l!:cland - both North and South - is commonly perceived and portrayed as constitutip,g a peripheral region, or more accurately two peripheral regions, Within a European context. A Synthetic Index of regional indicators (based on productivity and unemployment) compiled by the EC in 1984 placed Northern Ireland second-last and the Republic of Ireland fourth-last of 131 Level II EC regions. The respective index values as a proportion of the EC average were, 35 per cent for Northern ]relarid and 42 per cent for the Republic of Ireland. For Hamburg, the region with the highest index, the respective proportions were 23 per cent and 27 per cent (Trimble, 1990). A more sophisticated index published in 1987 showed the Republic's, and more particularly Northern Ireland's, relative position to have improved significantly, but this was mainly due to the effect of EC enlargement. Both parts of Ireland were still more than one .standard deviation worse than the EC average, and were the only EC regions outside the Mediterranean area in this category. Iu;land's economic peripherality is commonly seen as ~1, i.e. Ireland is located on the margins of a European economy in which economic prosperity and dynamism are strongly concentrated in a core region frequently referred to as the 'Golden Triangle'. Economic opportunity is seen as being a function of accessibility to the external economies offered by this core region (Keeble et a!., 1982). From this point of view, therefore, geographically peripheral regions such as Ireland face severe disadvantages which account, in large part, for their poor comparative economic performance. This chapter reviews some conflicting views on how the problem of peripherality should be tackled from an economic policy point of view, with respect specifically to the Republic of Ireland. The conventional economic emphasis on cost minimisation as the key to international competitiveness is dismissed as an inadequate response to the developmental needs of the Irish economy. The need to create integrated export-oriented industrial sectors is advanced, but the steps required to achieve this are considered to be beyond the conceptual grasp of the Irish economics 'establishment'. The findings of an inquiry into why Ireland has failed to create such a structure, where other small European countries have succeeded, are examined. Some ideas on how this deficiency in the Irish economy can be tackled are then presented. Initially, however, the chapter provides a historical backdrop to the current economic situation in Ireland, both North and South.