Productivity gap between North and South to be examined

The gap in productivity between Northern Ireland and the Republic, a core feature of the island's two economies, is to be examined as part of joint research undertaken by the Department of the Taoiseach's Shared Island unit and the Economic and Social Research Institute (ESRI).

Productivity is roughly defined as output per worker. Even when the multinational component in the Republic, which warps headline indicators such as GDP (gross domestic product), is discounted, productivity is much higher in the Republic than in the North.

Not only this, productivity in the North has fallen relative to other regions in the UK in recent years and since the 1998 peace agreement, meaning the North has not enjoyed an economic dividend since the ending of the Troubles.

Possible reasons for this include educational attainment, which is lower in the North than in the Republic, export intensity and/or foreign direct investment (FDI), which are also lower in the North.

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The ESRI's Adele Bergin, who is undertaking the research, said the existing research "suggests there is quite a large productivity gap North and South but no one has yet explained what might be driving productivity differences in the two jurisdictions".

“What we’re trying to do is use sectoral-level data to formally model productivity in both areas,” she said, acknowledging that measures such as GDP were increasingly disconnected to underlying trends in the economy.

Dr Bergin noted that even deglobalised measures such as gross national income (GNI) per capita is still much higher in the Republic.

The productivity paper is one of four areas of research being undertaken by the ESRI and the Shared Island unit. The other three are: childcare and early years education in Ireland and Northern Ireland; all-island energy infrastructure and renewable energy supports; and migrant integration on the island.

This is the second year of the joint research programme, which was established to examine opportunities for greater alignment between Northern Ireland and the Republic.