A report shows that Ireland’s productivity level has risen by 40% over that of Northern Ireland in the last 20 years.
It also showed that export intensity is an important factor in increasing Ireland’s economic productivity.
The Economic and Social Research Institute (ESRI) think tank, which prepared and published the report in collaboration with the Taoiseach’s Shared Island Unit, examined productivity trends in both regions.
Productivity is measured as gross value added per employee.
One of the key findings of the report was that productivity levels in the two regions were similar in 2000 but have diverged over the past 20 years, with Ireland rising and Northern Ireland falling.
As of 2020, Ireland’s productivity level was 40% higher compared to Northern Ireland.
In 17 sectors for which comparable data are available, productivity levels in Ireland are ‘significantly higher’ than in Northern Ireland in 14 sectors, with large gaps in administrative and support services, finance and insurance, legal and accounting and scientific research.
Northern Ireland is a leader in electricity, gas and construction.
The ESRI model shows that Ireland’s productivity increases with the proportion of skilled workers employed and the level of investment.
For example, if the proportion of employed graduates increases by 1%, this leads to a 1% increase in productivity in industry.
But ESRI said there was “no evidence” of a similar link between a range of factors and Northern Ireland’s productivity.
According to the report’s analysis, this raises questions about the competitiveness of Northern Ireland’s economy and its ability to respond to changes in “key policy areas”.
“The models for Northern Ireland show no significant results for the usual drivers of productivity levels,” it said.
“There may be other economic, social and political factors to consider when formulating a policy response.
“It is possible that the combined effects of the riots, a relatively closed economy in terms of international trade, peripheral location, limited regional policy outcomes and a historical reliance on public sector employment contribute to the impact of market forces on Northern Ireland businesses. to suppress. resulting in a productivity trend that appears largely exogenous to important policy variables.”
ESRI said its analysis shows there is a need for “rapid expansion of investment and skills upgrading in Northern Ireland, particularly at post-secondary level”.
“However, our models also suggest that without a comprehensive strategy to improve the competitiveness of Northern Ireland’s businesses, reform of education and skills provision and increased investment in isolation are not guaranteed to increase Northern Ireland’s productivity. Ireland will improve.”
One of the authors of the report, Professor Adele Bergin, said: “While some existing studies have compared Northern Ireland’s productivity with that of regions in the UK, we believe this is the first comprehensive study to compare productivity in Ireland and Northern compare Ireland.
“The survey shows a growing productivity gap between Ireland and Northern Ireland; with productivity per worker expected to be around 40% higher in Ireland than in Northern Ireland by 2020.”
The report’s second author, Professor Seamus McGuinness, was speaking at a recent event in Belfast organized by the pro-Irish unity group Ireland’s Future.
Speaking at the event, he said educational gaps were one of the factors driving Northern Ireland’s “lower relative productivity”.
“It is estimated that school dropouts in the north are two to three times higher than in the republic,” he said.
He argued that the need for subsidy costs in the case of Irish unity “is only because of the low productivity of the North”.
“In the event that a border vote ratifies reunification, a transition period will be necessary to transfer operational responsibility from the North to the Republic.
“Planning must focus on measures aimed at improving the North’s low productivity during this transition period, so that the subsidy issue becomes irrelevant until reunification.”
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Source: Bel Fast Live