Bounce Back: Economic Resilience of Irish Regions (Part 1/2)

Earlier this week, I attended a public lecture given by Professor Ron Martin from the University of Cambridge. Organised by the Department of Geography, School of Natural Sciences, the lecture was one of a series of public lectures by distinguished international lecturers in Geography. Professor Martin, in the lecture which was titled ‘Shocking Aspects of Regional Development: The Economic Geographies of Resilience’, explained the idea of resilience and focused on how to measure regional resilience during recessionary shocks using the cases of the UK and European regions.

Inspired by his lecture, I was wondering how regions in Ireland reacted to and recovered from the economic shocks in the history. It would make the analysis much more comprehensive if all the historical data of employment and income at the regional level was available. For instance, in Ireland the 1980s has been considered to be one of the state’s bleakest time, with high unemployment and mass emigration. Unfortunately, the data of employment at the regional level was only available back to the first quarter of 1998, according to the CSO Statbank Database. Still, the data collected by the CSO enables a close examination of how regions in Ireland were affected by the 2008 financial crisis, which is the focus of this blog.

Figure 1. Growth and recessionary shocks in employment in Ireland, quarterly, 1998(1)-2015(1), NUTS 2

Growth and recessionary shocks in employment in Ireland, quarterly, NUTS 2

Source: CSO.

Figure 1 shows how employment (persons aged 15 years and over) in the two NUTS 2 regions of Ireland has changed during the first quarter of 1998 and the first quarter of 2015. Although the two regions seem to show similar patterns of rise and fall in employment, there are some differences between them. Between the first quarter of 1998 and the third quarter of 2007, when the employment in both regions peaked, it was the so-called BMW region that outperformed its more advanced Southern and Eastern region counterpart in employment growth, which may partly reflect the Irish government’s increasing focus on a more balanced regional development from the late 1990s. Nevertheless, both regions witnessed significant growth in employment during this period.

Then came the 2008 financial crisis and followed the recession. In both regions, the employment had been constantly decreasing for 18 quarters from the third quarter of 2007 until the first quarter of 2012. Specifically, the employment index of the BMW region dropped from its peak at 155.7 to 127.7 over this period, while the index of the Southern and Eastern region declined from 142.9 to 121.3.

Table 1. Persons aged 15 and over in employment (000s) by NUTS 2, 1998(1)-2015(1)

BMW SE
Phase 1: Growth
1998Q1 357.5 1128.4
2007Q3 556.8 1612.8
🔺1998Q1-2007Q3 199.3 484.4
%1998Q1-2007Q3 55.7% 42.9%
Phase 2: Recession
2007Q3 556.8 1612.8
2012Q1 456.4 1368.7
🔺2007Q3-2012Q1 -100.4 -244.1
%2007Q3-2012Q1 -18.0% -15.1%
Phase 3: Recovery
2012Q1 456.4 1368.7
2015Q1 481.7 1447.8
🔺2012Q1-2015Q1 25.3 79.1
%2015Q1-2015Q1 5.5% 5.8%

Source: CSO.

Table 1 compares the employment performance of the two regions in the three different phases, namely growth (1998Q1-2007Q3), recession (2007Q3-2012Q1) and recovery (2012Q1-2015Q1). In general, the BMW region showed higher growth in the first phase, but was more heavily hit during the second phase, and exhibited a slower recovery in the third phase. Its Southern and Eastern region counterpart shows relatively stronger resilience in the face of the 2008 financial crisis and slightly faster recovery from the shock in the recent years.

Figure 2. Growth and recessionary shocks in employment in Ireland, quarterly, 1998(1)-2015(1), NUTS 3

image (12) (1)

Source: CSO.

Figure 2 shows how employment (persons aged 15 years and over) in the eight NUTS 3 regions of Ireland has changed during the whole period. It, in comparison to Figure 1, reveals more comprehensively the reaction and recovery of localities in the country. Table 2 below compares the duration of the recession in each of the eight regions, i.e. the period of time between when the employment peaked and when the employment declined to the lowest point.

Table 2. Duration of the recession, NUTS 3

Start End Duration
South-West 2007Q3 2011Q1 14 quarters
Midland 2007Q3 2011Q3 16 quarters
South-East 2007Q4 2012Q1 17 quarters
Dublin 2007Q3 2012Q1 18 quarters
Border 2007Q3 2012Q4 21 quarters
Mid-East 2007Q3 2013Q3 24 quarters
Mid-West 2007Q2 2014Q1 27 quarters
West 2007Q3 2015Q1 30 quarters

Source: CSO.

A clear message from Table 2 is that the Irish regions differ significantly in terms of how long it takes for them to go through the recession. South-West was the region in Ireland that got out of the recession earliest (14 quarters), followed closely by the Midland, South-East and Dublin regions. Relatively, the Border, Mid-East, Mid-West and West faced more difficulties with the recession and started their recovery later than the rest of the country.

Given that Ireland is a relatively small country, it is noteworthy that there still exists significant differences in the resilience of regions. The determinants of regional resilience are complex and could be examined from various perspectives, one of which could be the industrial structures of different regions.

(To be continued)

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