S2 - Episode 17 - Seamus McGuinness

Holywell Trust Conversations

‘It is absolutely crazy to think that constitutional change in Ireland would happen overnight’
Consideration of Irish unity needs careful preparation, argues Seamus McGuinness, research
professor at the Republic’s Economic and Social Research Institute. He suggests looking to the
example of Hong Kong, where the handover of control was undertaken over a 13 year period.
Seamus was talking in the latest Holywell Trust Forward Together podcast.
The difference in economic performance, North and South, sits “at the centre of debate around
constitutional change,” believes Seamus. “I come at it from the perspective of someone who worked
as an economist in Belfast for the first 10 or 12 years of my career, and now has spent around the
same amount of time looking at the issues relevant to the Irish economy.
“There are a number of differences, but the central differences between the economies North and
South really relate to differences in the level of productivity and the extent to which they exhibit
dynamic growth and are able to respond to shocks.”
Seamus explains: “There are fundamental underlying differences that drive lower productivity... The
first relates to human capital – we see that levels of educational attainment in the North are really
lagging other British regions and the Republic of Ireland. I have to say this, actually, was a shock to
me as someone who works in the Republic and is domiciled in the North. When I looked at the
data.”
Seamus points out that in 2015, over 35% of young people, 24 to 30, in Northern Ireland were
educated only to the lowest level, compared to 11% in the Republic. And while 40% of young adults
in the North hold third level qualifications, the figure was around 60% in the Republic. “So that’s a
key aspect,” of the difference in economic performance, argues Seamus.
Another factor is that the Republic is much more export-focused than is the North. Exports are
worth about 15% of Northern Ireland’s economy, or 35% if GB is included, compared to 54% in the
Republic. In addition, “the export sector in the Republic is much more value added than in the
North.” And, of course, the Republic has been very much more effective in attracting foreign direct
investment than the North, with the South’s FDI being highly productive.
The composition of the two economies also differs. While that in the North remains highly
dependent on public services, the private services sector in the Republic is very much larger than
that of the North. The Republic also has a large presence in the pharmaceutical, technology and
advanced services sectors. “A lot of that really stems from the success of the IDA,” the body that
promotes inward investment and economic development in the Republic, “in bringing these large
multi-nationals into Ireland – and the policies that have facilitated indigenous companies to grow up
around them.”
One of the disappointments about Northern Ireland is that the Good Friday Agreement did not
stimulate a greater economic impact. “When I looked at the data, one of the things that baffled me
was that we should have seen a peace dividend of some description.... I do wonder why foreign
direct investment has not been a bigger feature. And why bodies such as Invest NI have not been
more successful over the period in bringing large multinationals into the North, as the IDA has been
in the South.”
The difference in effectiveness between the IDA and Invest NI points to the opportunities that might
be achieved by greater cross-border co-operation, irrespective of whether the constitutional
settlement should change, believes Seamus. “Just thinking strategically... there are clear
opportunities for cross-border co-operation in a number of areas that are just so obvious and
mutually beneficial that should be pursued. The obvious case is health services. Another is around
infrastructural planning, but another is economic development.... You can only imagine that the
North would be a net beneficiary of that joint approach.”
Seamus concedes, though, that Brexit does reduce the attractiveness of Northern Ireland as a
foreign direct investment location. What Brexit achieves instead is accelerate the debate over
Northern Ireland’s constitutional situation – generating a much louder conversation over Irish unity.
This stimulated a major research publication, The Political Economy of the Northern Ireland Border
Poll, from Seamus, along with colleague Adele Bergin at ESRI.
“Without a doubt, in the absence of Brexit we wouldn’t be having this conversation.... The issue of
Brexit has put the question of the constitutional future of the North more centre stage. Even without
Brexit we know that there are continued demographic changes taking place that are likely to make a
border poll arise at some point in the future... But Brexit has made this likely sooner rather than
later.”
What is essential, believes Seamus, is to avoid the mistakes of the Brexit referendum by having an
evidence base “so that, when the time comes, people can make an informed opinion”. That evidence
base should consider the economic arguments, which include, says Seamus, that households in the
South are almost €3,000 a year better off after tax, while households in the North are at a
substantially higher risk of poverty compared to those in the Republic.
Seamus admits that at present it is not possible to predict the overall impact of unification, nor to
know the process by which it would take place. These are questions that planning and intergovernment negotiations must address. But it is “absolutely crazy”, he says, to think that
constitutional change would happen overnight, instancing the 13 year transition of Hong Kong from
UK to Chinese rule.
This latest podcast in the second Forward Together series is available here on the
website of peace and reconciliation charity Holywell Trust. It is funded by the
Community Relations Council’s Media Grant Scheme.
Disclaimer: This project has received support from the Northern Ireland
Community Relations Council which aims to promote a pluralist society
characterised by equity, respect for diversity, and recognition of interdependence.
The views expressed do not necessarily reflect those of the Community Relations Council.