When Ireland joined the Common Market in 1973, the country was experiencing exceptionally high economic growth. Barely six months into membership, we found ourselves at the mercy of the first of three major recessions that were to beset us over the next 25 years.

The impact of the 1974 oil shock knocked the economy off course, but we struggled through. In fact, until around 1981 GNP growth, though modest by today's standards, averaged about 3 per cent per annum. The surge in manufacturing exports and a steep rise in farm incomes, both factors in sustaining the economy, were directly attributable to membership.

On the other hand, the prediction made at the time of accession about employment - 50,000 new jobs were forecast - did not materialise. Living standards stood still or declined as wage levels spiralled in a high inflation environment.

During the 1980s, European economic policy limited exchange-rate variability within the EMS, liberalising capital markets, stabilising unemployment and achieving disinflation. Most of the EU's main macroeconomic indicators have improved from the period since the mid-1980s. The weak competitive position of the EU vis-a-vis the US and Japan was highlighted as long ago as 1983 in the Albert and Ball report commissioned for the European Parliament. Much of their analysis remains valid today.

This table demonstrates how far the Irish economy has changed since January 1st, 1973:

19731997

GDP per capita/EU average - 58%104%

Numbers at work (000's) - 1,0671,338

Unemployment (000's) - 65179

Rate 5.7%11.8%

Labour force (000's) - 1,1321,517

Exports 4.2bn37.5bn

Current expenditure/ GNP - 29.5%40%

Inflation rate - 11.4%1.5%

Government debt/ GNP - 62%75%

From the beginning of our EU membership, we were at the cutting edge regarding decisions that have had significant, long-term and positive implications for the economy. Among the early highlights was the conclusion of the first Lome agreement that has since been expanded to include 70 countries from Africa, the Caribbean and Pacific and now has a £8.5 billion budget.

The regional fund was established in 1975. The Common Fisheries Policy was drawn up. The basic tenets of Europe's social policy were agreed. Ireland joined the European monetary system in 1979.

The 1980s was the "Eurosclerosis" decade during which Europe was in the doldrums, politically and economically. The Internal Market initiative in 1985 was, perhaps, the most ambitious venture of the time. Despite best intentions, its potential remains unfulfilled in many important respects, witness the snail's pace of liberalisation, and its impact is but a fraction of what the famous Cecchini report predicted in 1988. On a positive note, the Single European Act (1987) set Europe off on a new political path that was built upon by the Maastricht (1993) and Amsterdam treaties (1997).

The Union has turned the corner. In the past 10 years its policies have flourished. Significant decisions have been taken in such fields as the environment, transport, energy, telecommunications, cohesion, education and human resources. These decisions have, in turn, brought about significant change in Ireland.

The EU is also promoting ambitious policies and funding programmes across a new range of issues, including the information society, for example. Irish industry's increasing levels of participation in these programmes is one measure of our success as an entrepreneurial economy.

The volume of legislation emanating from Brussels has reduced to a trickle. Next year, for example, the Commission expects to submit just 31 proposals, and of these 14 will relate to the reformed structural funds regime post-1999 and the CAP. There is instead a major push on implementing what has been agreed in the past. A spate of consultation papers are, however, also being considered and these will result in detailed legislative measures.

The European Parliament was little more than a talking shop in 1973. It has gained influence in the past decade in particular, and is not at all shy about using its new co-decision-making powers. It is not widely appreciated that MEPs have the same decision-making powers as ministers across a wide range of EU policies. Lobbying the Parliament has become a sine qua non of the Brussels beat.

Two events that occurred in the past 25 years will have fundamental implications for Ireland over the next 25 years. These are the fall of the Berlin Wall and EMU.

German unification and its government's commitment to European political union are behind the recent decision to expand the EU by six countries initially, and many more in due course. Ireland's sometimes privileged relationship as a small country will be gradually eroded as the Union expands east and south. A major factor in business and employers' support for enlargement is the access the enterprise sector will gain to 100 million new customers. We can, however, expect to pay for the cost of enlargement, in terms of becoming a net contributor to the EU's budget, at some stage in the future.

EMU will become a reality on January 1st, 1999. Its roots, however, go back to March 1971 when the original six member-states recorded their political will to establish "an economy and monetary union in stages" (by 1980, believe it or not). EMU is, without doubt, the boldest and most far-ranging strategic initiative ever undertaken by the Union. As in 1972, on the eve of joining the Community - another milestone for Ireland - there is a buzz of excitement coupled with expectation, as the single currency is now accepted as being but a short distance away.

Ireland, as a full EMU member, will be promoted into Europe's premier economic division. It will be tough at the top. We should not expect, nor will we get, any special favours. The strict fiscal and budgetary disciplines that will follow once Ireland's multi-annual stability and growth pact is in place next year should help consolidate the economy's position in a low-inflation and stable economic environment.

So what are Ireland's critical success factors as a seasoned member of the European Union?

First, we have a relatively narrow and uncomplicated policy agenda compared to most other member states. There are few policy issues where a genuine national interest, or veto, might be invoked. Second, as a small player Ireland has sought and helped to promote consensus. Ireland's five presidencies have played a major role in shaping the country's reputation as a skilful negotiator and deal-broker.

Third, a key focus of successive governments was to optimise the financial benefits from EU membership, a legitimate position given the ground we had to make up compared to the majority of our partners. Fourth, EU membership has exposed Irish civil servants and politicians alike to an agenda that embraces the entire world, and thus to a new way of thinking and policymaking. Finally, being at the core of European affairs is now instinctive. As a confident and creative people, our neighbours across the EU increasingly point to the Irish success model for inspiration. The nation consistently polls among the most enthusiastic supporter of matters European.

Will this change? Will the good times continue?

The £21.5 billion net that we have received since 1973 has given successive governments considerable budgetary flexibility. Gross EU transfers (at £2.3 billion in 1997) are roughly equivalent to 56 per cent of income-tax receipts. If such a regular flow of money was not available, the composition of government spending would be different and expenditure could not have continued its constant upward trend.

This level of funding has to an extent engendered a dependency culture which we will have to shake off. Post-1999 things are bound to change and, as the accompanying table indicates, the impact of the change involved is likely to be significant.

The political dimension of the European Union, where the greatest strides have been made in recent years, is practically an unknown quantity in Ireland. The electorate will be asked to consider these complex issues during the referendum campaign on the ratification of the Amsterdam Treaty.

For the past 25 years Ireland has been treated generously by the Commission and by other member states, financially and in policy terms. When we sought special treatment, we usually won the argument, or got the benefit of the doubt.

In the past year, however, our success has brought about a change in the climate. Ireland's negotiators can therefore expect some tough sessions during the next round of structural funds negotiations. And we can expect a similar position when the CAP reform talks begin.

We should not underestimate Ireland's positive image and economic reputation on the European and world stages. We are simultaneously the object of some jealousy and genuine admiration. In this context, managing our success should become a priority for government.

Ireland's positive experience of the past 25 years should help us define, in a more strategic sense, the best way forward in what will be a more competitive, a more diverse and a more politically complex Union.

Peter Brennan is director of the Irish Business Bureau, the EU representative office of the Irish Business and Employers' Confederation in Brussels

Friday: Fintan O'Toole on the impact of EU membership on Irish society