help explain why economic and political leaders acted as they did. It begins by outlining the Irish model of development and identifying three key weaknesses, arguing that these were essential features of the Irish growth model. The article then argues that, more than international factors, these weaknesses help explain the nature of the Irish economic collapse. The penultimate section discusses the lessons to be learnt from the Irish case and, drawing from literature on small states, focuses on the failures of policy makers to recognise the vulnerabilities of the Irish model, and on the weaknesses of social partnership to address these vulnerabilities. Finally, conclusions are drawn that identify policies needed for dealing with the crisis.