NORTH SOUTH DIVIDE ONCE MORE?

For the purpose of Eurostat and EU Structural Funds, two NUTS 2 regions of Ireland were established and came into effect in July 1999. One is the Southern and Eastern region, and the other one is Border, Midland and Western region. Both regions had “Objective 1” status in the early years, meaning they were both qualified to receive the Structural Funds, which are one of the financial instruments of European Union regional policy intended to narrow the development disparities among regions and Member States. The “Objective 1” status of the Southern and Eastern region ended in 2005, one year earlier than the Border, Midland and Western region.

These two regions may be similar in terms of size, but the Southern and Eastern region shows a much higher level of population density as well as economic activity measured as GDP (PPP) per capita. Figure 1 below analyses how the GDP per capita of the two regions compares against that of Ireland between 1996 and 2010.

Figure 1 GDP per capita as % that of Ireland by region, 1996-2010, Ireland=100

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Source: OECD (2014), Main Science and Technology Indicators.

Note: Per capita, US $ constant PPP, constant (real) prices (year 2005).

Clearly, Ireland has an unbalanced economy, which could be termed as a “North South Divide”, similar to what has also been found in the UK. In both countries, the southern regions show more advanced economic development than the northern regions. In 1996, GDP per capita of the Border, Midland and Western region in Ireland was just under three quarters of that of Ireland. More importantly, the gap between this region and the rest of the country was further widened across the years. Up to 2010, its GDP per capita was less than two thirds of the national average.

It may not come as a big surprise that the Southern and Eastern region is more developed in the Irish context. Indeed, it is this part of the country that houses the majority of firms, in particular those high-tech multinational companies. In 2012, OECD published its Cluster Scoreboard which compared the entrepreneurship of 80 local enterprise clusters in two key innovative sectors with important roles in local economic growth: high-technology manufacturing and knowledge-intensive service activities. Three of the four clusters from Ireland being selected in the report were from the Southern and Eastern region, including: Bio-pharma cluster in Dublin; Med-Tech cluster in Cork; and ICT cluster in Dublin. The Atlantic Technology Corridor from Galway to Shannon was the only one located within the Border, Midland and Western Region.

What is a bit surprising is the fact that the overall economic development level of the Border, Midland and Western region has lagged further behind the national average during the recent decade. Since the publication of the National Development Plan 2000-2006, the Irish Government has started addressing the regional disparities, with more and more resources being dedicated to supporting infrastructure development and business development in the weaker areas.

In Figures 2 to 5 we illustrate the R&D landscape in Ireland between 2002 and 2009. As Figure 2 demonstrate, the total R&D expenditure performed within the Border, Midland and Western region accounted for under 20 per cent of the total R&D expenditure in Ireland in 2009, showing a significant increase from less than 14 per cent in 2002.

Figure 2 Total R&D expenditure as % that of Ireland by region, 2002-2009

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Source: OECD (2014), Main Science and Technology Indicators.

Note: Million US $ constant PPP, constant (real) prices (year 2005).

Figure 3 R&D expenditure performed by the business sector as % that of Ireland by region, 2002-2009

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Source: OECD (2014), Main Science and Technology Indicators.

Note: Million US $ constant PPP, constant (real) prices (year 2005).

Figure 4 R&D expenditure performed by the government sector as % that of Ireland by region, 2002-2009

Image

Source: OECD (2014), Main Science and Technology Indicators.

Note: Million US $ constant PPP, constant (real) prices (year 2005).

Figure 5 R&D expenditure performed by the higher education sector as % that of Ireland by region, 2002-2009

Image

Source: OECD (2014), Main Science and Technology Indicators.

Note: Million US $ constant PPP, constant (real) prices (year 2005).

Figures 3, 4 and 5 show more or less similar trends to what is revealed in Figure 2. Therefore, although the Border, Midland and Western region has made gradual progress in terms of performing R&D activities, those efforts have not turned into economic benefits or final outputs. Understandably, it takes time for a region to adjust its industrial structures, and maybe needs more patience to build a functional system of innovation, in which institutions actively engage with each other in knowledge exchange and collaboration.

At the first glance, Figure 1 and Figures 2 to 5 may have shown something contradictory, but one needs to bear in mind that, although it is generally claimed that R&D expenditure is associated with economic development, that impact has to be examined within a longer period, depending on the specific context of regions. Ireland, as small as it may be, still has localities which present heterogeneous features of economic development, industrial structures, and organisational relationships.

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