A Step-Change in Economic Performance, NIE Council

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Content: Northern Ireland Economic Council A Step-Change in Economic Performance? A Response to Strategy 2010 Occasional Paper 12: September 1999
The Northern Ireland Economic Council (NIEC) is an independent advisory body, set up by the Secretary of State for Northern Ireland in 1977. The Council has a wide remit to provide independent advice to the Secretary of State on the development of economic policy for Northern Ireland. It carries out this role through four series of publications. Reports generally make specific policy recommendations endorsed by the Council. Occasional papers are intended to promote discussion on topical issues while commissioned research monographs are published under the author's name. Finally, Council responses to consultation documents are included in an advice and comment series. The Council also publishes an Annual Report and the text of the annual Sir Charles Carter Lecture, which the Council sponsors in honour of its first chairman. It also holds seminars and conferences designed to promote debate and their proceedings may from time to time be published. A list of the more recent publications is presented at the end of this volume. The Council is composed of 15 members, one of whom is the Chairman who is appointed by the Secretary of State. There are four other independent members. Five members represent trade union interests and are nominated by the Northern Ireland Committee of the Irish Congress of Trade Unions. Five members represent industrial and commercial interests and are nominated jointly by the Confederation of British Industry for Northern Ireland and the Northern Ireland Chamber of Commerce and Industry. Members serve four year terms, which may be renewed. A list of Members is included in this report. The Council has a small staff, including the Director, economists and administration support staff. Council publications are normally prepared by the economists but outside consultants are also engaged for particular projects. All publications go before the Council for comment prior to publication. It is the Council which bears final responsibility for their publication but not necessarily for the content or recommendations of commissioned research monographs.
A Step-Change in Economic Performance? A Response to Strategy 2010 ISBN: 1 897614 54 3 © Northern Ireland Economic Development Office Pearl Assurance House, 1-3 Donegall Square East BELFAST BT1 5HB Tel (028) 90232125 Fax (028) 90331250 e-mail: [email protected] website: www.niec.org.uk
NORTHERN IRELAND ECONOMIC COUNCIL MEMBERS
Chairman: Janet Trewsdale
Members:
Independents Professor B Ashcroft Professor R P Kinsella P D Montgomery MA
Nominated by the Northern Ireland Committee of the Irish Congress of Trade Unions F Bunting P Holloway J McCusker M Morrissey
Nominated by the Confederation of British Industry for Northern Ireland and the Northern Ireland Chamber of Commerce and Industry A Jackson FCA R Johnston BA MBA G P McGrath N P E Smyth MSc C Eng MIMM Bill Tosh
Director:
P K Gorecki
CONTENTS
FOREWORD
1 INTRODUCTION
1
2 A TEMPLATE FOR EVALUATION
4
Introduction
4
Elements of the Template
4
Vision
5
Targets
5
Recommendations
6
Implementation
7
Model
7
An Illustrative Example: Maintaining US Economic Leadership
8
Conclusion
10
3 CONNECTIONS: VISION, TARGETS AND
RECOMMENDATIONS
12
Introduction
12
Vision: A Fast Growing Knowledge-Driven Economy
12
Targets: Ten is the Magic Number
13
Baseline vs Desired Scenarios
15
Long-term Unemployment as a Target
16
Productivity as a Target
18
Road Investment as a Target
19
Recommendations: 62 in Total or 6 per Target
20
Recommendations and Targets: Three Clear Connections
28
Recommendations and Targets: Two Tenuous Connections
29
Recommendations and Targets: Two Missing Connections
30
Recommendations and Targets: One of a Kind
31
Recommendations and Targets: Two Bad Connections
32
Summary and Conclusion
32
Contents
4 COHERENCE: MODELS AND IMPLEMENTATION
34
Feasibility
34
Priorities
37
Shared Understanding
43
No Out-of-Town Shopping Centres
44
Deregulating Bed and Breakfast Accommodation
46
Location of Industry
47
A Tax Break for Inward Investment
48
Delivery Mechanisms
50
A Single Agency?
51
The Fit
54
Model
55
Summary and Conclusion
56
5 SUMMARY AND CONCLUSION
58
Introduction
58
Summary
58
Advancing the Debate
60
Evaluation of Current Economic Development Strategy
60
An Explicit Model of Economic Growth
61
Networking and Linkages
63
A Knowledge-Led Economy
64
Conclusion
65
ANNEX A: RECENT COUNCIL RESEARCH OF
RELEVANCE TO STRATEGY 2010
66
Learning from the Past: Lessons for the Future
66
Social Capability and the Capabilities Perspective
67
Social Capability
67
The Capabilities Perspective
75
Linkages and Inward Investment
76
Publicly-Funded R&D and Economic Development
78
REFERENCES
80
LIST OF TABLES AND FIGURES
Table
Page
2.1 Terms of Reference of Review of Economic Development
Strategy, Northern Ireland
11
3.1 Economic Development Strategy, Northern Ireland, Target
Variables, Current and Desired Levels
14
3.2 Economic Development Strategy, Northern Ireland, Selected
Target Variables, Baseline and Desired Levels
17
4.1 Public Resource Cost Per Full-time Equivalent Undergraduate
Student in Northern Ireland Universities, 1999
40
4.2 GDP Estimates for Sub Regions of Northern Ireland, 1996
48
A.1 Firm Assistance, IDB, LEDU, IRTU and T&EA, 1997-98,
Actual and a Proposed Reduction/Reallocation
72
Figure
4A Identifiable General Government Expenditure, Per Head,
Selected Categories, Northern Ireland, 1997-98 (UK=100)
43
A1 Determinants of Inter-Country Differences in Economic
Performance
74
ABBREVIATIONS USED
B&B CDP CSR DANI DED DENI DETR DoE(NI) DTI ESRI EU GB GCCNI GDP GNP HEFCE HEI IDB IRTU IT
Bed and Breakfast Company Development Programme Comprehensive Spending Review Department of Agriculture for Northern Ireland Department of Economic Development Department of Education for Northern Ireland Department of the environment, Transport and the Regions Department of the Environment for Northern Ireland Department of Trade and Industry Economic and Social Research Institute European Union Great Britain General Consumer Council for Northern Ireland gross domestic product Gross National Product Higher Education Funding Council for England Higher Education Institution Industrial Development Board Industrial Research and Technology Unit Information Technology
Abbreviations Used
LEDU NIE NIEC NIGC NITB NVQ OECD ONS PE QUB R&D RoI SFA SME SSG T&EA TSN UK US UU
Local Enterprise Development Unit Northern Ireland Electricity Northern Ireland Economic Council Northern Ireland Growth Challenge Northern Ireland Tourist Board National Vocational Qualification Organisation for Economic Co-operation and Development Office of National Statistics Public Expenditure Queen's University of Belfast Research and Development Republic of Ireland Selective Financial Assistance Small and Medium-Sized Enterprise Economic Development Strategy Review Steering Group Training and Employment Agency Targeting Social Need United Kingdom United States University of Ulster
FOREWORD As the period covered by Northern Ireland's current economic development strategy, Competing in the 1990s, draws to a close, Government is quite rightly considering the way forward. In March 1999 the Minister for the Economy launched Strategy 2010, a draft strategy for the first decade of the next century. The Minster's Foreword to Strategy 2010 emphasises that in the first instance it "is for discussion and debate". The Minister argues that "[D]ialogue is also necessary because real and effective long-term change cannot be achieved without the widespread involvement of the wider community". The Council agrees that debate and dialogue are needed in the first instance and trusts that this Occasional Paper, setting out the Council's response to Strategy 2010, will contribute to that process. The Minister lays great stress on the importance of the partnership approach to both policy making and implementation. The Council is, of course, a long-standing successful example of partnership representing key economic interests in Northern Ireland. Our remit is advisory in nature - to provide independent advice to the Secretary of State on the development of economic policy for Northern Ireland. Not surprisingly, in view of such a remit, the Council has a particular interest in economic development. It is then in this context that the Council offers its views on Strategy 2010. Strategy 2010 has a vision, ten targets, 62 recommendations and a model, albeit implicit, of the economy. The Council welcomes the vision in Strategy 2010 with its stress on growth with success coming through innovation and the knowledge-based economy. The Council also welcomes the stretching target of raising Gross Domestic Product (GDP) per capita in Northern Ireland from 80 per cent of the United Kingdom (UK) average to 90 per cent by 2010. Several of the recommendations clearly connect with the targets and the vision. Nevertheless, the difficulty of attaining the desired level of the ten targets
Foreword - employment, GDP per capita and so on - cannot be assessed because their expected values in 2010 on unchanged policies are not presented. In other words, if Northern Ireland's future economic development strategy were based on its current strategy, Competing in the 1990s, together with other developments independent of Strategy 2010 such as New Deal, what would employment, GDP per capita and so on likely be in 2010? Estimating this scenario is vitally important. It assists the policy-maker in deciding where effort, resources and attention should be concentrated in meeting the desired values of the target variables. If one or more of the target variables (eg the reduction in long-term unemployment) are likely to reach their desired levels on unchanged policies by 2010, then policy-makers can best devote their attention to those instances where this is less likely to happen (eg raising Northern Ireland's GDP per capita relative to the UK as a whole). The Council's response fills this lacuna with respect to several of the ten targets. Based on this analysis plus that in Strategy 2010 it seems unlikely that several of the targets set in the strategy will be attained by 2010. However, at the same time it appears that one target is likely to be reached on unchanged policies (ie without the strategy). At least a third of the recommendations made in Strategy 2010 either reflect existing or recently announced policies. Since frequently the strategy does not place its recommendations in the context of the current debate it is difficult to evaluate the 'value added' of the strategy. It is this 'value added' that will be the strategy's contribution to realising the desired target levels of employment, GDP per capita and so on. In several instances the Council has provided greater contextualisation but much more needs to be presented. The strategy is also weak in the largely ad hoc nature of the recommendations due to the lack of an explicit model of the economy to provide the bridge between the recommendations and the achievement of
Foreword the targets and, hence, the realisation of the vision. In the Council's view there are only three clear connections between the recommendations and the targets. In several of the seven remaining instances the Council has filled in some of the missing argumentation and evidence but much more remains to be done. Too frequently the recommendations do not contain a discussion of the evidence and reasoning on which they are based. Indeed, on occasion the available evidence suggests a recommendation is unlikely to have the desired impact or be inconsistent with achieving a particular target. However, the Council was able to examine in detail only a small number of the recommendations. More extensive analysis is needed. To a considerable extent the recommendations are too diffuse and cover too many areas. It is not clear why the strategy should encompass such comparatively minor issues as the regulation of bed and breakfast accommodation. Such issues are no doubt important but hardly strategic. Proposals and suggestions are not costed nor priorities specified suggesting that the sums have not been done. To advance the debate the Council has costed several of the recommendations, but more additional analysis is required. The Council considers a much better way forward would be a number of well argued strategic recommendations and targets that were directly related to a model of the economy which itself needs to be fleshed out in greater detail. Such an approach would be consistent with the recent UK White Paper on Competitiveness, Our Competitive Future. Building the Knowledge-Driven Economy, and the Economic and Social Research Institute's (ESRI) paper for the Republic of Ireland (RoI), National Investment Priorities for the Period 2000-2006. Towards this end we present some recently completed and forthcoming Council research which we believe will contribute to achieving this aim. Despite many similarities between Strategy 2010 and Northern Ireland's
Foreword current economic development strategy, Competing in the 1990s, there is no attempt to evaluate the success or failure of current policy. In a recently released report the Council argued that despite some considerable strides towards implementing Competing in the 1990s, overall there remain substantial question marks concerning the vigour with which policy implementation has been pursued since 1990. The Council, in its report, sets clear, quantifiable targets for the way forward and associated institutional mechanisms to ensure transparency and accountability. Steps are already being taken to implement parts of Strategy 2010. However, important concerns about the content, analysis and feasibility of Strategy 2010 have been raised not only by the Council but also by others who follow closely the development of the economy of Northern Ireland. This includes persons in Research Institutes, academia, the press and in democratic forums such as the Assembly and Belfast City Council. A pause for contemplation and reflection on the issues raised concerning Strategy 2010 so that the widespread support of the community can be gained before implementation takes place would, in my view, be a prudent step. One suitable model might be the Examination in Public currently being employed by the Department of the Environment for Northern Ireland (DoE(NI)) with respect to the draft regional planning strategy. It is important that any strategy is subject to the cut and thrust of debate as the Minister rightly recognised in his foreword to Strategy 2010. The testing of the strategy in the market place for ideas is a necessary step in ensuring its quality so that it will deliver the promised targets and thus realise the vision. The Council sees its contribution in this light and hopes that it will inform and enrich the debate in the Assembly and in the wider society. We have chosen to illustrate this Occasional Paper with a painting by
Foreword Morris Louis, Golden Age (1959), hanging in the Ulster Museum. It is an important painting which marked a step-change in art of the sort Strategy 2010 is trying to create in the Northern Ireland economy. The photograph is reproduced with the kind permission of the Trustees of the National Museums and Galleries of Northern Ireland, owner of the painting and Mrs Marcella Louis Brenner, owner of the copyright. Janet M Trewsdale Chairman
1 INTRODUCTION 1.1 On 23 March 1999 the Minister for the Economy launched Strategy 2010, a proposed economic development strategy for Northern Ireland. Strategy 2010 contains a vision for the economy, 10 targets, 62 recommendations, and a series of implementation deadlines. In essence Northern Ireland has been presented with a draft economic strategy for the first decade of the new century to build upon and take forward the current 10 year strategy, Competing in the 1990s (DED, 1990). 1.2 Responsibility for guiding the development of the strategy and its conclusions lay with the Economic Development Strategy Review Steering Group (SSG or Steering Group), chaired by the Permanent Secretary of the Department of Economic Development (DED). The SSG is composed of twelve individuals drawn from the public and private sectors1. In preparing the strategy document itself the SSG was assisted by the Strategic Review Unit, part of DED. 1.3 There were also seven Cross Sector Working Groups2 and 11 Sector Working Groups3. While the Cross Sector Working Groups were drawn from industry, academia, government and trade unions, the Sector Working Groups drew on the experience and expertise of the private sector led Northern Ireland Growth Challenge (NIGC) and others. A Consultation Panel, with wide representation, including the Economic Council, received and commented on these Groups' reports as well as some preliminary ideas for the strategy. Members of the SSG attended 1 The twelve are listed in Economic Development Strategy Review Steering Group (1999, p.4). 2 These were: culture; energy; exports and marketing Northern Ireland; infrastructure; innovation and design; investment and finance; and skills and education. 3 These were: agri-food; construction; electronics; engineering; food processing; health technologies; software; telecommunications; textiles and apparel; tourism and tradable services. 1
Introduction the meetings of the Consultation Panel, both as observers and participants. However, a pre-publication draft of the strategy together with its recommendations was not discussed nor seen by the Panel. 1.4 Thus, in preparing the strategy, the SSG was able to draw on the expertise and advice of some 300 people drawn from a large cross section of persons in Northern Ireland concerned with promoting economic development. This reflected the fact that an important objective of the review process was "to ensure the public and private sectors worked together, in order to build consensus about the direction of the strategy and acceptance by all concerned of their own part in delivering it" (Economic Development Strategy Review Steering Group, 1999, p.25). These differing perspectives and fields of expertise should therefore provide a powerful platform on which to build and launch the strategy. 1.5 The Minister's foreword to Strategy 2010 emphasises the "need for discussion and debate in the first instance" (p.2). This is essential not only in view of the importance of economic development, but also because the strategy has not been subject to widespread comment and debate. It is consistent with the extensive, open and inclusive public consultation process undertaken by the DoE(NI) in developing a regional strategic framework which is being prepared in parallel with the economic development strategy4. 1.6 In this Occasional Paper the Council provides its perspective on Strategy 2010. Section 2 sets out a template against which the strategy is evaluated. Attention then turns in Sections 3 and 4 to the issue of whether Strategy 2010 contains the critical elements of the template and whether these elements are linked in an appropriate way. In other words, 4 The DoE (NI) released its draft strategy, Shaping Our Future, in December 1998 for comment. When all the responses have been received an examination in public by an independent panel will consider any outstanding issues. These will then be incorporated in a final draft for consideration by the Assembly. 2
Introduction to what extent does Strategy 2010 provide a well thought out, coherent and consistent basis for developing the regional economy? Section 3 addresses the relationship between the strategy's vision, targets and recommendations; Section 4 considers implementation and the model of the economy employed by Strategy 2010. A Summary and Conclusion completes the paper in Section 5 which also includes a discussion of current Council research relevant to the way forward in economic development in Northern Ireland. 3
2 A TEMPLATE FOR EVALUATION
Introduction
2.1 In this section the Council sets out what it regards as an appropriate template which will serve to evaluate Strategy 2010. Each of the five elements of the template are discussed and defined. An illustrative example is presented to put flesh on the template. Finally, it is noted that the approach adopted by the Council in commenting on Strategy 2010 is fully consistent with the Terms of Reference within which the strategy was formulated.
Elements of the Template
2.2 An effective economic development strategy should contain at least five elements:
·
a vision;
·
targets or outcomes, together with milestones and a timetable;
·
recommendations or instruments that can be considered as inputs;
·
credible implementation mechanisms; and,
·
a model of the economy, which provides the mechanism for
developing and prioritising inputs and for transforming inputs
into outputs.
These five elements are clearly interrelated. If the model of the economy is incorrectly specified then the policy instruments may not have the desired effect and the targets selected will not be reached. Thus, it is important not only to consider each element of the strategy separately but also how they interact.
4
A Template for Evaluation Vision 2.3 The vision should be a short statement that captures the goal(s) or essence of the strategy. It might embody certain values and/or the underlying philosophy which could motivate those involved, whether firms, government officials, employees, and/or elected representatives. By its nature the vision will tend to be broad brush, directional and aspirational, rather than specific. In some important sense the vision is the embodiment or reflection of society's Social Welfare function. This function carefully weighs the different preferences, viewpoints and values of individuals in formulating the vision. To a considerable degree the vision is a value judgement. Reasonable people can therefore quite legitimately disagree with the vision. Targets 2.4 Targets or outcomes are a set of quantifiable economic and social bench-marks against which the success of the strategy can be determined. In other words, they translate the vision into a tangible set of quantifiable outputs that operationalise the vision. The targets need to be consistent with the vision as well as with each another. They should be mutually compatible, not mutually inconsistent. 2.5 Using this approach, only measurable targets are considered. If the vision refers to such concepts as well-being or happiness or equality of opportunity, these are more difficult but not impossible to quantify. For example, recent research suggests that happiness is increased the more democratic is society and the lower the level of unemployment5. However, economic strategies, perhaps more than most, lend themselves to quantification. 5 For details see Economist (1999). 5
A Template for Evaluation
2.6 Selecting the target variables and their desired values requires careful judgement. The values should be both attainable and, at the same time, stretching and demanding. Two scenarios should be presented in any strategy:
·
baseline scenario - what would happen if there were no change
in policy. In other words, what would the target variable values
be in (say) ten years on current policies; and,
·
desired scenario - the desired values of the target variables in ten
years as specified by the strategy.
A comparison of the baseline and desired scenario should enable an evaluation of how demanding are the targets. If there is little difference between the two scenarios then only small or marginal change to current policies might be expected; if there are large differences, then substantive, even radical, change might be anticipated.
2.7 Forecasting ten years ahead is a difficult task6. Nevertheless, undertaking such an exercise forces the strategist to consider critical relationships, systematic linkages, behavioural assumptions and incentive structures. It will also make it easier to revise the strategy and to conduct a mid-term evaluation as new developments - anticipated and unanticipated - arise.
Recommendations
2.8 Strategies usually come with a set of recommendations that are designed to achieve the given set of targets. These recommendations can be thought of as policy interventions or instruments. They are inputs, the targets, outputs. In essence they embody the added value of the strategy.
6 An alternative might be to consider various scenarios. 6
A Template for Evaluation 2.9 The recommendations need to be carefully articulated and well argued, with all the available evidence critically evaluated. This helps ensure that the targets will be realised and should assist to persuade those subject to the policy, whether responsible for its implementation or directly affected by the recommendations, of its value and feasibility. Carefully sifting the evidence also avoids thinking based on little more than casual empiricism. Both intended and unintended consequences of a recommendation need to be considered. Finally, all the recommendations need to be treated as a whole to ensure that they fit together coherently. 2.10 In some instances, of course, the evidence supporting or underpinning a recommendation will be weak or non-existent. Thus the strategist will be forced to make a judgement based on their own views and experience. Every attempt should therefore be made in presenting the recommendations to specify the basis - hard evidence or opinion - on which a recommendation is made. Implementation 2.11 It is commonplace that well written and argued reports and strategies gather dust on library shelves or Ministers' desks. To prevent such an outcome requires that careful consideration is given to the process by which the recommendations are translated into action. In some instances this may require new institutional arrangements, as well as timetables, regular reviews and/or tightly specified goals. It will also require that careful attention is paid to key constraints (eg budgetary limitations) and thus the feasibility of the strategy. Model 2.12 The strategy's recommendations typically pull the major economic policy levers with a view to realising the targets. However, for the desired outcome to be achieved requires an understanding of the way 7
A Template for Evaluation in which the economy functions: 8
A Template for Evaluation
·
What are the critical factors in the economy?
·
What are the key relationships?
The model is a representation of the way in which the economy works. It is not a complete description but rather a selection of what are considered the major factors of influence. It can be thought of as a forensic tool for exploring the implications of alternative policies. It should thus provide insight into the channels and mechanisms through which the recommendations lead to the achievement of the targets.
2.13 Developing a model requires a careful examination of the evidence of the way the economy functions combined with some prior sense of what is important7. Since much of the theory and evidence on economic growth and development is likely to be drawn from outside Northern Ireland, an appreciation of its relevance to the regional economy is required. Even so, there may be some important gaps in our knowledge. Future research could sensibly be directed at filling those gaps and thus informing any adjustment or revisions to the strategy as it progresses.
2.14 The representation of the economy need not be an elaborate econometric model. If, for example, the key target is the promotion of productivity growth then every effort should be made to examine what the economic literature has to say concerning its key determinants. The advantage of a model is that it means that these key determinants are placed in a wider framework and all the implications and ramifications carefully explored.
An Illustrative Example: Maintaining US Economic Leadership
2.15 Much of the discussion so far has been necessarily abstract and
7 For a defence of models in economics see Krugman (1995, pp.67-88). 9
A Template for Evaluation general. A concrete example which contains several but not all the elements of a strategy will usefully complement this discussion. 2.16 Baumol et al (1991) have a goal (or vision) of maintaining United States (US) economic leadership measured in terms of labour productivity and GDP per capita. This reflects the authors' views that productivity growth "in the long run ... can make an enormous contribution to living standards, and that there is no substitute for productivity growth in this respect" (p.24). Furthermore, by examining the historical record of the US, the UK and Germany (pp.15-16), they show that there is no long-run trade-off between employment and productivity growth. Baumol et al estimate a baseline scenario for the two variables that capture the essence of economic leadership to 2020 on the assumption that the US economy will at least maintain historical growth rates8 in labour productivity and GDP per capita. 2.17 For each of the competitor countries - Germany, France, Japan, Austria and so on - their productivity and GDP per capita for 2020 are estimated by assuming that they will grow at a rate somewhat less than their substantial rates in the period 1950 to 1979, but above their long-run historical growth rates. The desired levels of the two target variables for the US economy for 2020 thus are the growth rates necessary to maintain US leadership. These are substantially higher than the baseline scenario. For example, the US baseline scenario is 2.27 per cent growth in productivity, but the desired level to maintain US leadership over Germany is 3.50 per cent, France, 3.11 per cent, Japan, 3.10 per cent, and Austria, 3.01 per cent. 2.18 Baumol et al carefully review the available evidence to determine what needs to be done so that the desired level of the target variables can be realised. This has the advantage that it does not "rely on the authors' 8 1870-1979. 10
A Template for Evaluation
experience, judgement, or even pure hunches as the basis for the proposals offered" (p.252). The recommended measures are based on the view that the three prime determinants of productivity growth are:
·
the investment rate;
·
the magnitude of the effort devoted to basic and applied research;
and
·
the education of the labour force and managerial personnel
(p.260).
In addition, the authors make proposals with respect to promoting entrepreneurship. However, in some instances the evidence available is lacking and the authors are required to make educated guesses. In such instances the basis is clearly laid out for the reader.
Conclusion
2.19 To a considerable extent, of course, the successful achievement of all five elements of a strategy is only likely in an ideal world. Thus it could be argued that attempting to evaluate a strategy in this way is not worth the effort. However, this misses the point. Approaching a strategy in this way forces the strategist to give careful consideration to the evidence, the consequences - unintended and intended - important relationships, and so on. In other words, it imposes a certain discipline and consistency. The result should be 'joined-up' policy for 'joined-up' government. Finally, the prize of a successful economic development strategy is considerable. Raising Northern Ireland's growth rate by 0.5 of a percentage point generates an extra increment of output of Ј72m9 year after year.
9 Based on GDP for 1996 of Ј14,470m for Northern Ireland (Office of National Statistics (ONS), 1998a, Table 12.1, p.145). 11
A Template for Evaluation 2.20 The Council's template for evaluating the strategy is consistent with the Terms of Reference of the review of economic development strategy, set out in Table 2.1. For example, the goals (or targets) of the strategy have to be ambitious but attainable while the broad array of factors that influence economic progress fall within the ambit of the review. TABLE 2.1 Terms of Reference of Review of Economic Development Strategy, Northern Ireland The Terms of Reference for the review were as follows. It should: · encompass the entire economic context and set ambitious but attainable long term goals for the Northern Ireland economy in terms of wealth creation, employment and living standards; · range widely, covering not only industrial development matters but other major factors such as education and infrastructure provision, to the extent to which they will influence the rate of Northern Ireland's economic progress; · have regard to the Government's policies on sustainable development and equality of opportunity and to the public expenditure background; · be linked as appropriate to a regional spatial development strategy; · identify the major priorities for action by the Government, particularly DED and its agencies and the private sector, to create the conditions for meeting these goals; · provide strong direction for DED and its agencies and the private sector; and · be capable of adjustment in the light of future events. 12
A Template for Evaluation Source: Economic Development Strategy Review Steering Group (1999, p.24) 13
3 CONNECTIONS: VISION, TARGETS AND RECOMMENDATIONS Introduction 3.1 Strategy 2010 has, to a greater or lesser extent, most if not all of the elements of the template presented in Section 2. As noted in the opening paragraph of this Occasional Paper there is a vision, targets and recommendations, each of which has a timescale for implementation. A number of the recommendations specifically concern institutional changes designed to deliver the recommendations. Furthermore, it can be argued that much of the discussion in Strategy 2010 prior to the presentation of the recommendations presents - implicitly at least - a model of the economy. In this and the next section the Council's discussion will thus focus on the quality of Strategy 2010 and the degree to which the five elements identified in Section 2 fit together in a coherent whole. Vision: A Fast Growing Knowledge-Driven Economy 3.2 Strategy 2010 has a sense of the way forward in terms of a vision: [A] fast growing, competitive, innovative, knowledgebased economy where there are plentiful opportunities and a population equipped to grasp them (Economic Development Strategy Review Steering Group, 1999, p.129). The Council welcomes this vision with its emphasis on growth, with success coming through innovation and the knowledge-based economy. In order to fill openings created, Northern Ireland has to train its workforce so that they are able to supply the necessary skills. 3.3 Such a vision accords with the widely held view that the future of the economy lies in brains not brawn. It is consistent with much of the 14
Connections: Vision, Targets and Recommendations first part of Strategy 2010 which draws attention to the importance of innovation and knowledge for economic growth. It also agrees with the recent UK White Paper on Competitiveness, Our Competitive Future. Building the Knowledge-Driven Economy (DTI, 1998a). Finally, it is consistent with the thrust of Northern Ireland's current economic development strategy and the Council's own vision of the type of economy that Northern Ireland should be striving to achieve - "a selfsustaining, rapidly growing economy providing a high level of employment" (NIEC, 1997b, p.47). It is not just a matter of creating jobs, but also high paying sustainable jobs. This is, of course, implicit in that a more innovative and knowledge-driven economy will tend to result in a higher standard of living. Furthermore, when the vision is fleshed out in Strategy 2010, it is clear that rising living standards based on durable jobs is an important part of the vision, since it is argued that an economy that realises the vision will be characterised by "high value-added, high wage, lasting jobs." (Economic Development Strategy Review Steering Group, 1999, p.129). Targets: Ten is the Magic Number 3.4 Strategy 2010 has ten targets or outcomes (Table 3.1). These relate to GDP per capita relative to the UK, wage levels, Employment Growth, the importance of high technology industries, investment in roads and so on. As the strategy points out, some of these targets are final outcomes (eg Northern Ireland/UK GDP per capita), others are intermediate outcomes (eg share of high technology industries in total employment) and some are inputs (eg investment in roads as a percentage of GDP). By and large the targets are consistent with the vision. They reflect a clear emphasis on growth in employment and GDP per capita, and set targets that will assist in facilitating this growth, via the increase in the importance of high technology industries, increased levels of Research and Development (R&D) and improved educational qualifications of the workforce at National Vocational Qualification (NVQ) level 4. 15
Connections: Vision, Targets and Recommendations 16
Connections: Vision, Targets and Recommendations
TABLE 3.1 Economic Development Strategy, Northern Ireland, Target Variables, Current and Desired Levels
Current and Desired Level
Target Variable
Current (1998-99)
Desired (2010)
T1 GDP per head as a % of UK T2 Average weekly earnings as a % of UK T3 Employment growth T4 Long-term unemployment as a % of workforce T5 Registrations of new businesses per 10k population aged 16 or over T6 Level of exports as a % of regional GDP T7 Share of high-tech industries in total employment T8 % employed workforce qualified to NVQ level 4 T9 Business R&D as a % of GDP T10 Investment in roads as a % of GDP
80% 86% 0.5% pa 4.0% 31 21% 2.9% 23% 0.6% 1.0%
90% 91% 1.5% pa 2.0% 40 30% 6.0% 35% 1.5% 1.5%
Source: Economic Development Strategy Review Steering Group (1999, p.217) 17
Connections: Vision, Targets and Recommendations Baseline vs Desired Scenarios 3.5 The targets in Strategy 2010 refer to the desired values of the target variables in 2010, together with their current values (Table 3.1). However, little attempt is made to forecast what values the target variables would take in 2010 if present policies were to continue unchanged. In other words, if Northern Ireland's future economic development strategy were to be based on the current strategy, Competing in the 1990s, together with other developments independent of Strategy 2010, what, for example, would be the level of GDP per capita in 2010? The implicit assumption in Strategy 2010 seems to be that the current values of the target variables are good indications - with some exceptions - of their values in 2010 on unchanged policies. However, in the earlier part of Strategy 2010 a number of factors, such as peace and political stability (p.101) and favourable demographic forces (p.102), are identified which are likely to contribute to convergence with the UK economy. If a baseline scenario were provided then the reader would be in a position to judge how demanding are the targets and the added value of the strategy. 3.6 One way of establishing the baseline scenario is to examine the various forecasts for the Northern Ireland economy prior to the announcement of Strategy 2010. Cambridge Econometrics, for example, provided one such forecast. In February 1999 they commented that: In the long term, [Northern Ireland] GDP is expected to grow at just under 21/2% pa, slightly below the UK average, while employment is forecast to grow at around 3/4% pa, about the same as the UK average. Unemployment will thus remain about 3 pp above the average. With its current continued high dependence on declining traditional industries, Northern Ireland will have to work hard to attract further foreign Direct Investment to supply new high-tech jobs, while 18
Connections: Vision, Targets and Recommendations persuading indigenous companies to look internationally for business as well as encouraging a dynamic small business sector (Cambridge Econometrics, 1999, p.61). Using this baseline, the targets with respect to GDP per capita, employment growth, share of high technology industries and increased R&D are very demanding. Indeed, it could be argued that they require a step-change in the economic performance of the Northern Ireland economy. 3.7 The Council took the analysis a step further by obtaining the specific values of the target variables for which Cambridge Econometrics provides forecasts to 2010. The results are presented in Table 3.2 for T1 to T3 and T7. The baseline scenario suggests that by 2010 three of these four target variables will decline relative to their current levels, while one will increase. In other words, the current level of a variable is not a good proxy for the baseline scenario to 2010. The results in Table 3.2 demonstrate how demanding the targets in the desired scenario will be to attain, particularly relative GDP per capita. Cambridge Econometrics see Northern Ireland/UK GDP per capita declining from 79.3 per cent in 1996-98 to 74.4 per cent in 2010, compared with a desired level of 90 per cent. Long-term Unemployment as a Target 3.8 One target not covered by Cambridge Econometrics concerns the desired reduction in long-term unemployment (as a percentage of the workforce) from 4 to 2 per cent. Substantial efforts are being made in Northern Ireland to reduce the blight of long-term unemployment. It is commonly accepted that the growth of the economy is unlikely by itself to eliminate the problem10. Thus the New Deal has been introduced by 10 For a discussion of long-term unemployment in a Northern Ireland context see NIEC (1997a). 19
Connections: Vision, Targets and Recommendations the 20
Connections: Vision, Targets and Recommendations
TABLE 3.2 Economic Development Strategy, Northern Ireland, Selected Target Variables, Baseline and Desired Levels
Target Variable
Current, Baseline and Desired Scenario _________________________ 2010 ________________ Current* Baseline Desired
T1 GDP per head as a % of UK
79.3% 74.4% 90%
T2 Average weekly earnings as a % of UK 86.3% 84.3% 91%
T3 Employment growth
0.5% pa 0.7% pa 1.5% pa
T7 Share of high-tech industries in total employment
2.5% 2.1% 6.0%
* Average 1996-1998 Source: Table 3.1 above and data supplied by Cambridge Econometrics
Government as part of Welfare to Work, with an emphasis on reducing the number of the long-term unemployed. A substantial tranche of spaces has been allocated to Northern Ireland. As part of the Chancellor's package of 12 May 1998 it was announced that 30,000 places for the long-term unemployed over 25 years of age were being created on a pilot basis. This should make a substantial contribution to reducing the incidence of long-term unemployed in Northern Ireland, which in May 1998 numbered 25,658 across all age groups. This, combined with New 21
Connections: Vision, Targets and Recommendations Targeting Social Need's (TSN) emphasis on reducing unemployment11 and replacement of local programmes12 to deal with the long-term unemployed by Worktrack on 31 August 1999, suggests that major inroads are likely to be made in reducing those out of work for a year or more in the near to medium-term. It thus appears that there are grounds for thinking that the baseline scenario on this variable may approximate the desired scenario, given current policy interventions, irrespective of Strategy 201013. Productivity as a Target 3.9 Attention needs to be paid not only to GDP per capita but also to GDP per employed person or some other measure of overall productivity. As noted in Section 2, Baumol et al (1991) make a good case for productivity as a target variable for a strategy concerned with the economy. It also accords with the views of HM Treasury in their pre1999 Budget Report: "[P]roductivity - the quantity of output each of us on average produces - is a fundamental yardstick of economic performance. No economy can grow sustainably unless its productivity improves. And poor productivity condemns a nation to be held back" (HM Treasury, 1998, p.28). When analysing the RoI's Gross National Product (GNP) per capita growth, Bradley et al (1997) demonstrate that the employment rate14, the participation rate15, the dependency ratio16 as 11 New TSN is discussed in NIEC (1998). 12 Such as Action for Community Employment. 13 This assumes that the relatively low Northern Ireland unemployment rate will continue so that employment opportunities will be available for the long-term unemployed. 14 Total employment divided by the labour force. 15 The labour force divided by the population of working age. 16 The population of working age divided by the total population. 22
Connections: Vision, Targets and Recommendations
well as productivity all affect GNP per capita growth. Furthermore, these factors do not always move in the same direction17. Thus, it is important that productivity should be an explicit target for a Northern Ireland economic development strategy.
Road Investment as a Target
3.10 As noted in Section 2, targets should relate to outputs not inputs. By and large the ten targets met this criterion. However, in the case of the target concerning road investment, this is clearly an input not an output. Furthermore the target takes no account of the commitment of the Department of the Environment for Northern Ireland (1998b) to improve the local economy's public transport system and of the potential consequences for labour mobility, particularly for those located in deprived areas with limited access to alternative means of transport. Thus T10 should be added to the list of recommendations and amended to include reference to increased funding for public transport. Nevertheless, in evaluating and discussing the strategy, we will treat such investment as a target.
3.11 In sum, while the target variables in general connect well with the vision, more work needs to be done on:
·
estimating what would have happened in the absence of the
strategy so that a baseline scenario can be established;
·
adding the desired level of productivity in 2010 as a target; and,
·
turning the target concerning road investment into a
recommendation and amending it to include reference to
17 However, they may be related. For example, if an economy is growing based on high productivity and consequently high wages this may induce increased participation. 23
Connections: Vision, Targets and Recommendations increased funding for public transport. Estimating the baseline scenario is vitally important. It assists the policymaker in deciding where effort, resources and attention should be concentrated in meeting the desired targets. If, for example, the baseline scenario shows one or more of the target variables will reach their desired levels on unchanged policies by 2010, then policy-makers can devote their attention to those instances where there is a disparity between the desired and the baseline scenario. 3.12 Despite these caveats it would appear that many of the targets for 2010 are extremely challenging and suggest a step-change in the performance of the Northern Ireland economy. The Council welcomes stretching targets. Raising GDP per capita from 80 per cent of the UK average to 90 per cent by 2010 is especially demanding. This will require, other things being equal, much superior productivity growth performance in Northern Ireland relative to the rest of the UK. It is unlikely that tinkering around the edges will suffice to meet the targets. Fresh ideas will need to be considered. As one of the members of the Steering Group remarked: If we stay with the old ways we are going to be in very serious trouble in a relatively short time. We have no alternative but to seek radical strategies to attract inward investment, bolster indigenous industries and create a dynamic small business sector (Kingon, 1999, p.53). Attention now turns to the 'how' of the strategy. Recommendations: 62 in Total or 6 per Target 3.13 Strategy 2010 makes 62 recommendations, grouped under five key principles, including 'Equality and Social Cohesion' and 'Self Help' (See Box 1 for details). These five principles emerged from the review 24
Connections: Vision, Targets and Recommendations process as well as from Steering Group discussions (Economic BOX 1 Strategy 2010: The Recommendations Equality and Social Cohesion · Locational Policy R1 The cities and towns identified in the DoE's "Shaping our Future" regional plan should be the main focus for the future location of industry. (p.144) · Social Partnership R2 An Economic Development Forum should be established. R3 A high powered, high quality research body should be established. (p.146) · Sustainable Development R4 Businesses should take every opportunity to minimise their environmental impact through measures which will also enhance their competitiveness. (p.148) Knowledge-Based Economy · Skills and Education R5 The Dearing report should be speedily and comprehensively implemented. R6 Economic development strategy must inform education and training policy and its funding and delivery mechanisms. R7 Collaborative clusters of schools, businesses and colleges should be 25
Connections: Vision, Targets and Recommendations established. 26
Connections: Vision, Targets and Recommendations BOX 1 continued Strategy 2010: The Recommendations R8 A valued sub-degree level vocational educational programme should be established. R9 A clearer focus is needed for the Further Education sector. R10 The current system of careers guidance should be enhanced. R11 Teacher training should include an industry placement module. (p.150) · Information Age R12 An Information Age Commission should be established. (p.155) · Innovation R13 There should be a campaign to promote innovation and good design. R14 Efforts to increase R&D in indigenous firms should be intensified. R15 University/business links should be enhanced. R16 Businesses should look for opportunities to collaborate on R&D. R17 A separate stream of funding to encourage R&D in universities is needed. R18 Further funding should be allocated to the Teaching Company Scheme. R19 Consultation is needed about the coverage of future Centres of Excellence. R20 There should be a Northern Ireland equivalent of the "Reach Out" fund. R21 The support structures for spin-out companies should be enhanced. R22 A programme to promote Northern Ireland as a region associated with quality design is needed. (p.158) 27
Connections: Vision, Targets and Recommendations BOX 1 continued Strategy 2010: The Recommendations · Networking R23 The Northern Ireland Growth Challenge should further develop its sectoral approach to networking. R24 The business bodies should co-operate to increase networking. (p.163) Enterprise · Celebrating Success R25 The Government should set up a joint working group with the business bodies to consider ways and means of celebrating business success. (p.166) · Rebalancing the Incentives Package R26 The existing grant regime for inward investment should be maintained unless and until new measures become available. R27 Northern Ireland should have a special rate of Corporation Tax for new inward investments over a period of 5 years. R28 Selective Financial Assistance (SFA) should be less readily available to existing firms. R29 The Assembly should discuss further options for tax incentives with the Chancellor. (p.168) · Priorities for Financial Support R30 Financial assistance should be prioritised according to characteristics displayed by applicant companies. 28
Connections: Vision, Targets and Recommendations BOX 1 continued Strategy 2010: The Recommendations R31 A larger share of resources should be devoted to "softer" forms of assistance. (p.173) · Private Equity Finance R32 The establishment of a venture capital fund. R33 The development of a Business Angels initiative. (p.176) · The Planning System R34 No further out-of-town shopping developments for five years. R35 The Assembly should introduce a rates regime which helps to nurture small indigenous retail businesses. (p.178) Outward Looking · Infrastructure Linkages with Other Regions R36 The Belfast-Dublin road route should be developed as a matter of priority. R37 A centralised plan should be established to develop and budget for Strategic Transport Routes on a UK-wide basis. R38 Future energy investment decisions should be made in the context of an island of Ireland energy market. R39 The machinery for the creation of an island energy market should be established as a matter of priority. (p.181) 29
Connections: Vision, Targets and Recommendations BOX 1 continued Strategy 2010: The Recommendations · European Union R40 There should be a well-resourced, high profile Northern Ireland regional office in Brussels. R41 There should be a Minister with special responsibility for Northern Ireland's interests in Europe. R42 A further round of special European Union (EU) funding, with a particular focus on economic regeneration, is necessary to maximise the benefits of peace. (p.186) · Fostering Global Perspectives R43 Programmes such as the Business Education Initiative and Explorers which provide opportunities for students and business people to gain experience and knowledge overseas should be expanded, and new ones developed. R44 Tailored training courses in self-presentation should be developed and introduced in all schools and colleges. R45 foreign language teaching should be extended throughout the education system and the choice of languages available should be widened. R46 Twinning arrangements with other regions should be developed. R47 Northern Ireland should engage more actively in European, UK and, where appropriate, RoI initiatives, in areas such as technology, competitiveness, Information Technology (IT) and education and training. (p.190) 30
Connections: Vision, Targets and Recommendations BOX 1 continued Strategy 2010: The Recommendations Self Help · Local Economic Development R48 The Assembly should address the future funding and evolution of local economic development as soon as possible. R49 A pilot project to explore methods of rationalising local economic development arrangements should be set up. (p.194) · The Rural Economy R50 Deregulation of the bed and breakfast sector of the tourism industry should be considered. R51 New technology-driven businesses should be promoted in rural areas. R52 A technology training programme targeted at those working in the rural community should be devised. (p.196) · Energy Policy R53 An updated energy policy statement should be adopted. R54 Strategic investments may require a public/private partnership justifying public investment. R55 Targets should be set for use of Non-Fossil Fuels for electricity generation, for the achievement of energy efficiency and the use of Combined Heat and Power. R56 The recommendations of the Government's Utilities Regulation Review should be fully implemented. R57 The revision of the electricity generation contracts should be brought to a speedy conclusion. 31
Connections: Vision, Targets and Recommendations BOX 1 continued Strategy 2010: The Recommendations R58 The Ј40 million fund, held by DED, should be used to buy out generating capacity currently under contract to Northern Ireland Electricity (NIE). (p.199) · The Structure of the Public Sector R59 The public administration arrangements in Northern Ireland should be reviewed urgently. (p.204) · DED Structures R60 The recommendations of the McKie report relating to a sectoral approach and to information sharing should be implemented as soon as practicable. R61 A new single economic development body should be created. (p.205) · The Public Expenditure Dimension of Economic Development R62 A Northern Ireland Development Fund should be established. (p.207) Source: Economic Development Strategy Review Steering Group (1999, various pages) Development Strategy Review Steering Group, 1999, p.130). Within each of the principles up to six headings are used to group the recommendations. Several of the key principles, including 'KnowledgeBased Economy', 'Enterprise' and 'Outward Looking' have a clear resonance with the strategy's vision. 32
Connections: Vision, Targets and Recommendations 3.14 One of the most striking characteristics of the recommendations is their breadth, both horizontally - across a wide variety of topics from locational to energy policy - and vertically - from strategic direction on the course of public support for industry to the details of the appropriate regulatory regime for bed and breakfast accommodation. To some extent, of course, this reflects the broad array of Groups created to advise the Steering Group18 consistent with the review's broad Terms of Reference19. However, several of the recommendations do not appear to be derived from these Groups, such as those relating to the Northern Ireland Tourist Board (NITB) regulation of the bed and breakfast sector. We will return to this below. 3.15 The recommendations are the how of the strategy. They represent the ways in which the desired scenario, together with its associated targets, will be realised. We need to consider the degree to which the recommendations link with the targets. However, the strategy does not explicitly link the recommendations to the targets. While in several instances the link is clear, in others it has to be inferred. Thus, there may be links which the Council fails to identify because of this lack of specificity in Strategy 2010. Recommendations and Targets: Three Clear Connections 3.16 In the case of three of the targets - T5, T7 and T9 in Table 3.1 there are clear links to the recommendations. New firm formation is to be enhanced by greater access to private equity finance and reduced grant aid from the state20 (Economic Development Strategy Review Steering Group, 1999, pp.176-77). The emphasis on innovation in the public and private sectors should encourage the growth of high-tech industries and 18 These are listed in footnotes 2 and 3, above. 19 These are presented in Table 2.1 above. 20 T5, R32, R33. 33
Connections: Vision, Targets and Recommendations business R&D in relation to GDP21. It could also be argued that recommendations designed to give businesses a higher profile within society22 as well as new ways of attracting inward investment23 are likely to create conditions encouraging enterprise and innovation, thus assisting in the achievement of T5, T7 and T9. However, the recommendation concerning inward investment lasts only five years. It is not clear that this will give the required boost to inward investment. Indeed, it may encourage firms to enter Northern Ireland for short-term gain rather than embed themselves in the economy for the longer-term. 3.17 Although there are clear qualitative connections between several of the recommendations and these three targets, it is not obvious that the quantitative connection is sufficient to achieve the desired scenario by 2010. In the case of T5, for example, an analysis of the determinants of birth rates of firms would have had to be undertaken, with the importance of the amount and form of finance to assist firm start-ups assessed and compared with other determinants. No such study was undertaken. Recommendations and Targets: Two Tenuous Connections 3.18 Despite the lack of a clear link presented in Strategy 2010 it could be argued that, implicitly at least, connections exist between the recommendations and the targets relating to exports (T6) and employment growth (T3). The achievement of a higher share of hightech industries in output and the increased levels of R&D should see increased growth and exports, both of which are characteristics of hightech and knowledge intensive industries. For example, firms which are innovators in Northern Ireland have experienced employment growth 21 T7, T9, R13 to R22. 22 For example, R6, R7, R11, R25. 23 R26, R27. 34
Connections: Vision, Targets and Recommendations rates substantially greater than non-innovators24, while research undertaken by the Organisation for Economic Co-operation and Development (OECD) (1998, Figure 1.13, p.51) shows that investment in IT is positively related to employment growth. In the 1995 Mannheim Innovation Panel Survey, 31 per cent of non-innovator companies exported, while 89 per cent of companies with an R&D department exported25. However, Strategy 2010 does not flesh out such links. Recommendations and Targets: Two Missing Connections 3.19 There are no recommendations relating to two of the targets - the reduction in long-term unemployment (T4), and the increase in the employed workforce qualified to NVQ level 4 (T8). While there was a Cross Sector Working Group on skills and education, neither in Strategy 2010 nor in the Group's report is any mention made of how the target level of NVQ level 4 is to be achieved. Such a target would have knockon implications for achievement at NVQ levels 1 to 3 as well as the reduction in educational underachievement highlighted in the strategy (Economic Development Strategy Review Steering Group, 1999, p.115). As regards the level of long-term unemployment, a labour market topic, there is little discussion of such topics in Strategy 2010, nor was a Group created to look at such issues. The issue, as noted above, is being addressed separately by New Deal, New TSN and Worktrack. This is not to deny, of course, that Strategy 2010 does not make recommendations R5 to R11 - relevant to skills and education but rather that these are not linked in any explicit way to the targets. 24 For details see Roper and Hewitt-Dundas (1998, Table 7.1, p.55). Innovators with respect to product innovations experienced employment growth of 19 per cent over 1993-95; non-innovators, 7.9 per cent. 25 Based on presentation by J. M. J. Severijns given at the Seminar "Innovation Policy and Strategy for Regional Progress in Europe", European Institute of Public Administration, European Centre for the Regions, Barcelona, 11-13 November 1998. 35
Connections: Vision, Targets and Recommendations Recommendations and Targets: One of a Kind 3.20 Although there is no recommendation concerning the target with respect to a 50 per cent increase in road investment (T10), nevertheless, the target does contain a rationale within itself. Specifically, it is noted that for "every 1% of GDP invested in infrastructure it is estimated that there is a corresponding improvement of 0.25% in productivity" (Economic Development Strategy Review Steering Group, 1999, p.222). However, four points need to be made in relation to this discussion. First, this is an average relationship whereas the discussion in Strategy 2010 is concerned with increased investment at the margin. Thus some attention needs to be paid to the stock of investment in roads in relation to demand. In this respect Northern Ireland could be considered well endowed when compared with Great Britain (GB). For example, as at 1 April 1997 Northern Ireland had 5,235 private and light goods vehicles per km of motorway compared with 7,294 for GB; the corresponding numbers of Class 1 roads were 257 and 499, respectively26. Second, in order to argue for such a large increase in road investment on the basis of increased productivity, comparisons should be made with alternative public investment in (say) nursery school education, R&D, diffusion of new technology and increased university enrolment, especially graduate and research students. Strategy 2010 did not undertake or report the results of such an exercise. Third, as noted above in paras 3.10 and 3.11 in the discussion of road and infrastructure investment, no mention is made of public transport, although the importance of public transport is noted (Economic Development Strategy Review Steering Group, 1999, p.145). Finally, the Standing Advisory Committee on Trunk Road Assessment in GB, in a recent report, concludes, with respect to the effect of new public investment in transport improvements, that "any contribution to the sustainable rate of economic growth of a mature economy, with well developed transport systems, is likely to be modest" 26 For further details see DoE (NI) (1998a, Table 1.1, p.5 and Table 1.9, p.14). 36
Connections: Vision, Targets and Recommendations (Department of the Environment, Transport and the Regions, 1999, Summary Report, p.3). Recommendations and Targets: Two Bad Connections 3.21 Arguably the most demanding targets are those two which benchmark Northern Ireland performance against the UK as a whole, particularly the increase in GDP per head from 80 to 90 per cent, because the baseline scenario suggests on unchanged policies that the value of this variable in 2010 will be 74.4 per cent (Table 3.2). The achievement of the other targets - increased new firm formation, raising the educational qualifications of the labour force, more business R&D, greater penetration of export markets - are clearly very important and necessary conditions for this step-change in economic performance. However, as the discussion above makes clear, it is not at all obvious based on Strategy 2010 that these targets will be achieved. Nor is it obvious how the recommendations not related to the targets result in Northern Ireland performing much better than the rest of the UK27. This is not to deny that several of these recommendations (such as the emphasis on the knowledge-driven economy) appear to be sensible moves in the right direction. However, GB is doing the same. Thus the demanding and ambitious targets bench-marking Northern Ireland against the UK as a whole will be extremely difficult to attain by 2010, based on the discussion in Strategy 2010. Summary and Conclusion 3.22 In sum it appears, based on the discussion, analysis and recommendations in Strategy 2010, that due to the lack of clear qualitative and quantitative links, lines of causation and channels of impact, the targets of the desired scenario are unlikely to be reached by 27 eg R4, R12, R13, R19, R25, R34, and R35. 37
Connections: Vision, Targets and Recommendations
2010. (One exception is, however, likely to be the reduction in long-term unemployment - but that is the result of existing policies not Strategy 2010.) This outcome is consistent with previous economic development strategies in Northern Ireland. As one member of the Steering Group remarked, "every single economic development strategy for Northern Ireland in living memory has failed to meet its own targets. With the exception of export growth targets, virtually no target in 30 years has been met" (Kingon, 1999, p.53).
3.23 In order to enhance Strategy 2010 more work needs to be done on:
·
estimating what would have happened in the absence of the
strategy so that a baseline scenario can be established;
·
adding the desired level of productivity in 2010 as a target;
·
turning the target concerning road investment into a
recommendation and amending it to include reference to
increased funding for public transport; and,
·
establishing clear connections between the targets and the
recommendations so that the vision will be realised.
Achieving the latter requires a model of the economy, an issue which is discussed in the next section.
38
4 COHERENCE: MODELS AND IMPLEMENTA
4.1 Strategy 2010 has a 'can do' approach to implementation, with a timescale typically attached to each recommendation. This suggests they are well thought out, feasible and practical. The Steering Group considers that "the strategy process has created a momentum which must be carried forward into the implementation phase" (Economic Development Strategy Review Steering Group, 1999, p.213). Parts of the strategy are already being implemented. The issue of implementation is discussed here under four headings: feasibility; priorities; shared understanding; and delivery mechanisms. It is, of course, important both for implementation and for ensuring that there are good connections between the vision, targets and recommendations, that the strategy is underpinned by a model of the economy, as discussed in the final part of the section.
Feasibility
4.2 In many important respects the strategy will be relatively easy to implement. At least a third of the recommendations reflect either existing or recently announced policies28. These include:
·
R129 endorses existing proposals in the draft regional strategy
Shaping Our Future, released in December 1998 (Department of
the Environment for Northern Ireland, 1998b). These proposals
have been developed over a 12 month period with extensive
public consultation which is scheduled to continue with the
Public Examination in late 1999;
·
R5 calls for the implementation of the Dearing Report (National
Committee of Inquiry into Higher Education, 1997). However, in
28 Of course, all these recommendations would be part of the baseline scenario discussed above and would not be additional because of Strategy 2010. 29 This notation is used for ease of presentation. R1 to R62 are set out in full in Box 1. 39
Coherence: Models and Implementation
the surrounding discussion of R5 in Strategy 2010, there is no suggestion that the government is failing to give the Report a high enough priority (Economic Development Strategy Review Steering Group, 1999, p.151);
·
R16 and R20 argue that, in Northern Ireland, business should
collaborate more with universities and that there should be an
equivalent of the Reach Out fund, which is designed "to reward
and encourage HEIs [higher education institutions] to enhance
their interaction with business" (HEFCE, 1999, p.1). This Fund
was established in March 1999, with the release of proposals by
the Higher Education Funding Council for England (HEFCE)
(1999) under which the Department of Education in Northern
Ireland (DENI) would be a co-funder and allocate grants in 1999
from the fund to local institutions to cover the period 1999-2003;
·
R28, R30 and R31. These recommendations restate Northern
Ireland's existing economic development strategy, Competing in
the 1990s (DED, 1990). In the mid-term review in 1995, for
example, the principal elements of the strategy were stated as:
- the improvement of the competitiveness of indigenous companies; - a shift in emphasis from capital grants to assistance in overcoming obstacles to growth across the broad spectrum of factors which affect a company's international competitiveness, in particular, building management and workforce skills and raising innovation levels; - a shift from Government grants to private sector funding; - development of an enterprise culture; and, - attraction of new internationally competitive investment to Northern Ireland (DED, 1995, p.4).
40
Coherence: Models and Implementation
In discussing R28 to R31, Strategy 2010 (Economic Development Strategy Review Steering Group, 1999, pp.168-75) makes no reference to the existing economic development strategy; how its proposals differ from current policy; and what lessons can be learnt from the record of implementation of Competing in the 1990s. We return to this last issue in Section 5 below;
·
R34 is consistent with existing planning guidelines issued by the
Planning Service30, which ban all out-of-town shopping centres,
and proposals made in the draft regional strategy, Shaping Our
Future, that argue Strategic Planning Guideline 5 should:
sustain the vitality of city and town centres by ensuring that they should normally be the first choice for major new retail developments and confirming that there is no justifiable need for any new regional out-of-town shopping centres in Northern Ireland (Department of the Environment for Northern Ireland, 1998b, p.71).
Strategy 2010's discussion of R34 makes no reference to either of these DoE(NI) documents;
·
R51, R52. The recommendations concerning the revitalisation of
the rural economy are consistent with proposals made by the
Department of Agriculture for Northern Ireland (DANI) with
respect to European Union Structural Funds for Agriculture and
Rural Development post 1999 (DANI, 1999).
In other instances Strategy 2010 exhorts (R4) or calls for a campaign
30 Planning Service (1996, p.15). 41
Coherence: Models and Implementation (R13) or the expansion of an existing programme (R18), all of which are also likely to be easy to implement. 42
Coherence: Models and Implementation
4.3 The recommendation which is likely to be most difficult to implement concerns the reduction in Corporation Tax for new inward investment, albeit only for a five year period (R27). This is likely to be inconsistent with the UK's international investment obligations concerning national treatment and trade obligations concerning export subsidies. Even if these difficulties could be overcome, it might be politically difficult to grant a special Corporation Tax for Northern Ireland. Such a concession might lead to similar demands from other parts of the UK, particularly Scotland and Wales, perhaps followed by some of the English Regional Development Agencies, particularly those that cover Objective 1 regions, a status for which Northern Ireland no longer qualifies. Finally, despite continuing high long-term unemployment, Northern Ireland has dramatically closed the gap with the UK as a whole over the past 20 to 30 years on many indicators of need such as infant mortality, housing conditions and life expectancy (NIEC, 1998, pp.23-26). In such circumstances a special Corporation Tax for Northern Ireland might be difficult to justify.
Priorities
4.4 Priorities are important because they provide a sense of direction (ideally according to their impact on the targets) of where effort should be concentrated, both in terms of public expenditure and to those charged with administering the policy. This is particularly important when a strategy has 62 recommendations and a number of public expenditure implications31. Those recommendations with such implications include:
·
a 50 per cent increase in road investment. To meet this target in
1997-98 would have required an extra Ј77.1m of public
31 Only expenditure commitments which are genuinely additional because of the strategy are identified here. 43
Coherence: Models and Implementation
expenditure (T10)32;
·
the establishment of an Information Age Commission (R12);
·
the establishment of a venture capital fund (R32);
·
more expenditure on the Teaching Company Scheme (R18);
·
a well resourced centre for Northern Ireland representation in
Brussels (R40);
·
strategic investments in the energy field that may require the
formation of public/private partnerships which will require a
public contribution (R54);
·
the tax expenditure of a reduced Corporation Tax (R27), with
some offsetting reduction in the volume of grant assistance
(R26); and,
·
a reduction in rates for small indigenous retail businesses (R35).
However, Strategy 2010 provides no sense of priorities in terms of the recommendations, their financial implications, or their impact on the targets, except insofar as timescales for implementation are attached to the recommendations33.
4.5 It is also important that the spending priorities of Strategy 2010 are consistent with one another. In other words, that they add up in some
32 DoE (NI) (1998a, Table 1.3, p.8). 33 This interpretation is consistent with the views of one member of SSG who in a paper published shortly after the publication of Strategy 2010 stated: "{T}he next signpost for Strategy 2010 is that it needs prioritisation. It needs to be sorted through" (Gillespie, 1999, p.41). 44
Coherence: Models and Implementation sense. This is not always the case. R5 recommends that the Dearing report should be implemented speedily and comprehensively. One of the Dearing report recommendations singled out by Strategy 2010 for implementation concerns the call for an increase in the number of higher education places. Osborne (1999, p.11) interprets Dearing as calling for 10,000 additional places, so bringing Northern Ireland to parity with Scotland and Wales34. Although some extra higher education places have been announced as part of the Comprehensive Spending Review (CSR), Osborne (1999, p.11) concludes that "since expansion has taken place in other UK jurisdictions, it is not clear whether the differential provision of places has changed". 4.6 The cost of providing an extra 10,000 higher education places depends critically on the mix of places, since the costs of provision vary considerably by subject, as illustrated in Table 4.135. If the average cost per place for all four groups in Table 4.1 is taken as indicative for the purposes of Dearing and Strategy 2010, then the result of implementing Dearing would be an extra Ј69.2m in public expenditure. For 1999-2000 this is equivalent to an increase in DENI's budget of 4.4 per cent; in terms of DENI's share of public expenditure by Northern Ireland departments, an increase from 32.1 per cent to 33.5 per cent36. Furthermore, Strategy 2010 argues that these places should be provided within the comparatively short time scale of two years (Economic Development Strategy Review Steering Group, 1999, p.151) which might raise the cost of providing the places. The Dearing report takes a longer term view - 34 Measured by the number of higher education places available relative to the population aged 15-19. 35 The table only refers to full time undergraduates. The corresponding cost for a postgraduate place is higher; for a part-time under or post graduate place less. 36 For 1999-2000 DENI's planned budget is Ј1,558m, while the total planned expenditure for the Northern Ireland departments is Ј4,856m. For details see DFP/HM Treasury (1999, Table 1.1, p.8). 45
Coherence: Models and Implementation
"[I]t is difficult to see why, as part of a long term policy, it would be other than desirable to put Northern Ireland into a position of broad equilibrium between supply and demand without of course denying students, and particularly those of outstanding ability, the opportunity of choosing to go to other parts of the United Kingdom." (National Committee of Inquiry into Higher Education, 1997, p.449, emphasis supplied). 4.7 However, the estimates derived from Table 4.1 are almost
TABLE 4.1 Public Resource Cost Per Full-time Equivalent Undergraduate Student in Northern Ireland Universities, 1999
Group
Cost per Place Cost per 10,000 Places
(Ј)
(Јm)
A Clinical, Medicine, Dentistry & Veterinary Science B Laboratory-based Science & Engineering Subjects C Part Laboratory & High Cost Studio-based Subjects D Other Subjects Average Price All Groups
15,250 8,100 6,660 5,230 6,920
152.5 81.0 66.6 52.3 69.2
46
Coherence: Models and Implementation Source: Based on data supplied by DENI 47
Coherence: Models and Implementation certainly too high37. The public resource cost of providing a higher education place includes: (i) The Queen's University of Belfast (QUB)/University of Ulster (UU) teaching costs; and (ii) student support including tuition fees. Student support is provided whether or not the place is provided inside or outside Northern Ireland. At present some 12,500 Northern Ireland students attend higher education courses outside Northern Ireland. Thus, if some of the 10,000 places were taken by students who would have attended university outside Northern Ireland then the additional public expenditure in Northern Ireland would be only (i) - which is about a half of the average resource cost of providing a higher education place. If, for example, 5,000 extra places were accounted for in this way then the cost of implementing Dearing with respect to additional higher educational places would be an increase in DENI's budget of Ј51.9m (or 3.3 per cent using 1999-2000) while DENI's share of public expenditure in Northern Ireland would rise from 32.1 to 33.1 per cent. 4.8 At the same time as Strategy 2010 is making a recommendation that will lead to an increase in DENI's budget, it also argues - somewhat inconsistently - under the heading, "Re-prioritisation of existing expenditure" that, During the last three years Health and Education have consumed about 55% of Northern Ireland PE [Public Expenditure]. The CSR envisages that even larger proportions of Northern Ireland's PE should be allocated to these two services; they would absorb 58% of the total by the end of three years. Whether this progression 37 It could also be argued that if Wales were used as the comparator the number of extra higher education places would be closer to 5,000 than 10,000 (National Committee of Inquiry into Higher Education, 1997, p.449, p.451). If this lower limit is accepted then the estimates of the extra cost presented in the text would be reduced accordingly. 48
Coherence: Models and Implementation within the Northern Ireland PE block can be sustained over time is doubtful and it may need to be considered in the light of existing standards of resource and provision in Northern Ireland (Economic Development Strategy Review Steering Group, 1999, p.208). In the case of health, the ageing of the population will almost certainly lead to increased demands for public expenditure38. 4.9 It could be argued that the one area where re-prioritisation is desirable is not so much education and health but in the trade, industry, energy and employment budget (NIEC, 1999b)39. At present, Northern Ireland spends substantially more per capita on trade, industry, energy and employment in relation to the UK as a whole than on either education or health (Figure 4A). As the Council has argued, there are cogent grounds for reducing the trade, industry, energy and employment budget. The Council considered that a conservative reduction would be 15 per cent over a five year period. Using 1999-2000 as a bench-mark, this would see planned expenditure on trade etc fall from Ј490m to Ј416m (or by Ј74m). This sum is more than that required to expand higher education places by 10,000. Such reallocation is broadly consistent with the thrust of Strategy 2010 on promoting the knowledge-based economy. However, whether it would be better to allocate all or a substantial portion of this Ј74m to higher as opposed to further education, or to other 38 Health care expenditures per head are particularly high for those over 75 years of age (Ј2,890 per head for the UK in 1991) and births (Ј1,360 per birth) (NIEC, 1994b, Figure 2H, p.15). The 1996 population based principal projection sees not only a general ageing of Northern Ireland's growing population but also a decline in the number of births (24,000 in 1999-01, 22,000 in 2004-05) and a more than offsetting increase in the number of persons over 75 years of age (96,000 in 1999 to 102,000 in 2004) (Based on data supplied by the Government Actuary's Department). 39 See Section 5 below for further discussion. 49
Coherence: Models and Implementation
areas of public expenditure such as reducing educational underachievement or raising university R&D, is of course a different issue.
FIGURE 4A Identifiable General Government Expenditure, Per Head, Selected Categories, Northern Ireland, 1997-98 (UK=100)
300 274 250 200 150 100 50 0 Trade, Industry, Energy, Employment
138 Education
111 Health and Personal Social Services
135 Total
Source: HM Treasury (1999, Table 8.6b, p.101) Shared Understanding 50
Coherence: Models and Implementation 4.10 In taking the strategy forward the Steering Group believes that it is "necessary to ensure that there is the widest possible understanding of the strategy and the principles underlying it in order to ensure the consensus needed for successful delivery" (Economic Development Strategy Review Steering Group, 1999, p.213). This chimes well with the Council's own discussion (in Section 2) of the necessity for recommendations to be well specified and set out. It will also greatly assist the Assembly in coming to a view about the strategy and the validity of its recommendations. However, a number of recommendations do not meet this criterion. Several examples illustrate the point. No Out-of-Town Shopping Centres 4.11 The strategy argues that there should be no out-of-town shopping centres for five years (R34). However, it is not clear what will happen for the last five years of the ten year strategy. Furthermore, as noted above, no reference is made to the DoE(NI) view that such centres should be banned for the foreseeable future. No evidence is offered to support the recommendation40. The only study of the one out-of-town shopping centre in Northern Ireland, Sprucefield, concluded that it did not have an adverse effect on the nearby town (Pieda/Ulster Marketing Services, 1995). Furthermore, the "majority of Northern Ireland consumers (67 per cent) believe that the arrival of the new supermarkets has been 40 The recommendation seems largely based on casual empiricism. The relevant passage reads as follows: The Steering Group recognises that shopping patterns and customer needs are changing but believes that the loss of small, indigenous retail businesses by competition from out-of-town developments militates against the development of an entrepreneurial culture in Northern Ireland. The blighting of town centres that results is undesirable from a community, commercial and environmental perspective (Economic Development Strategy Review Steering Group, 1999, p.179). 51
Coherence: Models and Implementation beneficial" (General Consumer Council for Northern Ireland (GCCNI), 1999, p.8). 4.12 A recent study for the Department of the Environment, Transport and the Regions (DETR) on the impact of large food stores on market towns and district centres found that "smaller centres which are dependent principally on their convenience shopping function are generally less able to adjust to a transfer of food trade to less central locations." (CB Hillier Parker and Savell Bird Axon, 1998, p.11). In contrast, larger centres with a "well developed comparison and services function ... tend to be less susceptible to harm from large food stores" (p.11). In the case of centres "with a clearly defined tourist role, which do not rely solely on expenditure from the local catchment, [they] are also generally more robust" (p.11). The study also found little evidence that the large food stores led to adverse employment effects (p.8), while the shift to the car for the purposes of shopping was "relatively small." (p.9). Although a recent Boots study suggested that out-of-town shopping centres result in net job losses this study is subject to serious methodological problems (Wylie, 1999). 4.13 Finally, research suggests that restricting the development of outof-town shopping centres will prevent new entry, inhibit the development of sub-supplier networks and hinder productivity growth. In a recent report for HM Treasury on productivity and growth, McKinsey point to restrictive land use and planning regulations in the UK making "it difficult for large-format [food retailing] operators to develop new sites or expanding existing ones" (McKinsey Global Institute, 1998, p.13). In terms of the impact on innovation and competitiveness, McKinsey take the view that these restrictions, limits their ability to compete with, and ultimately displace, less productive operators. Consequently, the high levels of innovation exhibited by the top players in areas such as supply chain management and chilled meal 52
Coherence: Models and Implementation development have not spread to other parts of the industry. Leading operators are prevented from achieving their full productivity potential, while new operators are discouraged from entering the market (p.14). This is not to deny that out-of-town shopping centres may adversely affect local town centres as the DETR study shows. What the Council is arguing is that a careful review of the evidence is necessary in order to ensure the widest possible understanding of the position taken by Strategy 2010. From this review of some of the available evidence it would appear that encouraging rather than discouraging out-of-town shopping centres might contribute more to the realisation of T1 and T241. Deregulating Bed and Breakfast Accommodation 4.14 A second example concerns the deregulation of bed and breakfast (B&B) accommodation (R50). This recommendation did not come out of the Tourism Group report, nor the recent comprehensive review of tourism undertaken by the NITB in preparing its 1998-2000 corporate strategy (NITB, 1998). The emphasis in both reports is the need for high quality to attract affluent visitors. Furthermore, it is not clear how deregulation and the withdrawal of NITB fits with greater all-island cooperation in tourism, where a common standard of classification might be expected42. 41 Higher productivity, other things equal, should lead to higher GDP per capita and higher average earnings. In addition, as noted in para 3.18, more innovative firms typically grow faster than non-innovators, measured in terms of employment. 42 In the RoI, bed and breakfast accommodation certified as meeting the standards set by Bord Fбilte are able to be listed in Bord Fбilte accommodation publications, used by Regional Tourist Offices and can display the Shamrock sign. In addition such approved accommodation is often used by non-Bord Fбilte guides and by tour companies. However, participation in the Bord Fбilte scheme is voluntary. 53
Coherence: Models and Implementation 4.15 The rationale for a grading system is that it lets the buyer know that there will be a certain standard of accommodation. It is particularly important when an industry is being established, as is the case in Northern Ireland. Perhaps when a mature stage has been reached deregulation would be appropriate. The assertion in Strategy 2010 is that NITB regulation holds back substantial B&B accommodation in west Belfast and rural areas (p.170). This implies that regulation is either very onerous or else there are incorrect perceptions among potential new entrants. These should be clearly documented before the recommendation is accepted. Nor is it clear how the strategy's proposal will lead to the "standards of accommodation being maintained through a market based approach" (Economic Development Strategy Review Steering Group, 1999, p.197). Location of Industry 4.16 The third example concerns the discussion of location policy. Strategy 2010 states that, "[R]egional GDP figures show a high GDP/head in the Belfast area, suggesting that there is scope for spreading development throughout Northern Ireland" (Economic Development Strategy Review Steering Group, 1999, p.145). However, it is not clear that the figures, presented in Table 4.2, bear this interpretation. The regional GDP/head data are defined as follows: incomes of persons working in a given area/the resident population in the given area. Thus, if a substantial number of persons commute to Belfast from surrounding towns, and few people in Belfast go the other way, then Belfast will have a high GDP per head, the surrounding towns a lower GDP per head - as indeed is the case. Thus, based on these data, it is not clear that there is a good reason to redistribute economic activity43. This is not to deny that 43 Furthermore, there are economic reasons why firms co-locate in the same area. See, for example, DTI (1998b, paras 5.13 to 5.16). 54
Coherence: Models and Implementation there are good reasons for encouraging growth outside Belfast. Such growth might lead to better utilisation of social capital, reduce urban congestion and pollution in Belfast, and promote greater social cohesion. 55
Coherence: Models and Implementation
TABLE 4.2 GDP Estimates for Sub Regions of Northern Ireland, 1996
Sub Region
GDP per Head1 (UK = 100)
Belfast
128
Outer Belfast2
69
East of Northern Ireland3
75
North of Northern Ireland4
75
West and South of Northern Ireland5
66
Northern Ireland
81
1 Income generated by persons working in sub-region divided by resident population in the sub-region. 2 Outer Belfast is Carrickfergus, Lisburn and North Down. 3 East of Northern Ireland is Antrim, Ards, Ballymena, Banbridge, Craigavon, Down and Larne. 4 North of Northern Ireland is Ballymoney, Coleraine, Derry, Limavady, Moyle and Strabane. 5 West and South of Northern Ireland is Armagh, Cookstown, Dungannon, Fermanagh, Magherafelt, Newry and Mourne and Omagh. Source: ONS (1998b)
A Tax Break for Inward Investment 4.17 It is not clear that a temporary Corporation Tax reduction - R27 will have longer-term positive effects. First, temporary tax incentives primarily appear to affect the timing rather than the magnitude of 56
Coherence: Models and Implementation investment (Bond et al, 1992, 1996). This is consistent with the views of Ruane and Gцrg (1999) in considering foreign direct investment policy for the manufacturing sector in the RoI. They argue that policy certainty is an important characteristic and this is achieved by "providing the investing firms with long and certain time horizon." (p.6) In the 1960s, for example, "firms locating in Ireland were given a fifteen year tax holiday and those locating in the 1980s were assured that the corporate tax system which they would face would be unchanged until 2000; in 1990 this was extended to 2010" (p.6). Such a view agrees with Dunning et al (1998) who, in a research monograph commissioned for the Council, stated that in "order to attract investment which is high value-added and not a typical branch plant operation, investment in Northern Ireland should be based on fundamentals and not financial inducements" (p.61). 4.18 Second, as the strategy correctly notes, Northern Ireland should be attracting inward investment based on fundamentals such as the quality of the labour force and the university infrastructure so as to embed inward investors in the local economy (Economic Development Strategy Review Steering Group, 1999, p.169). This also agrees with a survey of inward investment in the British Isles which found that "the availability of labour was the key investment consideration" (Coopers and Lybrand, 1996, p.6)44. Furthermore, this survey also found that, There has also been a traditional perception that the Republic's 10 per cent corporation tax rate for manufacturing provided a significant advantage over the UK's corporate tax regime. What was remarkable therefore, was the discovery that more than half of 44 The survey "interviewed a representative sample of the 3,925 inward Investment Companies currently operating in Northern Ireland, Scotland, England and Wales. In addition, interviews were conducted with a sample of the 1,104 inward investment companies which had located in the Republic of Ireland." (Coopers and Lybrand, 1996, p.3). 57
Coherence: Models and Implementation
companies faced with choice between Northern Ireland and the RoI, invested in the North. This suggests that while 10 per cent corporation tax appears to be a formidable weapon in the Republic's inward investment armoury, it can often be deflected by more attractive inducements in the North (Coopers and Lybrand, 1996, p.5).
This seems inconsistent with Strategy 2010's view that in "order to compete effectively, Northern Ireland needs to address the disparity of Corporation Tax regimes: the fact we share a land mass with the Republic of Ireland highlights this disparity" (Economic Development Strategy Review Steering Group, 1999, p.170).
4.19 Finally, it should be noted that the reduced Corporation Tax is not a cost free option for Northern Ireland. This reflects the fact that the tax break envisaged by Strategy 2010 would result in a loss of tax revenue to the Treasury and, as Strategy 2010 acknowledges, would probably have to be paid for by a reduction in the Northern Ireland Block (Economic Development Strategy Review Steering Group, 1999, p.170). However, Strategy 2010 provides no indication of the size of the tax expenditure nor whether it would be better spent to improve the fundamentals and thus make Northern Ireland more attractive for far more than five years.
Delivery Mechanisms
4.20 A number of new structures as well as changes to the existing structures are proposed with respect to implementation of the strategy. These include proposals that:
·
an Economic Development Forum should be established to agree
on the development and implementation of economic
development policy (p.148) supported by a high powered, high
58
Coherence: Models and Implementation
quality research body (R2, R3). An annual report "on progress against targets should be provided to the Forum by DED" (p.20);
·
the NIGC should further develop its sectoral approach to
networking, with business bodies co-operating to increase
networking (R23, R24); and,
·
a new single economic development body should be created and,
in the short-term, there should be greater emphasis on a sectoral
approach among the current economic development bodies (R60,
R61).
In Strategy 2010 these proposals are largely treated separately and their interactions and 'fit' are not fully explored45. We consider first the proposals for a single body and then the fit between the three sets of proposals.
A Single Agency?
4.21 Strategy 2010 argues (R61) in favour of a single agency which would bring together the Industrial Development Board (IDB), the Local Enterprise Development Unit (LEDU), the Industrial Research and Technology Unit (IRTU) and the Training and Employment Agency's (T&EA's) Company Development Programme (CDP). The rationale for this suggestion is as follows:
[B]ringing all economic services under the direction of one unit would have a number of benefits. It would sharpen the direction and delivery of overall economic development policy, presenting a clearer structure to users and removing the potential for confusion in the
45 A short discussion is found in Economic Development Strategy Review Steering Group (1999, p.213-214). 59
Coherence: Models and Implementation
market place. It would simplify companies' dealings with the Department, and help to ensure that a clear and coherent policy message is presented to potential investors in Northern Ireland, whether indigenous or external. In addition, the integration of administrative services should yield worthwhile savings46 (Economic Development Strategy Review Steering Group, 1999, p.206).
These suggestions build upon the April 1998 review of structures within the DED for delivery of industrial development support services, headed by Professor Peter McKie.
4.22 The McKie review makes a number of recommendations for the better delivery of support services to business but considered it inappropriate, at the time of writing, to recommend the creation of a single body47. For example, the McKie review recommends,
·
that "improved information sharing with the introduction of a
unified IT database should be an immediate priority" (McKie et
al 1998, p. 33);
·
that "IDB and LEDU support services to growth companies
should work more closely together" (p.33);
·
that the "Departmental Board ... adopt a strong policy and co-
ordinating function on the holistic approach" (p.34); and,
46 These savings are not quantified. 47 They argue that this issue can be reconsidered "once the relevant issues arising from the strategy review and political devolution have been settled" (McKie et al, 1998, p.30) 60
Coherence: Models and Implementation
·
that the "Departmental Board ... be supported by a management
team." (p.34).
61
Coherence: Models and Implementation The latter two recommendations reflect the McKie review team view that although they approve of the DED holding company model in relation to IDB, LEDU, IRTU and T&EA, they see "scope for improvement in the mechanisms that are in place for turning [strategic] planning [by the Departmental Board] into operational action" (p.27). In other words, the Departmental Board has to provide better leadership to sharpen the direction and overall delivery of economic development policy - the rationale for a single body in Strategy 2010. This would go some way to correct the lack of vigour that DED has shown in implementing Competing in the 1990s - as identified by the Council's evaluation of the implementation of economic development strategy in the 1990s (NIEC, 1999b). 4.23 There are, however, a number of drawbacks associated with the creation of a single body. While these are identified in the McKie review, they are not discussed in Strategy 2010. The review team, like the Council, considers that IRTU and T&EA have been successful in implementing Competing in the 1990s. As a result: The Review Team endorses the need for an ongoing high R&D profile and recommends that the IRTU continues as a separate agency until the R&D function becomes more deeply imbedded [sic] in Northern Ireland industry (McKie et al, 1998, p. 20). The Review Team believes that the Company Development Programme and Management Development should remain within the T&EA, but that T&EA's ongoing co-operation with the other industrial development agencies be enhanced and developed with the objective of providing a seamless service to clients (p.22). Since Strategy 2010 clearly takes the view that the R&D function needs 62
Coherence: Models and Implementation
to be more firmly ingrained in Northern Ireland, with the emphasis on a knowledge-driven economy and a target of raising business R&D as a percentage of GDP from 0.6 per cent currently to 1.5 per cent in 2010, a single body might compromise the achievement of this target.
4.24 It thus seems sensible to the Council for the McKie review recommendations, designed to increase the efficiency of the delivery of the support services to business, to be carefully considered on their merits and, where appropriate, implemented. However, while the Council considers that serious consideration should be given to the creation of a single agency, a number of safeguards need to be incorporated. The agency should not be a bolting together of IDB, LEDU, IRTU and the T&EA's CDP. It would have to be structured so that the success of LEDU, IRTU and the T&EA's CDP were not compromised, but built upon and enhanced. Considerable thought would also need to be given to the status of the single agency: should it be part of DED or a separate agency? The latter might be appropriate in view of the extensive set of recommendations made by the Council in considering the implementation of economic development strategy in Northern Ireland (NIEC, 1999b), which are presented in Section 5 and Annex A below.
The Fit
4.25 A number of issues need to be addressed in considering these proposed delivery mechanisms:
·
is an Assembly Committee a more appropriate body than the
Economic Development Forum to hold the executive to account
in administering and enforcing the economic development
strategy? For example, should the DED's annual report on
progress against targets be provided to an Assembly Committee
rather than - as proposed - the Forum48?
48 Particularly in view of the fact that the Minister responsible for DED will chair the Forum (Economic Development Strategy Review Steering Group, 1999, p.148). 63
Coherence: Models and Implementation
·
what is the degree of overlap and duplication between the
Economic Development Forum and the Civic Forum?
·
what is the appropriate relationship between the NIGC and the
new proposed single economic development body? In answering
this question the following factors should be borne in mind: the
NIGC, like the proposed new body, is largely publicly funded49
and is organised along sectoral lines; the NIGC will be
undertaking tasks that will encourage activities that economic
development bodies such as IDB, LEDU and IRTU already
facilitate. These include bench-marking/best practice,
developing strong supplier chains and strengthening linkages
between business, universities and research institutions50; and,
the report by Professor Peter McKie on DED structures did not
include NIGC within its remit and thus there is a case for an
evaluation of NIGC and whether or not it should also be part of
the single body.
Until these pieces of the jigsaw are fitted together the overall arrangement is somewhat disjointed and perhaps duplicative.
Model
4.26 There is in Strategy 2010 no explicit model of the determinants of economic growth and development, nor reference to the literature on the theory of economic growth51. This is an important missing link between the inputs (or recommendations) and outputs (or targets).
49 Since 1996 NIGC has received in excess of Ј2m of public funds. 50 These three are mentioned in the strategy (Economic Development Strategy Review Steering Group, 1999, p.164). 51 For recent accessible summaries see Crafts (1993, pp.33-38) and Fitz Gerald et al (1999, pp.16-23). 64
Coherence: Models and Implementation Nevertheless, it could be argued that some of the early discussion in the strategy that stresses determinants such as knowledge (pp.38-40) and the consequent shift in demand towards "employees with higher skills and greater flexibility" (p.38) is based on an implicit model of the economy. This theme is echoed when the strategy profiles those sectors with the greatest potential for growth: electronics; telecoms; software; health technologies; tourism; and tradable services. In virtually all cases the availability of a skilled workforce is one of if not the key factor affecting growth, while the level of R&D is also mentioned frequently (Economic Development Strategy Review Steering Group, 1999, pp.79-88). However, this line of analysis does not feature prominently enough in the recommendations for the strategy to be entirely consistent with a coherent, well argued and internally consistent model of the economy. 4.27 Two recent examples of the use of economic analysis and models in informing public decisions are the UK White Paper on Competitiveness (DTI, 1998a, 1998b) and the report prepared by the ESRI on investment priorities for the RoI covering the period 2000 to 2006. (Fitz Gerald et al, 1999). In the case of the White Paper on the knowledge-driven economy, the accompanying analytical paper sets out the rationale for knowledge being a means for improving economic performance and then works through its implications in terms of capabilities, collaboration and competition. The ESRI report carefully considers the role of public infrastructure in the growth process and discusses the current stock of such infrastructure and future demand before coming to a conclusion as to priorities. Summary and Conclusion 4.28 Strategy 2010 has a 'can do' approach to implementation, with a timescale typically attached to each recommendation. However, no priorities are set, nor costings made, suggesting the sums have not been done. The reasoning behind a recommendation is not always explored. A number of new institutional structures as well as changes to existing 65
Coherence: Models and Implementation structures are proposed, but issues of interaction, fit, accountability and duplication are not sufficiently addressed. 4.29 In its response, the Council has attempted to fill in some of these missing pieces. The rationale for several of the recommendations is examined while some of the public expenditure implications are explored. However, on occasion the available evidence suggests a recommendation is unlikely to have the desired impact or be inconsistent with achieving a particular target or change in the pattern of public expenditure. This discussion thus casts light on areas that need to be clarified and carefully considered. 4.30 Strategy 2010 lacks an explicit, well argued and internally consistent model of the determinants of economic growth and of how the economy works. This is an important missing link between the vision and the targets (on the one hand), and the recommendations and implementation mechanisms (on the other). Strategy 2010 does stress some of the key drivers of a modern economy such as knowledge and innovation but we need to build on and extend this perspective in a systematic way so that these insights can be fully exploited. 66
5 SUMMARY AND CONCLUSION Introduction 5.1 The Council's remit is advisory in nature - to provide independent advice to the Secretary of State on the development of economic policy for Northern Ireland. As a result the Council has a strong interest in economic development strategy and it is in this context that the Council offers its views and concerns on Strategy 2010. Moreover, in view of the DED's approach to consultation and implementation with respect to Strategy 2010, the Council presents in this section some of the key findings and recommendations of its recent research relevant to the strategy. Although the research in some instances is nearing completion, the Council has not given its final imprimatur. Nevertheless, if the research is to influence the debate on Northern Ireland's economic development strategy, the Council takes the view that it should be in the public domain as soon as possible before Strategy 2010 is a fait accompli. Summary 5.2 In Section 2 of this Occasional Paper we presented a framework for evaluating Strategy 2010, which was consistent with the Terms of Reference within which the strategy was formulated. In Sections 3 and 4 we evaluated Strategy 2010 within this framework, with respect to its vision, targets, recommendations, implementation mechanisms and model of the economy, as well as the degree to which these five critical elements of the strategy fit together in a coherent manner52. 5.3 Essentially, Strategy 2010 has a good vision, a challenging set of 52 Evaluations of Strategy 2010 have also been offered by others who follow economic matters closely in Northern Ireland, including persons in research institutions, academia, the press and in democratic forums such as the Assembly and Belfast City Council. See Belfast City Council (1999), Simpson (1999), Birnie (1999) and Bradley and Hamilton (1999). 67
Summary and Conclusion targets and a model, albeit implicit and limited, of the economy. Where the strategy is weak is in the recommendations due to the lack of an explicit model of the economy to provide the bridge between the recommendations and the achievement of the targets and, hence, the realisation of the vision. Too frequently the recommendations do not contain a discussion of the evidence and reasoning on which they are based. To a considerable extent the recommendations are too diffuse and cover too many areas. Proposals and suggestions are not costed nor priorities specified. It is not clear why the strategy should deal with such comparatively minor issues as bed and breakfast accommodation. The Council considers a much better way forward would be a number of well argued strategic recommendations and targets directly related to the model which, itself, needs to be fleshed out in greater detail. 5.4 The Council in its evaluation seeks to advance work on the strategy by estimating the baseline scenario that is expected in the absence of the strategy for several of the targets. This assists in deciding where effort, resources and attention should be concentrated in meeting the stretching targets of the strategy. We suggest that the desired level of productivity in 2010 should be a target, one that would assist greatly in the strategy being able to meet or exceed its other targets. The Council's evaluation thus fills some lacunae in Strategy 2010, and suggests that it seems unlikely that some targets (eg raising Northern Ireland's GDP per capita relative to the UK as a whole) will be met by the year 2010 without more focused attention on such critical areas as productivity growth (since the stretching targets imply a step-change in the performance of the Northern Ireland economy). 5.5 The Council's evaluation builds on the groundwork of Strategy 2010 by placing it in the context of existing policies, making it possible to evaluate the 'value added' of the strategy. It is this 'value added' that will be the strategy's contribution to realising its targets and vision. The evaluation exposes more clearly some of the connections between the recommendations and the targets of the strategy, and some 68
Summary and Conclusion inconsistencies between the recommendations and the targets. Moreover, we cost some of the proposals and suggest some priorities. The Council's evaluation thus advances the debate in a number of important ways, but much more extensive analysis is needed and remains to be done in order to take Strategy 2010 forward. Towards this end we present in this section and in Annex A Council research recently completed and in the pipeline which we believe can contribute to moving the strategy forward. Advancing the Debate 5.6 The Council's major area of interest is in the promotion of economic development in Northern Ireland. Success in this regard will lead to improved living standards for all, higher productivity, lower unemployment and a movement towards more skilled employment. Economic development policy should be more concerned with enhancing economic success than with dealing with comparative economic failure. Such a policy emphasis is largely consistent with the vision and targets set out in Strategy 2010. 5.7 The Council has published research on topics vitally important for an understanding of how to raise the level of economic development of Northern Ireland. Examples include the lessons for Northern Ireland from successful European regions, Dunford and Hudson (1996), the implications of peripherality, NIEC (1994c), R&D activity in Northern Ireland, NIEC (1993), as well as competitiveness and industrial policy, Dunning et al (1998). Some of this research informed Strategy 2010. The Council's current work plan also contains several reports relevant to the debate on economic development. Evaluation of Current Economic Development Strategy 5.8 In view of the similarities between significant elements of Strategy 2010 and Competing in the 1990s, it is important that lessons concerning the implementation of current economic development strategy 69
Summary and Conclusion should inform future policy. Strategy 2010 did not address this question nor, as noted above, did it mention or refer to Northern Ireland's current economic development strategy53. 5.9 However, the Council has recently conducted an extensive evaluation of the implementation of Competing in the 1990s and drawn lessons for future economic development strategy (NIEC, 1999b). The Council's major findings are presented in Annex A. In essence the Council found that despite some considerable strides towards implementing Competing in the 1990s, overall there remain substantial question marks concerning the vigour with which policy implementation has been pursued. This suggests that Strategy 2010's proposed single agency54 would only be successful if its predominant culture was that of the agencies, such as LEDU, IRTU and T&EA, which had implemented Competing in the 1990s, and if steps were taken to ensure that the funds allocated to the functions of these successful agencies were increased rather than reduced to facilitate other functions of the single agency. The Council's recommendations are designed, through a mixture of specific targets and institutional arrangements, to ensure that the policy direction of both Competing in the 1990s and Strategy 2010 is realised with respect to where economic development support should be focused. An Explicit Model of Economic Growth 5.10 The development of an explicit model of the economy can assist and guide policy makers, not only in designing an economic development strategy but also in setting priorities. However, a model of the economy 53 The Investment and Finance Cross Sector Working Group did, however, in its Final Report argue for capital grants to existing firms to be reduced by 20 per cent per annum and its level reviewed after three years while new inward investment should attract a 12.5 per cent Corporation Tax. However, it is not clear on what basis the 20 per cent was selected. 54 R.61. 70
Summary and Conclusion serves other purposes. If it commands widespread agreement across society then it can promote a shared understanding of the economy and the way it works which will assist in the realisation of any vision for the economy. 5.11 For some time the Council has been impressed with the ideas on economic growth of Professor Michael Best, Director, Centre for Industrial Competitiveness, University of Massachusetts, Lowell, as expressed in his book The New Competition. These were then developed in the Sir Charles Carter Lecture Professor Best delivered in Belfast in 1995 for the Economic Council. The Council subsequently commissioned Professor Best to prepare a monograph on the appropriate model of regional competitiveness for Northern Ireland. This monograph is now nearing completion. 5.12 The Best approach is to develop the idea of economic capability at the level of the firm and the region. There is a wide literature on what has been referred to as social infrastructure or capability within which Best's work on economic capability can be placed. This literature, and Best's own work, is briefly described in Annex A. 5.13 The fundamental issue in the social capability literature is how to create the right institutional framework and set of incentives so that appropriate social infrastructure for economic growth results. There are a number of ways in which the right incentives and institutional framework for economic growth can be created in Northern Ireland. For example, changing incentives for business by signalling in a credible way that grants and tax expenditures are to be substantially reduced. Thus, firms will have an incentive to become more self reliant, and more focused on earning a return from their introduction of new products and new processes. Such a change in incentives is consistent with the broad thrust of Strategy 2010 and the discussion earlier in this section regarding the implementation of Competing in the 1990s. This is an example of the wider set of questions that exists with respect to the incentives created by 71
Summary and Conclusion the so-called soft-budget constraint - the notion that Northern Ireland has a standard of living not merited by the underlying economic structure which leads to complacency about the performance of the economy55. In other words, the soft budget constraint perhaps "decouples income from the underlying economic structure" (Clulow and Teague, 1993, p.105). The Council in the proceedings of a series of seminars on governance issues has developed this issue further56. 5.14 Professor Best still has to refine his own perspective in the context of teasing out the implications for policy at the regional level for Northern Ireland. Nevertheless even at this stage some implications are emerging. Policy clearly has an important role in developing and diffusing generic capabilities such as technology management, skill formation and best practice business organisation. Some of this can be accomplished through a better appreciation and understanding of the entrepreneurial firms that already exist in the Northern Ireland economy. Several of these will be identified by Professor Best in his report. Networking and Linkages 5.15 Strategy 2010 lays, quite rightly, great stress on the development of a competitive, fast growing and innovative economy. Given Northern Ireland's small size, a major conduit through which best practice in management, production techniques, design, new products and processes will be diffused into the local economy is through inward investment. It is, therefore, vitally important that the linkages between inward investors and the local economy be maximised so that Northern Ireland becomes fast growing and innovative. 55 However, the system is more complicated. This reflects the fact that under this system, fiscal transfers provide free insurance against adverse economic performance, an issue discussed in Barnett (1995). 56 See NIEC (1995, 1996) and DD/EHSSB/NIEC (1998). 72
Summary and Conclusion 5.16 The Council explored the issue of linkages in a recent report based on a survey of all externally-owned investors in manufacturing in Northern Ireland employing 100 or more persons (NIEC, 1999a). A number of recommendations as to how such linkages could be maximised were made by the Council. These are set out in Annex A. The Council's recommendations suggest that there is scope to improve the vital role inward investment can play in transferring best practices to locallyowned firms in the critical areas of competitiveness (highlighted in Professor Best's work), through better linkages. A new Regional Linkages Initiative set in the wider context of upgrading regional capabilities would signal a portentous shift in the focus of industrial development policy away from the subsidisation of capital which currently dominates industrial assistance in Northern Ireland. A Knowledge-Led Economy 5.17 One of the five key themes of Strategy 2010 is that of a knowledge-based economy. In elaborating on this theme the SSG comment that "we need a strong push for more R&D, technology transfer, innovative design and receptiveness to new ideas from any quarter" (Economic Development Strategy Review Steering Group, 1999, p.134). The Council would agree that raising the level of R&D so that it can drive forward new products and processes is very important for innovation and enhancing productivity. However, it is also essential that existing R&D is organised in an optimal way so that it earns high rates of return. This applies particularly to publicly-funded R&D which is likely to be subject to less economic evaluation than privately-funded R&D. 5.18 In this connection the Council was pleased to respond to a request from the Minister for the Economy to review publicly-funded R&D, make national and international comparisons, and advise on whether better co-ordination between Departments is desirable (NIEC, 1999c). Preliminary findings of our research are set out in Annex A. 73
Summary and Conclusion The Council will consider these findings and make suggestions on how best to create a virtuous co-ordination of R&D, innovation and economic development strategy, and embed matters of the knowledge-led economy at the heart of economic policy making in Northern Ireland. Conclusion 5.19 Strategy 2010 was released in late March 1999. Within two months steps were being taken to implement parts of the strategy. There has been little, if any, time for discussion and debate on the strategy. There has been no formal consultation period. Such a procedure would be considered normal for such a vitally important document57. Consultation before implementation would be merited in the Council's view not only as a matter of good practice but also because - as demonstrated particularly in Sections 3 and 4 above - there are a number of crucial questions and comments concerning Strategy 2010 that need to be addressed before the strategy is implemented. 57 And can be contrasted with the DoE (NI) handling of Shaping Our Future. 74
ANNEX A: RECENT COUNCIL RESEARCH OF RELEVANCE TO STRATEGY 2010
Learning from the Past: Lessons for the Future
A.1 Strategy 2010 recommends that Selective Financial Assistance should be less readily available to existing firms and that a larger share of financial support for industry should be devoted to softer forms of assistance, including establishing inter-firm collaborative networks and the improvement of skills to promote marketing and exports58. The increase in the share of softer forms of assistance is not specified nor is the magnitude of the proposed reduction in SFA. Strategy 2010 argues that new institutions should be created to take these and related recommendations - such as those concerned with the knowledge-driven economy - forward.
A.2 Northern Ireland's current economic development strategy, Competing in the 1990s, now almost a decade old, also argued for reduced SFA and a shift towards softer forms of assistance59. As with Strategy 2010, the argumentation was qualitative not quantitative. In order to implement the current strategy new institutions were created. For example, IRTU was set up in 1992 with responsibility for industry related technology and innovation policy, covering firms of all sizes in manufacturing and tradeable services.
A.3 The Council's evaluation of policy implementation of Competing in the 1990s raised the following questions:
·
Have SFA grant rates been reduced?
·
Has the total volume of financial support to industry declined?
58 R28 and R31. See Box 1 above for details. 59 For details see para 3.25 above, NIEC (1991; 1999b, Section 2 and DED (1987, 1990, 1995)). 75
Annex A: Recent Council Research of Relevance to Strategy 2010
·
Has there been increased financial support for training,
marketing, R&D and exports?
·
Have the new institutional arrangements been successful?
A.4 Our findings and recommendations are to be found in Boxes 2 and 3 and set clear quantifiable targets for the way forward and associated institutional mechanisms to ensure transparency and accountability. Table A.1 explores the implications of the suggested reduction/ reallocation of financial support to industry, with the reduction in support concentrated in SFA. As noted in NIEC (1999b), the proposals for changing the balance of financial support are conservative and do not affect the various tax expenditures which remain untouched at the present time60.
Social Capability and the Capabilities Perspective
Social Capability
A.5 An hypothesis in economics is that inter-country productivity levels should converge over time61. The leading mature economies, such as the US and the UK, experience high levels of productivity, but low rates - around 2.5 per cent per annum - of productivity growth. Backward or developing economies have lower levels of productivity, but the potential for higher productivity growth as they replace old with new machinery. However, the degree to which this potential is realised depends upon what is variously referred to as social capability (Abramovitz, 1986) or social infrastructure (Hall and Jones, 1999).
60 Listed under 'Memo Items' in Table 4.1. 61 For further discussion see, for example, Abramovitz (1986). 76
Annex A: Recent Council Research of Relevance to Strategy 2010 BOX 2 Major Findings of Council Report on Implementation of Competing in the 1990s · at the level of priority-setting by Government, through the annual public expenditure survey, allocation decisions have been made which are inconsistent with the Government's economic development strategy. In 1996, for example, reductions were made to labour market programmes and university R&D in order to fund capital grants; · at the macro level, there has been little reduction in overall public expenditure on economic development, either in absolute terms or relative to Great Britain. Public expenditure on trade, industry, energy and employment averaged Ј465m per year in the 1990s with no tendency to fall over time; · DED has not set timetables and bench-marks for the implementation of the economic development strategy. The Council (1994a, p.97) suggested in 1994 - unsuccessfully - that DED "produce an annual report that provides a comprehensive assessment of the way in which economic development policy has progressed over the year and the impact that it has had on the Northern Ireland economy. Indeed, DED could produce its own set of performance indicators in this regard"- some of which would no doubt have related to policy implementation. · DED has not reallocated public expenditure to training and R&D by channelling an increased share of DED agency resources going to IRTU and T&EA. Between 1990-91 and 1996-97 the share of economic development expenditure accounted for by T&EA and IRTU remained essentially unchanged; 77
Annex A: Recent Council Research of Relevance to Strategy 2010 BOX 2 continued Major Findings of Council Report on Implementation of Competing in the 1990s · IDB, the lead development agency, has made very limited progress in implementing key elements of Government's economic development strategy. Substantial amounts of capital assistance continue to be provided, with no fall in grant rates, although there has been an increase in grant aid under the Marketing Development Grant; · LEDU, the small business agency, has made substantial progress in implementing Competing in the 1990s. Overall the budget of LEDU has fallen during the 1990s, capital assistance as a proportion of total aid to industry has fallen dramatically, and marketing and management assistance has increased while grant rates have fallen. · IRTU, the agency charged with increasing R&D, has made considerable progress implementing Competing in the 1990s. While IRTU's share of DED firm assistance has remained largely unchanged in the 1990s, the number of grants under the COMPETE programme which assists 'near market' research - that a firm can simultaneously hold has been limited to a maximum of three, leading to a greater number of companies receiving R&D assistance. Grant rates for COMPETE have declined since 1995. · T&EA, the agency responsible for the labour market, has successfully raised training expenditure by companies. The combination of a lower grant rate and somewhat lower grant expenditure has meant overall that more training has been levered via the Company Development Programme. Source: NIEC (1999b, various pages) 78
Annex A: Recent Council Research of Relevance to Strategy 2010 BOX 3 Recommendations of Council's Report on Implementation of Competing in the 1990s · the Council recommends that public expenditure on trade, industry, energy and employment and regional assistance should be reduced by at least 15 per cent between 2000 and 2005. · the Council recommends that the public expenditure released because of the reduction in trade, industry, energy and employment and regional assistance should be reallocated to areas designed to raise the longerterm productivity of the Northern Ireland economy. · the Council recommends that the average annual grant rate for Selective Financial Assistance should be reduced by at least 50 per cent between 2000 and 2005. · the Council recommends that efforts to encourage investment in marketing, R&D, management development, and training should be strengthened. · the Council recommends that: (i) the overall economic development budget with an indicative split between 'hard' and 'soft' assistance should be set by the First/Deputy First Minister; (ii) the decision on average grant rates should be made by the Minister responsible for economic development; (iii) the decision on the actual split between 'hard' and 'soft' assistance should be set by the Minister responsible for economic development; and, 79
Annex A: Recent Council Research of Relevance to Strategy 2010 BOX 3 continued Recommendations of Council's Report on Implementation of Competing in the 1990s (iv) operational responsibility for implementing (ii) and (iii) should be delegated to the development agencies reporting to the Minister responsible for economic development. · the Council recommends that: (i) the directions by the Minister responsible for economic development on grant rates, 'hard' and 'soft' assistance should be published; (ii) the development agencies should publish annual reports setting out how they have complied with the Minister's directions; · the Council recommends that the Minister responsible for economic development should present an annual report to the relevant Assembly Committee showing progress. · the Council recommends that the IDB board should be broadened to include representatives from leading international firms and others familiar with best practice. Source: NIEC (1999b, various pages) 80
Annex A: Recent Council Research of Relevance to Strategy 2010
TABLE A.1 Firm Assistance, IDB, LEDU, IRTU and T&EA, 1997-98, Actual and a Proposed Reduction/Reallocation
Form of Grant Assistance
Actual Јm
15% Reduction in Total Grant Assistance1 Јm
Capital and Related2 Marketing and Promotion3 Training4 R&D5 Total Memo Items 100 per cent rate relief Industrial Sites and Factories Capital Allowance on Grant Aided Portion of Investment6 Grand Total
107.1 18.2 15.9 18.1 159.3 51.0 14.9 19.3 244.5
59.3 26.3 23.8 26.0 135.4 51.0 14.9 10.7 212.0
1 All of the reduction is concentrated in capital and related. 2 For IDB includes Selective Financial Assistance excluding Marketing Development Grants; for LEDU all items listed under "Hard Grants". These are grants paid. 3 For IDB includes Marketing Development Grants; for LEDU includes all items listed under "Soft Grants" and "Others" except Management Development. These are grants paid. 4 T&EA's CDP plus Management Development by LEDU. CDP refer to budget, LEDU grants paid. 5 IRTU expenditure on companies and joint company/university grants. Amounts refer to offers. 6 Assuming 25 per cent of the 1997-98 SFA capital grant by IDB and LEDU is written off against profits.
81
Annex A: Recent Council Research of Relevance to Strategy 2010 Source: NIEC (1999b, Table 10.2) 82
Annex A: Recent Council Research of Relevance to Strategy 2010 A.6 These are difficult terms to define and measure. For Abramovitz (1986) it refers to the ability of a country or region to be able to absorb and take advantage of advanced technologies. This, in turn, depends upon the content and quality of education and the institutional structure, including the degree to which it might impose barriers to the introduction of new technology. In his empirical work on inter-country differences in labour productivity Abramovitz was unable to include a measure of social capability. A.7 Hall and Jones (1999) see social infrastructure as the "primary, fundamental determinant of a country's long-run economic performance" (p.95). They argue, [B]y social infrastructure we mean the institutions and government policies that provide the incentives for individuals and firms in an economy. These incentives can encourage productive activities such as accumulation of skills or the development of new goods and production techniques, or those incentives can encourage predatory behaviour such as rent-seeking, corruption, and theft (p.95). Figure A1 illustrates the authors' view of the relationship between social infrastructure and the performance of the economy. Professor Michael Best's work, discussed below, fleshes out the relationship between input and productivity by developing the concept of economic capability. A.8 In testing their model Hall and Jones measure social infrastructure in terms of the degree of law and order, bureaucratic quality, corruption, risk of appropriation, and the degree to which the country is open to trade, since trade restrictions provide opportunities for rent seeking through efforts spent to obtain, for example, import licences. In summarising the major findings of their empirical work across 127 countries, Hall and Jones (1999) state, 83
Annex A: Recent Council Research of Relevance to Strategy 2010 FIGURE A1 Determinants of Inter-Country Differences in Economic Performance SOCIAL INFRASTRUCTURE [ (INPUTS, PRODUCTIVITY) [ OUTPUT PER WORKER Source: Hall and Jones (1999, p.86) [D]ifferences in social infrastructure across countries cause large differences in capital accumulation, educational attainment, and productivity, and therefore large differences in income across countries (p.114). The issue is thus how to create the right institutional framework and set of incentives so that appropriate social infrastructure results. A.9 Abramovitz and Hall and Jones discuss social capability and social infrastructure, respectively, in the context of a large diverse group of countries. These vary from, on the one hand, the US and the UK, to, on the other hand, Zambia and Comoros. In the context of Northern Ireland, we are concerned with applying the concept of social capability to a small region within a large developed nation state - the UK - or group of nation states - the EU. Thus we need to be sensitive to local circumstances as we apply social capability insights to the local 84
Annex A: Recent Council Research of Relevance to Strategy 2010 economy. The Capabilities Perspective A.10 The central propositions of Professor Best's approach to economic capability, which he refers to as the capabilities perspective on economic growth, rely on an understanding of the internal dynamics of firms which then link to the regional growth process. Networking between firms is the mediating link between firms and the region. Technology is all encompassing, and as technology and technological systems change through time, so does the nature of the mediating link between firms and the region. Thus, understanding relevant and appropriate models of technological management is essential for not only understanding the regional economic growth process but also in designing and implementing economic development policy. A.11 Economic capabilities at the firm level are productive assets that come in two forms: unique and generic. Firms strive to develop their unique capabilities, which are the basis of their competitive advantage and the determinant of their profitability. Generic capabilities, such as technology management capabilities, can diffuse across firms and combine with firms' unique capabilities to explain the productivity of the region's embedded labour and capital. The dynamic that exists between the development of unique and generic capabilities and the exploitation of market opportunities is the driver of regional industrial growth. A.12 Best's exploration of these underlying principles leads to important implications for industrial policy. Technology management is one of three synchronised elements in a productivity triad including, in addition, business organisation and skill formation. The level of skills is a constraint on the diffusion of new technology and business organisations and, thereby, on industrial growth. However, an industrial policy that focuses on skills development in isolation from its embedding in the economic growth process will not provide the necessary 85
Annex A: Recent Council Research of Relevance to Strategy 2010 institutional integration across the three major dimensions of the process. No one of these three elements (technology management, business organisation and skill formation) can drive industrial success on its own; they mutually reinforce one another in a dynamic, interactive process of industrial development. Linkages and Inward Investment A.13 Inward investment is likely to play a vital role in diffusing best practice in all three areas of technology management, business organisation and skill formation, through better linkages with locally owned firms, an issue explored in a recent Council report (NIEC (1999a). Recommendations of this report are set out in Box 4. BOX 4 Recommendations of Council's Report on Linkages and Inward Investment · The Council recommends that the Industrial Development Board initiates a triennial survey of externally-owned firms to measure the proportion of expenditure on material inputs sourced locally and other important linkage effects. · The Council recommends that the Industrial Development Board establishes a Regional Linkages Initiative which will draw together the disparate range of linkage activities which are currently taking place. · The Council recommends that the Industrial Development Board's Regional Linkages Initiative should set a target of increasing the level of local sourcing (non-food) to 15 per cent by 2010. Source: NIEC (1999a, various pages) 86
Annex A: Recent Council Research of Relevance to Strategy 2010 A.14 An important measure of linkages is the proportion of expenditure on material inputs sourced locally. The Council estimates that the proportion of total expenditure on material inputs sourced locally by externally-owned manufacturing firms in Northern Ireland amounted to Ј370m or 19.7 per cent in 1996-97. When food manufacturers are excluded the figure falls to slightly in excess of Ј200m or to 11 per cent. This latter figure compares with a figure of 19 per cent in the RoI. A.15 The level of local linkages is unacceptably low. Northern Ireland is failing to maximise the contribution of inward investment to the local economy. Local sourcing by the externally-owned sector has declined from 26 per cent in 1986. A.16 There are indications of regional supplier capability problems which, if they could be overcome, would raise the level of linkages. For example, 35 per cent of externally-owned plants said they had switched from a local to an external supplier and 36 per cent said they did not source locally because of a capability problem such as quality, cost or delivery performance. A.17 Crucially, the new Regional Linkages Initiative (as recommended by the Council) should focus on developing local supplier manufacturing capabilities within the wider context of an industrial development strategy which aims to upgrade regional capabilities in general. The National Linkages Programme in the RoI and in particular the Source Wales Initiative are good working models. A.18 The proposed initiative is an inherently outward looking strategy which, since it involves adopting and adapting world best standards of manufacturing, gives practical substance to the oft quoted slogan 'Think Globally. Act Locally'. Furthermore, it readily lends itself to cooperation on an all-island basis, as is envisaged in the remit of the proposed Trade and Business Development Implementation Body under the Belfast Agreement - namely, "promotion of north-south trade and 87
Annex A: Recent Council Research of Relevance to Strategy 2010 supply chains, including through business linkages and partnerships". Publicly-Funded R&D and Economic Development A.19 In requesting that the Council undertake this project (NIEC, 1999c), the Minister for the Economy was concerned that within total publicly-funded R&D, there might be duplication or gaps such that maximum economic benefit is not being achieved and additional investment might be beneficial. Advice was sought on whether some form of inter-departmental mechanism to co-ordinate R&D programmes or a Minister with overall responsibility is required. A.20 Total civil (ie non-defence) R&D expenditure in Northern Ireland amounted to Ј152m in 1996, or 1.05 per cent of GDP. Of this amount, the publicly-funded portion was Ј79m, or 0.54 per cent of GDP, and the remaining Ј73m, or 0.51 per cent of GDP, was privately-funded. The picture of R&D in Northern Ireland that emerges in UK regional and other national comparisons is of a low overall expenditure and a relative dominance within this low expenditure of public sector funding. Thus the effectiveness and efficiency with which Northern Ireland organises its publicly funded R&D is likely to be vital for promoting economic development and the knowledge-driven economy. A.21 The Council, in its report, examines policies in nations and regions such as the UK, RoI, Scotland, Wales, North East England, Denmark and South Sweden. In bench-marking best practice in these nations and regions, the Council finds the following common themes high policy priorities given to R&D; mechanisms for continuous review and renewal of R&D policies; and the existence of centralised institutions and initiatives both to implement R&D policy and to embed it fully into economic development strategy. A.22 The Council's assessment of the publicly-funded R&D system in Northern Ireland reveals the existence of some excellent R&D 88
Annex A: Recent Council Research of Relevance to Strategy 2010 capabilities, especially in the science base, but also some overlap and duplication, for example, in IT and e-commerce programmes. There are gaps too, for example, in university R&D, support for small and mediumsized enterprises (SMEs), and in environmental research at the public policy level. Finally, the publicly-funded R&D system in Northern Ireland is largely uncoordinated between IRTU, Government Departments, the universities, the health authorities and industry, with relatively weak networking and linkage connections between programmes. A.23 Based on the absence in Northern Ireland of most of the best practice institutions and initiatives found in other regions, the Council argues there is much more to be done in Northern Ireland to maximise the economic benefit of existing R&D capabilities, to co-ordinate the overall public R&D spend, and to embed R&D policy fully into economic development strategy. 89
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References Cambridge Econometrics (1999) Regional Economic Prospects. Abridge Version. February. Cambridge: Cambridge Econometrics. CB Hillier Parker and Savell Bird Axon (1998) The Impact of Large Foodstores on Market Towns and District Centres. A DETR study. London: Stationery Office. Clulow, R. and Teague, P. (1993) "Governance Structure and Economic Performance". In Teague, P. (ed) The Economy of Northern Ireland. Perspectives for Structural Change. London: Lawrence and Wishart. Coopers and Lybrand (1996) Inward Investment in the British Isles. Belfast: Coopers and Lybrand. Crafts, N. F. R. (1993) Can De-Industrialisation Seriously Damage Your Wealth? A Review of Why Growth Rates Differ and How to Improve Economic Performance. Hobart Paper 120. London: Institute for Economic Affairs. DANI (1999) The Rural Development Regulation. A Consultation Paper. Belfast: Department of Agriculture for Northern Ireland. DD/EHSSB/NIEC (1998) hard choices. Policy Autonomy and Priority-Setting in Public Expenditure. Belfast: Democratic Dialogue, Eastern Health and Social Services Board and Northern Ireland Economic Council. DED (1987) Building a Stronger Economy. The Pathfinder Process. Belfast: the Department. DED (1990) Competing in the 1990s. Belfast: the Department. DED (1995) Growing Competitively. Belfast: the Department. 91
References Department of the Environment for Northern Ireland (1998a) Transport Statistics 1997/98. Belfast: the Department. Department of the Environment for Northern Ireland (1998b) Shaping Our Future. Draft Regional Strategic Framework for Northern Ireland. Belfast: Stationery Office. Department of the Environment, Transport and the Regions (1999) Transport and the Economy. Report of the Standing Advisory Committee on Trunk Road Assessment. London: Stationery Office. Department of Trade and Industry (1998a) Our Competitive Future: Building the Knowledge-Driven Economy. Cm 4176. London: Stationery Office. Department of Trade and Industry (1998b) Our Competitive Future: Building the Knowledge-Driven Economy. Analytical Paper. London: the Department (www.dti.gov.uk;comp/competitive). DFP/HM Treasury (1999) Northern Ireland Expenditure Plans and Priorities. The Government's Expenditure Plans 1999-2000 to 2001-2002, Cm 4217. London: Stationery Office. Dunford, M. and Hudson, R. (1996) Successful European Regions: Northern Ireland Learning From Others. Research Monograph 3. Belfast: Northern Ireland Economic Council. Dunning, J., Bannerman, E. and Lundan, S. (1998) Competitiveness and Industrial Policy in Northern Ireland. Research Monograph 5. Belfast: Northern Ireland Economic Council. Economic Development Strategy Review Steering Group (1999) Strategy 2010. Belfast: Department of Economic Development. Economist (1999) "Happiness is a warm vote." Economist 17 April, p.122. 92
References Fitz Gerald, J., Kearney, I., Morgenroth, E. and Smyth, D. (1999) National Investment Priorities for the Period 2000-2006. Policy Research Series 33. Dublin: Economic and Social Research Institute. General Consumer Council for Northern Ireland (1999) What's in Store? Consumers' Views on Grocery Shopping. Belfast: GCCNI. Gillespie, A. (1999) "Strategy 2010: Serious Scrutiny Recommended". Economic Outlook and Business Review. Vol 14.2, June, pp.35-42. Hall, R. E. and Jones, C. I. (1999) "Why Do Some Countries Produce so Much More Output Per Worker than Others?" Quarterly Journal of Economics. Vol CXIV, Issue 1, Feb, pp.83-116. Higher Education Funding Council for England (1999) Higher Education Reachout to Business and Community Fund. Funding Proposals. 99/16. Bristol: HEFCE. HM Treasury (1998) Steering A Stable Course For Lasting Prosperity. PreBudget Report. Cm 4076. London: Stationery Office. HM Treasury (1999) Public Expenditure. Statistical Analyses 1999-2000. Cm 4201. London: Stationery Office. Kingon, S. (1999) "Time for Radical Change". Ulster Business. Volume 9, No 4, April, pp.52-53. Krugman, P. (1995) Development, Geography and Economic Theory. Cambridge Mass: MIT Press. McKie, P., Ewart, W. and McLaughlin, A. (1998) Review of the Structures within DED for Delivery of Industrial Support Services. Belfast: DED. 93
References McKinsey Global Institute (1998) Driving Productivity and Growth in the UK Economy. London: McKinsey. National Committee of Inquiry into Higher Education (1997) Higher Education in the Learning Society Main Report. London: the Committee. NIEC (1991) Economic Strategy in Northern Ireland. Report 88. Belfast: Northern Ireland Economic Council. NIEC (1993) R&D Activity in Northern Ireland. Report 101. Belfast: Northern Ireland Economic Council. NIEC (1994a) Economic Assessment: April 1994. Report 108. Belfast: Northern Ireland Economic Council. NIEC (1994b) The Reform of Health and Social Care in Northern Ireland: An Introduction to the Economic Issues. Report 110. Belfast: Northern Ireland Economic Council. NIEC (1994c) The Implications of Peripherality for Northern Ireland. Report 111. Belfast: Northern Ireland Economic Council. NIEC (1995) Through Peace to Prosperity. Occasional Paper 3. Belfast: Northern Ireland Economic Council. NIEC (1996) Decentralised Government and Economic Performance in Northern Ireland. Occasional Paper 7. Belfast: Northern Ireland Economic Council. NIEC (1997a) Towards Resolving Long-Term Unemployment in Northern Ireland. Occasional Paper 8. Belfast: Northern Ireland Economic Council. 94
References NIEC (1997b) The 1997 UK Budget: Implications for Northern Ireland. Report 125. Belfast: Northern Ireland Economic Council. NIEC (1998) Growth with Development. Occasional Paper 11. Belfast: Northern Ireland Economic Council. NIEC (1999a) Let's Get Together. Linkages and Inward Investment in Northern Ireland. Report 130. Belfast: Northern Ireland Economic Council. NIEC (1999b) The Implementation of Northern Ireland's Development Strategy in the 1990s. Lessons for the Future. Report 131. Belfast: Northern Ireland Economic Council. NIEC (1999c) Publicly-Funded R&D and Economic Development in Northern Ireland. Belfast: Northern Ireland Economic Council. Forthcoming. NITB (1998) Corporate Plan 1998-2001. Belfast: the Board. OECD (1998) Technology Productivity and Job Creation. Best Policy Practices. Paris: OECD. ONS (1998a) Regional Trends 33. London: Stationery Office. ONS (1998b) "Local area gross domestic product". News Release (98)351. London: ONS. Osborne, R. D. (1999) "Higher Education Participation in Northern Ireland". Paper presented at the Statistical and Social Inquiry Society of Ireland, University of Ulster at Jordanstown, May. Pieda/Ulster Marketing Services (1995) Sprucefield Regional Shopping Centre. Impact Assessment. Belfast: Pieda/UMS. 95
References Planning Service (1996) Retailing and Town Centres. Planning Policy Statement 5. Belfast: Planning Service. PricewaterhouseCoopers (1999) Northern Ireland Economic Review and Prospects. Belfast: PwC. Roper, S. and Hewitt-Dundas, N. (1998) Innovation, Networks and the Diffusion of Manufacturing Best Practice. A Comparison of Northern Ireland and the Republic of Ireland. Research Report 40. Belfast: Northern Ireland Economic Research Centre. Ruane, F. and Gцrg, H. (1999) "Some Reflections on Foreign Direct Investment Policy for the Manufacturing Sector in Ireland." Paper presented at Scott Policy Seminar, 19 May Malone House, Belfast sponsored by NIERC. Simpson, J. (1999) "First the Strategy, Now for the Action". Business Telegraph, 22 June, p.4. Wylie, P. (1999) Out-of-Town Multiples and Local Retail Employment. A Critique of Some Recent Findings. Unpublished Paper. Belfast: Northern Ireland Economic Council. 96
PROJECT STAFF Research: Text Processor and Editor: Proof-reader:
Paul Gorecki Peter Wylie Roisin Rogers Roy Boreland
ACKNOWLEDGEMENTS The Council would like to thank departmental officials for providing data and information. The views expressed, however, are those of the Council.
NIEC PUBLICATIONS IN THE LAST 5 YEARS Reports 112 Annual Report 1993-94 (October 1994) 113 Autumn Economic Review (October 1994) 114 Annual Sir Charles Carter Lecture "Britain and Northern Ireland, The State We're In - Failure and Opportunity" by Will Hutton, Economics Editor of The Guardian (November 1994) 115 Annual Sir Charles Carter Lecture "Competitive Dynamics and Industrial Modernisation Programmes: Lessons from Japan and America" by Michael H Best, Centre for Industrial Competitiveness, University of Massachusetts, Lowell (September 1995) 116 Annual Report 1994-95 (October 1995) 117 Taxes, Benefits, Unemployment and Poverty Traps in Northern Ireland (November 1995) 118 The 1995 UK Budget: Background and Implications for Northern Ireland (February 1996) 119 Annual Report 1995-96 (October 1996) 120 Annual Sir Charles Carter Lecture "Reforming Education in the United Kingdom: The Vital Priorities" by Sir Claus Moser KCB CBE FBA, The British Museum Development Trust (January 1997) 121 Rising to the Challenge: The Future of Tourism in Northern Ireland (February 1997) 122 The 1996 UK Budget: Implications for Northern Ireland (March 1997) 123 Industrial Policy Assessment and Performance Measurement - The Case of the IDB (April 1997) 124 Annual Report 1996-97 (October 1997) 125 The 1997 UK Budget: Implications for Northern Ireland (November 1997) 126 Annual Sir Charles Carter Lecture "Setting Priorities for Health Care: Why Government Should Take the Lead" by Chris Ham, Professor of health policy and Management and Director, Health Services Management Centre, University of Birmingham (January 1998)
NIEC Publications in the Last 5 Years
127 A Framework for Economic Development: The Implications for Northern Ireland of the 1998 UK and EU Budgets and the Chancellor's Economic Strategy for Northern Ireland (June 1998) 128 Annual Report 1997-98 (October 1998) 129 Annual Sir Charles Carter Lecture "Social Exclusion, Income Dynamics and Public Policy" by Professor John Hills, Director, Centre for Analysis of Social Exclusion, London School of Economics and Political Science (April 1999) 130 Let's Get Together. Linkages and Inward Investment in Northern Ireland (June 1999) 131 The Implementation of Northern Ireland's Economic Development Strategy in the 1990s: Lessons for the Future (August 1999)
Occasional Paper Series
1
Reforming the Educational System in Northern Ireland. A Comment on
'Learning for Life' and Recent Developments in the Education System
(January 1995)
2
Demographic Trends in Northern Ireland: Key Findings and Policy
Implications (March 1995)
3
"Through Peace to Prosperity". Proceedings of the Peace Seminar
hosted by the Economic Council (April 1995)
4
The Economic Implications of Peace and Political Stability for Northern
Ireland (June 1995)
*
A Supplementary Paper to NIEC Occasional Paper 4:-
The Implications of Peace and Political Stability in Northern Ireland for
Selected Sectors: Inward Investment, Tourism and Security (June 1995)
5
Health and Personal Social Services to the Millennium. A Response to
Regional Strategy for Health and Social Wellbeing, 1997-2002
(December 1995)
6
Building A Better Future: A Response to Building on Success.
Proposals for Future Housing Policy (May 1996)
NIEC Publications in the Last 5 Years
7
"Decentralised Government and Economic Performance in Northern
Ireland". Proceedings of the Seminar sponsored by the Northern Ireland
Economic Council in association with the University of Ulster on 19
June 1996 at the University of Ulster at Jordanstown (December 1996)
8
Towards Resolving Long-Term Unemployment in Northern Ireland. A
Response to the Long-Term Unemployment Consultation Document
(June 1997)
9
The Impact of a National Minimum Wage on the Northern Ireland
Economy. A Response to the Low Pay Commission (February 1998)
10
"Hard Choices. Policy Autonomy and Priority-setting in Public
Expenditure". Proceedings of the Seminar sponsored by the Northern
Ireland Economic Council jointly with Democratic Dialogue and the
Eastern Health and Social Services Board on 22 June 1998 at the
Eastern Health and Social Services Board (November 1998)
11
Growth with Development. A Response to New TSN (December 1998)
Research Monograph Series
1
Demographic Review Northern Ireland 1995 by Paul Compton (March
1995)
2
The Arts and the Northern Ireland Economy by John Myerscough with
A Statement by the Economic Council (January 1996)
3
Successful European Regions: Northern Ireland Learning From Others
by Michael Dunford and Ray Hudson with A Statement by the
Economic Council (November 1996)
4
Educational Achievement in Northern Ireland: Patterns and Prospects
by Tony Gallagher, Ian Shuttleworth and Colette Gray with a Statement
by the Economic Council (December 1997)
5
Competitiveness and Industrial Policy in Northern Ireland by John H
Dunning, Edward Bannerman and Sarianna M Lundan with A Statement
by the Economic Council (March 1998)
6
Regional Economic and Policy Impacts of EMU: The Case of Northern
Ireland, edited by John Bradley with A Statement by the Economic
NIEC Publications in the Last 5 Years
Council (April 1998)
7
Improving Schools in Northern Ireland by Tony Gallagher, Ian
Shuttleworth and Colette Gray with A Statement by the Economic
Council (August 1998)
Advice and Comment Series 98/1 A Response by the Northern Ireland Economic Council to: Northern Ireland Science Park (Department of Economic Development) September 1998 (3 pages) 98/2 A Response by the Northern Ireland Economic Council to: Fit for the Future (Department of Health and Social Services) September 1998 (13 pages) 98/3 A Response by the Northern Ireland Economic Council to: Structural Funds Plan 2000-2006 (Department of Finance and Personnel) October 1998 (2 pages) 98/4 A Response by the Northern Ireland Economic Council to: Housing Selection Scheme Review: Proposals for Consultation (Northern Ireland Housing Executive) October 1998 (12 pages) 99/1 A Response by the Northern Ireland Economic Council to: Water and Sewerage Services in Northern Ireland: A Consultation Paper (Department of the Environment for Northern Ireland) February 1999 (11 pages) 99/2 A Response by the Northern Ireland Economic Council to: Shaping Our Future. Towards a Strategy for the Development of the Region (Department of the Environment for Northern Ireland) April 1999 (16 pages)
COUNCIL ECONOMIC DEVELOPMENT PUBLICATIONS Recent: Let's Get Together. Linkages and Inward Investment in Northern Ireland (Report 130) The Implementation of Northern Ireland's Economic Development Strategy in the 1990s: Lessons for the Future (Report 131) In the Pipeline: Publicly-Funded R&D and Economic Development in Northern Ireland Forthcoming: The Capabilities Perspective: Advanced Industrial Competitiveness in Northern Ireland local development in Northern Ireland

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