International convergence of economic and regulatory policies towards liberalisation and light-touch, unfortunately embraced also by Ireland, and ridiculously easy availability of credit (eventually helped by the removal of exchange rate risk across the euro area) were key factors in the international environment that masked the vulnerabilities associated with the emergence of evident imbalances in the trend towards a construction monoculture: extreme house price inflation, a skewed revenue base for the Government accounts and a seemingly inexorable erosion of wage competitiveness.
A score-card on the role of globalisation in the Irish downturn shows an equally mixed picture. Despite the fact that international trade was badly hit worldwide in the macro-shock of late 2008, Irish exports held up well and provided a stabilising force in the evolution of aggregate demand both in that downturn and in the subsequent couple of years.