OPINION:We need to use the two jurisdictions on the island of Ireland as a competitive strength rather than a threat, write ANDY POLLAK and MICHAEL D'ARCY.
HAS NORTH-South economic co-operation a part to play in preparing Ireland for its eventual emergence from recession? In all the billions of words of commentary in recent months, this aspect of the Irish economy has not even been mentioned. The only time Northern Ireland entered public consciousness in this context was during the outcry from politicians and retailers before Christmas at the “unpatriotic” flooding North by the Republic’s citizens to shop for goods that were spectacularly cheaper than those at home.
Six leading business figures and economists interviewed for the Journal of Cross Border Studies in Ireland, the annual journal of the Centre for Cross Border Studies – to be published today – say that this whole controversy missed the point entirely. David Dobbin, chief executive of one of the North’s largest indigenous companies, United Dairy Farmers, and chairman of the North-South trade and business development body InterTradeIreland, has some advice for Southern business people: “Rather than get nervous about cheaper consumer products in the North, they should look to the benefits there might be for business to use the North to source goods and services that until now they have sourced elsewhere in Europe, and thus to improve their competitiveness. We’ve got to keep focused on the trade opportunities from North-South economic co-operation. We need to use the fact that there are two jurisdictions on the island as a competitive strength rather than a threat.”
Stephen Kingon, chairman of the North’s industrial promotion agency, Invest Northern Ireland, agrees. He thinks that with sterling now spectacularly undervalued – and labour and property costs 30 per cent lower in Belfast than Dublin – there are real opportunities for firms that look across the Border for new business.
Dobbin also believes that there are strong arguments for smaller companies, particularly in innovative areas like electronics and healthcare, to work to overcome the recession by linking with partners across the Border to develop and market new products. “Both our economies are still very small in world terms, so by exploiting some of your neighbour’s capability you may be able to compete with mainland Europe or the US where the scale is so much larger because of their much larger domestic markets.”
Kingon also underlines the importance of the governments in Dublin and Belfast continuing to co-operate closely on infrastructure. Stressing that “externally investors just see one island”, he goes on: “You can’t solve the problems of Derry without Donegal and vice-versa. How do you package the north- western region for foreign direct investment without taking in the whole region from Coleraine to Letterkenny? The same thing, to a lesser extent, goes for the Fermanagh-Sligo-Mayo region. The peripherality of the west has to be dealt with on a cross-Border basis if you’re going to counter the accusation that we’re only interested in the big conurbations: Belfast and Dublin.”
Former Ibec chairman Maurice Healy, chief executive of a Dublin-based supplier of pharmaceutical and food ingredient products, sees the Northern shopping spree as a temporary phenomenon caused by lack of competitiveness in the Republic. “I have no problem with Southern retailers getting a good kicking,” he said. “Look at border regions between France and Germany, and Holland and Germany, where people adjust their spending habits literally every week. What we need is an ‘equalised’ market – we say we want such an ‘equalised’ market in Europe, but we don’t have one on this island yet.”
The prominent former ESRI economist Dr John Bradley, who spends most of his time advising central and eastern European governments on their economic strategies, has an even more radical idea. He believes that one way to get Ireland out of recession is not only to promote the high-tech sectors beloved of governments, but also to encourage entrepreneurs to move back into more traditional manufacturing sectors such as specialised food products, high quality footwear and clothing, furniture and so on.
He says these are the kind of areas other small European countries such as Denmark and Slovenia have made a success of – and there is potentially an important all-island dimension. “In a period of serious world recession you’re not going to get anything in the foreign direct investment pipeline – nothing very significant anyway, nothing that will replace the outflow of jobs to lower labour cost areas abroad – so you have to turn to these neglected areas.
“And these are precisely the areas that will operate best on an all-island basis because they’re usually run by small, level-headed, entrepreneurial business people who are desperately looking to survive at the moment. Northern Ireland might be a little behind the South currently because the true horror of the recession has not dawned on them yet. But they must have many small entrepreneurs – the North traditionally has had more SMEs in manufacturing – who will be driven by the need to survive to seek partners across the Border.”
For University of Ulster economist Dr Michael Smyth one route to greater competitiveness is greater integration of the island’s labour markets, with a “pivotal” element being the closer co-ordination of the two higher and vocational education systems. David Dobbin is thinking along the same lines. He worries that the recession will see a return to the high graduate unemployment and emigration we last saw in the 1980s. He wants major state investment in training in both jurisdictions to be co-ordinated to ensure that “we don’t lose our best and brightest young people” and “separate government policies don’t lead to further distortions on the island”.
All those interviewed are confident that the island will survive the recession and prosper again in the medium term. Asked to look forward to 2025, they saw both parts of Ireland in the euro; seamless infrastructure across the island; genuine all-island labour markets assisted by more integrated tax and social insurance systems; and higher education becoming truly co-ordinated. In the words of a former governor of the Bank of Ireland, Laurence Crowley, there would be “a change in mindsets so that whatever you call this island of two jurisdictions, we will be able to think of it all as one – not politically, but economically.”
Andy Pollak is director of the Centre for Cross Border Studies. Michael D’Arcy is a Dublin-based business consultant