A key factor in discussions on the all-island economy is a lack of comparable data and information. Policy needs to be based on evidence – and in many areas this has been sadly lacking, allowing all sides of the argument about Northern Ireland’s future to use the limited information available to their own advantage.
For these reasons the work being done by the Economic and Social Research Institute (ESRI) as part of the Shared Island initiative overseen by the Department of the Taoiseach is particularly welcome. It has already shone an interesting light on comparisons between the two parts of the island in health, education, foreign direct investment and cross-Border trade. Its latest report focuses on productivity and has important messages, in particular, for the Northern Ireland economy.
Productivity is one of the least-often discussed, but most important economic indicators. The amount of output per worker is, in the longer term, the vital determinant of national economic health, even if it can be a difficult concept to measure. Calculations of productivity in the Republic, for example, are exaggerated by the financial tactics of multinationals.
The latest report presents important new evidence of productivity trends North and South. Back in 2000 the two parts of the island were roughly similar in productivity terms, but since then the Republic has moved ahead, while productivity in Northern Ireland has fallen back. The gap is now measured at 40 per cent which is, as the researchers point out, a large gap to appear in such a relatively short period of time.
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Why exactly Northern Ireland has fallen behind is not entirely clear – in turn meaning that no one policy response is likely to solve the problem. A range of factors – perhaps including the legacy of the Troubles, peripherality and a reliance on public sector employment may all be relevant. In a response to the ESRI research, Dr David Jordan, research fellow at Queen’s University, argues that policy and institutions in Northern Ireland may also be important, instancing, for example, a poorer record in attracting foreign direct investment.
The two key factors identified by the ESRI were lower levels of investment in Northern Ireland and a need to boost education and skills at post-secondary level. These point to priorities for the future, though the researchers warn that a wider programme to increase the competitiveness of Northern Ireland’s business will also be needed.
The research shows the serious work needed in trying to address Northern Ireland’s economic problems. There are lessons from the Republic’s progress, but there is little point pretending that these can be easily copied.