Regional Disparities are Widening

Earlier this year the CSO released statistics on Household Income at County level and Regional GDP for the year 2012. While the data is not current, it is still useful to look at the trends over time and particularly in relation to disparities among regions.

Examining regional indicators can help us to examine what growth and development is taking place in our regions, to highlight changes in growth and development and assess issues of efficiency and equity among regions. A regional perspective on national growth and development is necessary since inequalities not only occur among individuals but also in the places where people live[1]. Looking at the data over a ten year period it is clear that regional disparities are increasing.

One way to examine disparities is to consider GVA in the different regions indexed relative to the state (which is set at 100 for each year (Figure 1)). At NUTS3 level in 2012 the index for the highest, the South West, was 129.4. Dublin and Mid East (126.2) was also consistently above the state. In 2012 the lowest relative to the state was the Midland, was 54.3. The West region index was 82.4 and the Border was 55.4. In 2003 the difference between the highest and lowest was 65.8 index points but by 2012 was 75.1 index points.

Figure 1: Index of GVA 2003-2012 State=100

Fig 1 disparities blog

Source: CSO County Incomes and Regional GDP 2009, Table 10

Comparing indices of GVA at NUTS 2 level (state=100), as this is often used in international comparisons, the BMW was 64.8 and the S&E was 113.1 in 2012. There has been a significant widening of the gap between the BMW and the S&E regions since 2008, the difference in 2012 was 48.3 points and in 2008 was 40.6 points (in 2003 it was 42.6).

Disparities in regional GVA have been increasing in recent years and have been particularly significant since 2008 while, in contrast, disparities in disposable income reduced between 2003 and 2010, but have increased since then. Coefficients of Variation, shown below (Figure 2), indicate the level of variation among the regions for regional GVA and disposable income per capita. Clearly there are much greater disparities in GVA among regions than in disposable income.

Figure 2: Coefficients of variation for GVA per capita and household disposable income per capita, 2003- 2012

Fig 2 disparities blog

Source: CSO, 2015, County Incomes and Regional GDP 2012, Table 3,9, own calculation[2]

The increase in disparities in both data sets has been particularly significant since 2010. The widening of disparities in GVA per person is likely to be the result of increased productivity and in concentration in high value sectors in some regions, and slower recovery in others, alongside a more rapid bounce back in the regional economies of the West, South West and Dublin & Mid East.

Disparities in disposable income per person decreased between 2003 and 2010 but have begun to increase. The narrowing of the gap in disposable income was a result of increased transfers including social welfare alongside growth in primary income in all regions, while the more recent widening of the disparities is likely to be the result of relatively reduced levels of social transfers and variations in primary income levels. Nonetheless the effect of social transfers in reducing regional income disparities is clear.

This widening of disparities among regions since the recovery began is of concern and it is to be hoped that, as and when the benefits of economic recovery spread to other regions, this disparity will narrow once again. This will depend on the structure and nature of the recovery as well as on the focus of government policy and a recognition that growth in all regions benefits the whole country.

 

Helen McHenry

[1] OECD, 2011, ‘Interpreting OECD Regional Indicators’ in OECD Regions at a Glance 2011, OECD Publishing

[2] The Coefficient of variation for GVA uses Dublin and Mid East combined figure, while the Coefficient of Variation for Disposable Income per person uses Dublin and Mid East separately (as they are not reported together).

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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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