The Anglo-Irish Treaty of 1921 split Ireland into two separate political units, Northern Ireland and the Irish Free State. In economic terms, the change made little difference for a decade or so: the Irish Free State pursued a liberal trade policy aimed at consolidating its comparative advantage in extensive agriculture. The South therefore maintained free access to United Kingdom markets, and imposed few tariffs in turn. This outward-looking policy changed after the general election of 1931: the average nominal tariff rate rose from about 9% in 1931 to 45% in 1936, and was to remain high until the 1960s. While the South attempted to become more self-sufficient through protection, Northern Ireland's economy remained more open because it maintained full economic union with Great Britain.
The economic structures of the North and the South in the 1960s have often been compared: three decades of contrasting commercial policy, should, it is argued, throw light on the effects of protection on the Southern economy. Northern Ireland is commonly thought of as largely industrial, and Southern Ireland as agricultural, yet in the early 1960s their industrial sectors were of roughly equal size. Comparing North and South in the early 1960s does reveal contrasts. In particular, the share of manufactured output exported was substantially less in nearly all sectors in the South, and much less of domestic consumption was imported.
In Discussion Paper No. 242, Research Fellow Cormac <209> Gráda argues that such comparisons do not shed much light on the effects of Southern protectionism. Protection did distort manufacturing output in the South, but the differences between the two Irelands are too great to allow strong inferences to be drawn from comparing their trading patterns. The approximate equality in the sizes of the manufacturing sectors in the two Irelands in the early 1960s part of the justification for the comparison was itself due to the protection on which it was supposed to shed light.
Comparing Northern Ireland and the Irish Free State in the 1920s shows that even then the Northern economy was much more `open': the ratio of exports to gross manufacturing output there was over four-fifths, while in the South it was only one-quarter. Subsequent changes in this ratio did not follow changes in the tariff regime closely. In both North and South the ratio dropped in the 1930s and 1940s, and rose in the 1960s. A direct examination of output and productivity trends in the North and South are a more promising way of assessing the economic effects of the contrasting commercial regimes, <209> Gráda concludes.

Did Tariffs Matter That Much? Ireland since the 1920s Cormac Gráda

Discussion Paper No. 242, June 1988 (IT)