The Northern Ireland economy

As far as I know, there has not been a single blog relating to Northern Ireland since The Irish Economy blog began earlier this year. Northern Ireland is having a relatively good recession for various reasons on which I do not wish to dwell. However, it has serious long-term problems which have been addressed in a report commissioned by the devolved economy Minister. The report is available here. What will interest readers of this Blog was that 4 out of the 5 report authors are economists, of which I am one.

In essence, the Northern Ireland economy has operated under wartime conditions for nearly four decades. Public sector output amounts to around 60% of gross value added (the regional equivalent of GDP). More specifically, industrial policy has consisted of providing large scale grants to both inward investors and indigenous firms. This has been partly successful: employment growth has been high in the last decade and at the peak of the recent boom, the unemployment rate was hovering just above 4% as in the Republic of Ireland case. What was different was that productivity growth was low to non-existent. Consequently living standards have not converged on the UK and have diverged markedly from the Republic of Ireland and other successful countries.

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DEW Kenmare 2009 conference

The programme for this conference is available here.

You can download a booking form here.

Regulating groceries

Paul Gorecki has a great new paper: A Code of Practice for Grocery Goods Undertakings and An Ombudsman: How to Do a Lot of Harm by Trying to Do a Little Good.

The subtitle is a nice summary.

(It has been suggested by some on this blog that the ESRI has no interest in regulation, turning a blind eye to unsavourary practices in many sectors. This is not true. We just wish we had the resources to do more in this area.)

THE-QS University Rankings 2009

The new rankings are out. All Irish universities are up. TCD at 43, UCD at 89.

To pre-empt some critique: No ranking is perfect, but each imperfect ranking correlates with each other imperfect ranking. Two universities in the top 100 is not at all bad for a country that has far less than 2/100 people in the OECD, let alone the world.

A left view of the economic crisis

Michael Burke has an analysis of the nature of Ireland’s economic crisis in the Socialist Economic Bulletin which is a blog published by Ken Livingstone. His account of how we got into our economic crisis is by and large a coherent one (an unfortunate typo suggesting that NAMA proposes to pay €54bn for assets worth €77bn notwithstanding) although one can quibble with some of his judgements. For example, his claim that the April 2009 budget was regressive is not supported by the results reported by Tim Callan using the ESRI tax-benefit model on this blog. One point he highlights to which I had seen little reference before is the implication of the collapse in domestic asset values for our net external debt position, given that much of this borrowing was financed by foreign bondholders.

In contrast to the detailed analysis of past history, his proposals for responding to the crisis are little more than sketched out and are thus less convincing. Competitiveness is not seen as a problem despite his clear analysis that a big contribution to our current trade surplus is the collapse in imports of investment goods and that our relatively good export performance is heavily influenced by the special circumstances of the dominant chemicals sector. One proposal is to delay fiscal adjustment because of its deflationary consequences (a demand already being made by the trade union movement). Another is to “take control” of leading property and construction companies presumably in order to restore economic activity in construction, although why this would make sense given the substantial over-capacity that exists in both residential and commercial property is not clear. He also proposes nationalisation of the banks and repudiation of some or all of their accumulated debts, policies which have been debated and which have found some support on this blog.