Regions and recovery?

Discussion of regional performance and the spread of growth are back on the agenda with the preparation of the Regional Action Plan for Jobs and the new National Planning Framework.   The recent CSO publication of the 2012 data on County Incomes and Regional GDP[1] provides some insight into regional performance.

On county incomes the CSO note that of the eight regional authority areas, the Dublin region had the highest average disposable income per person in 2012. At €22,011 it was 13% higher than the State figure of €19,468. Of the remaining seven regions, only the Mid West, at €19,701, had an average disposable income per person 1.2% higher than the State average. The Border region with €17,126 and Midland region with €17,288 fared worst among the eight regions at approximately 12% each below the State average.

The gap between the maximum and minimum value of disposable income per person per region increased from €4,325 in 2011 (revised) to €4,885 in 2012, with Dublin regional incomes increasing by €400 and those of the lowest region, the Midland region in 2011 and now the Border region in 2012, decreasing by €160.

Dublin remains the only region with higher per capita disposable income than the State average during the entire 2003-2012 period while the Midland, Border and West regions have consistently earned less than the State average. For the same period (2003-2012) the CSO note that divergence between the regional authority areas was at its lowest in 2010, with a difference between maximum and minimum disposable incomes of €3,467, but has widened in 2011 and 2012.

county incomes 2012

Source: CSO County incomes and regional GDP 2012

The CSO also published the Regional Gross Value Added (GVA) figures for 2012 and the chart below of GVA per person at Basic Prices, 2003 to 2012, shows the growth in all regions in the period up to 2007 and the effect of the financial crash on all regions. Since then (to 2012) there was continued decline or stagnation in regional output in the Border, Midland and Mid East regions, while GVA growth in the Dublin and the West resumed in 2010.

GVA per person at Basic Prices, 2003 to 2012

Regl GVA per person 03-12

Source: CSO County incomes and regional GDP 2012, Table 9

GVA per person showed considerable variation among the eight regions, with the highest in Dublin €51,839 (151% of the state average) and the lowest in the Midland region (€18,638, 54% of the state average). In the West, GVA per person was €28,256 (82% of the state average) and in the Border region it was €19,016 in 2012, 55% of the state average. Clearly the structure of regional economies is important here. The WDC will produce further more detailed analysis of this CSO data in the coming weeks.

Also last week, as part of its quarterly economic bulletin, the Nevin Institute for Economic Research noted that “concerns persist that the recovery has yet to spread across the country – a phenomenon typified by weak or limited employment growth in regions outside Dublin and its hinterland.[2]

They also considered the meaning of this trend:

“It is not yet clear whether the regional trend represents A) a structural shift in the Irish economy towards the Greater Dublin Area with stagnation or decline persisting into the future in the western half of the country, or, alternatively, B) represents a temporary phenomenon whereby the economy recovery currently taking hold in Dublin gradually extends out to other regions.”  NERI Quarterly Economic Observer (QEO) Spring 2015 Pg 9

While the recovery is underway, it is happening earliest and fastest in Dublin, and while economic growth is very welcome it needs to spread beyond Dublin and other big urban centres. As the WDC noted in its 2010 Policy Briefing “Why care about regions?”  the impact of growth in all regions is significant for the national economy as a whole. Lagging regions generate an important part of national economic output and where there are underused resources in lagging regions mobilising them will add to overall national economic growth.

Bringing about convergence is less important than improving the performance of all regions. In order to promote regional growth, policymakers need to develop a comprehensive regional policy which not only links regions through infrastructural investments, but also fosters human capital, and facilitates innovation.  If regional strengths and areas of comparative advantage are taken into account in the implementation of national enterprise policy, it is likely to be far more effective. Hopefully this will be the case in the forthcoming Regional Action Plans for Jobs

 Truly national growth involves growth in all regions. If regional policy is effective it will result in a country with better options for all.

 

Helen McHenry

 

[1] CSO County incomes and regional GDP 2012

[2] NERI Quarterly Economic Observer (QEO) Spring 2015, Pg 1,

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About WDC Insights

WDC Insights is the blog of the Western Development Commission Policy Analysis Team. The WDC Policy Analysis team analyses regional and rural issues, suggests solutions to regional difficulties and provides a regional perspective on national policy objectives. Policy Analysis Team Members are: Deirdre Frost, Helen McHenry and Pauline White. We will all be posting here. You can contact us here, or use our firstnamelastname at wdc.ie Follow us on Twitter @WDCInsights
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