Believe it or not, the economic recession has been worse in the north than the south…

The economist Michael Burke has made some interesting comparisons between northern and southern economic outputs using a measure called GVA which strips out the influence of tax and subsidies:

NI ROI GVA figures

The effect of comparing the data may be surprising. These show that recessions occurred both sides of the border at the same time but that the recession in the North was more severe.

Real GVA in the South fell to a low in 2010 and has since recovered slightly. The links to the relevant statistical data are provided here and here. There is as yet no recovery in NI.

The actual decline in real GVA in NI was 11.3% while the real decline in GVA in RoI has been 3.3%, although at its low-point it was a slump of 4.9%. This is shown in the chart above where both have been rebased so that the indices in 2010 equal 100.

To provide some background, you can see from this second chart the catch up effect of the Tiger economy (much of which, let’s note, has not gone away you know). Burke notes of this date from the Nerin Institute:

NI ROI GVA 2

From 2000 to 2007 the level of real GVA in NI expanded by 24%. Over the same period GVA expanded in RoI by 40%. The slump saw real GVA fall by 6.2% in RoI from 2008 to 2010 and it has since recovered less than half of that loss. By contrast real GVA in NI fell by 10.9% over the same period and there has been no recovery. The cumulative fall in real gross value added to 2012 has been 11.8%.

The truth is that with all such divergences these trends are long and deep and arise from radically different policy tracks. Ireland doesn’t have a Nordic model, partly because of some the cultural differences highlighted by Ian here. But in part too because it has few natural resources it can easily exploit, like Norwegian oil, or Swedish hydro electric.

Our greatest asset is our people, and it is that which needs investing in. The idea that dropping NI’s corporation tax is a win all strategy ignores the problems in education, and in an infrastructure that are likely to become strained over the medium to longer term as peace settles in again.

What NI needs just to begin catching up is some competent politicians who know what a good deal tastes and feels like. Yet the political focus remains as ever on what needs to be got rid of (like #flegs and Orangemen) rather than what demands the future is likely make of us.

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