Despite general prosperity, the west and north regions continue to lag behind in terms of regional and social development; in 2006 we must ensure they start to catch up, writes Patricia O'Hara
Ireland's prosperity has continued to impact positively in the regions in 2005. There is much vitality, even in areas with a long history of decline. In the west and northwest the spectre of emigration has finally faded and those who left in bad times are returning home in considerable numbers. Last year too the regions began to reap the benefits of public investment in infrastructure, with the completion of major road projects and continuing upgrading of public transport.
Further commitment to investment in regional projects in Transport 21 and in the Budget is eagerly anticipated. The recent EU budget agreement to increase funding for rural development will bring a relatively small but significant boost to rural regions. Perhaps more importantly, it is an acknowledgment that the future viability of rural areas is dependent on developments outside the farm gate.
Given the current buoyant state of the economy and the scale of the public capital investment programme, growth in the regions is not surprising. However, the real test of progress is whether lagging regions have managed to catch up, and whether Government policy, as set out in the National Development Plan, to promote balanced regional development (broadly between the east and south and the west and north) is being achieved.
Looked at from this perspective, the west and north regions are falling further behind. According to the conventional European measure of regional progress - gross value added per capita (GVA) - the gaps between regions persist and have widened.
The differences between the two main EU-designated regions - South and East (S&E) and Border Midlands and West (BMW) are considerable. GVA per capita in the BMW region is 31 per cent below that for the State as a whole, compared with 11 per cent above it in the S&E, and this gap has widened since the mid-1990s. In effect, the BMW region accounts for a declining share of national wealth. This is reflected in the gaps in disposable incomes between the regions, with levels in the BMW region at 8 per cent below the State average. It should be remembered that these differences are not as wide as in the case of the GVA, because disposable incomes are often augmented by welfare payments.
Wide regional imbalances are not conducive to achieving national goals of competitiveness, sustainability and social cohesion. Uneven development is associated with two distinct sets of problems. The first is caused by very rapid and concentrated growth in one region, which results in congestion and pressure on infrastructure and services. This is what has happened in the Greater Dublin Area (GDA), and has negative impacts on the economic efficiency and productivity of businesses and on the quality of life in the capital. The second set of problems are those experienced by the lagging regions which, in attempting to catch up by attracting inward investment and growing indigenous enterprises, find themselves hampered by deficits in transport, energy and communications infrastructure and by long-standing structural problems.
Achieving more balanced development requires that we address both sets of problems, ie, alleviate the problems of the GDA so that it can continue to prosper, and position the regions to catch up. Otherwise, the GDA and other large centres will continue to accumulate a greater share of Ireland's economic activity and wealth, and disparities will widen further. There are few who would argue that this is desirable.
Moreover, the CSO population projections published during the year give added urgency to the need for greater balance in spatial development. Projections indicate that the State's population will increase from 3.9 million in 2002 to five million in 2021 and that 45 per cent of this increase will go to the Dublin area. Given that Dublin is already experiencing congestion problems from recent population growth and settlement patterns, an increase of half a million in the population of the east will intensify and worsen such pressures.
A key concern is that the sustainability of much of the current employment growth in the regions outside the main centres is open to question. Much of this has been in public sector employment and in the construction industry. The industrial structure in much of the west and northwest, for example, is vulnerable due to a heavy dependence on declining primary sectors such as agriculture and fisheries and on traditional industries often linked to primary production. Natural resource-based sectors, such as tourism and the marine sector, have not performed well nor reached their potential. While the more rural counties continue to show the highest patterns of participation in second- and third-level education, the brain drain to the larger centres continues leaving a depleted human resource base in the regions. But there is ample evidence that where opportunities arise graduates will eagerly return home.
Several studies published in 2005 recommended the urgent need to position the regions to compete effectively for inward investment and to address the industry and enterprise structure in them - particularly through supporting innovation in indigenous industry (both high tech and traditional) and encouraging business start-ups in rural regions to enable them to contribute to the knowledge economy. Sectors based on natural resources such as tourism, agri-food and the marine need to be the focus of creative and innovative strategies. Growth in inward investment and public sector employment can underpin demand for locally traded services and lessen the impact of industrial closures.
The provision of quality road and air access and full broadband coverage is critical to progress on these issues, and public investment commitments must be backed by clear time-bound targets and delivery mechanisms.
As Ireland positions itself as a knowledge-based economy and society, the combination of the loss of well-qualified graduates and the lack of a university as a centre of knowledge in the northern half of the State is a major challenge. This should be addressed through education and training programmes linked to institutes of technology and by remote contact with universities through the use of information technologies. Government needs to develop a clear strategy for aligning delivery of policies and programmes in the key areas of enterprise and employment, as well as education, to address these issues.
In 2006 we expect another national partnership agreement, while new rural development measures will be put in place and the next national development plan will be completed. The imperative for economic and social development to be more regionally balanced must be at the heart of each of these. The new NDP is likely to set out national goals of competitiveness, sustainability and social cohesion. Achievement of better regional balance is intrinsic to achieving these national goals, and to the achievement of a better quality of life in all regions. All in all, mixed fortunes for the regions in 2005, and testing challenges for policy-makers in 2006.
Dr Patricia O'Hara is policy manager, Western Development Commission