Peripherality and Northern Ireland

Beginning of article

In writing recently about the economic problems that Northern Ireland faces (Begg and Mayes, 1994) we argued, uncontroversially, that an end to the 'Troubles' would significantly alter the region's prospects. Our analysis, nevertheless, focused on other factors which might be amenable to policy action. With an end to the Troubles in Northern Ireland now on the cards, these other characteristics of the Northern Ireland economy must be expected to be of increased importance in determining the Province's competitiveness compared with other parts of the UK and, indeed, other regions of the European Union. In particular, Northern Ireland is a prime example of a 'peripheral' economy, located as it is at the North-Western corner of the EU and facing the further barrier of a sea crossing to markets other than the Republic of Ireland. It is also a region that shares a number of the characteristics of the older industrial regions of Britain, such as high unemployment, persistent emigration of working-age population and difficulties in achieving industrial restructuring (Harris et al., 1990; Harris 1991).

Northern Ireland, however, differs from the declining industrial areas of Northern England and Scotland in one key respect. This is that its high unemployment is the result not so much of job losses as the high 'natural' growth of the working population. In both the 1970s and the 1980s, employment grew in the Province, in contrast to Northern England which lost jobs. Only Wales amongst the regions traditionally classified as 'assisted' in the UK had a better employment record than the Province in the last decade (Cambridge Econometrics, 1994). The growth in employment in Northern Ireland has, of course, been largely the result of massive public spending associated both with security and with programmes to enhance services. In so far as it can be identified by territory (defence spending, for example, cannot be), public expenditure in Northern Ireland per capita has been around 50 per cent above the UK average (Heald, 1990).

Although the Northern Ireland economy has been extensively analysed, there has been a temptation to ascribe its difficulties largely to the twin effects of the Troubles and of the Province's remote location, both of which have, hitherto, been viewed as essentially unalterable by economic policy. If the Troubles are genuinely over, the first of these overarching obstacles to progress disappears. Our purpose in this note is to question the conventional view that Northern Ireland's peripheral location is as profound a barrier as is so often assumed. In attempting to answer this, we assess how peripherality interacts with other determinants of Northern Ireland's competitive position. Understanding how peripherality affects a regional economy is a key first step in formulating a policy response. Our analysis suggests that there is little scope for improving the Province's competitive position by further action to improve transport infrastructure or services, and we conclude that in terms of operating costs, Northern Ireland is penalised in some respects, but benefits in others. However, a wider view of the economic impact of peripherality points to different sorts of problems to be overcome, many of which could be affected by policy changes. We consequently explore the scope for public and private sector responses in the Province, the UK and the EU within the framework of current policy and the market economy.

The next section of the note provides an overview of approaches to the measurement and appreciation of peripherality and presents an alternative. We then provide an assessment of how its relatively remote location affects Northern Ireland and highlight the facets of this which seem most pertinent. The concluding section explores the policy implications of these findings.

Assessing the significance of peripherality

Peripherality is an ill-defined word, although its obvious geographical definition is in terms of remoteness from the centre of an economic system. On this basis, Northern Ireland, Jutland and Greece would unambiguously be defined as being on the periphery of the European Union (EU). Similarly, New Zealand or Paraguay could be regarded as peripheral in the world economy. The significance of peripherality in this sense is presumed to be that it implies higher costs of access to markets, and many previous studies have, indeed, tended to view peripherality almost entirely in terms of transport and administrative costs for serving major centres of population.

Although peripherality has, traditionally, been portrayed as a geographical concept of distance from a centre or core, its economic significance stems from the effects of remoteness on competitiveness. There is a widely-held presumption that being located in the 'periphery' means that a region is at a disadvantage relative to 'core' regions. A key policy question is how peripherality affects competitive advantage and whether it is amenable to policy action. Being at the edge of Europe is not necessarily a disadvantage. In a world in which the weight of transport costs in manufactured products has fallen progressively, and in which advances in telecommunications have facilitated contacts, it can be argued that a narrow focus on transport costs is inappropriate. Singapore and Copenhagen are both on islands, while Taiwan has, arguably, thrived because of its separation from mainland China. The analysis of cores and peripheries is well-known to economic geographers, but has also featured increasingly in recent literature on location and the effects of economic integration (see, for example: Krugman, 1991). Although there are conflicting views about whether or not the periphery tends to catch-up (Barro and Sala-i-Martin, 1991; Quah, 1994), or is condemned to a subservient position, a common thread is that most peripheral regions will lag behind their more favoured counterparts in core areas. To some extent, this is a self-defining relationship, as 'cores' can build up in places which might otherwise be regarded as peripheral. For example, there was a period during the nineteenth century when Naples appeared to be making rapid steps towards industrialisation, and played a key role in the unification of Italy.

The work of Keeble et al. (1982, 1988), which analyses the economic potential of regions on the basis of their proximity to centres of demand, is more elaborate. In this approach core and peripheral regions are not identified purely by their locations on the map of the economic system. Instead, a 'peripheral' region is one which has few sizable markets nearby, whereas a 'core' region is one which is located close to such markets. This means that there can be several regions spread throughout an economic system which are 'core' and these need not be geographically central. In the US, for instance, New York and Chicago are both located near other major centres of demand and would thus be designated as core regions in spite of being on the geographical edges of the country, whereas Kansas, in the middle of the country, would be treated as peripheral.

In the UK, South East England, because of the agglomeration of activity there, is …