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A Tale of Three Regions: GDP in the new NUTS2 Regions

Regional GDP for 2017 has recently been published by Eurostat for 281 NUTS2 regions in the EU28.  This data shows how the different EU regions compare in terms of GDP and how they rank in relation to each other and to the EU average.  This data is of particular interest in Ireland as it is the first data on regional GDP available for the new Irish NUTS 2 regions.  As discussed here and here, instead of two NUTS2 regions in Ireland (the Border, Midland and West (BMW) Region and the Southern and Eastern (S&E) Region) there are now three regions: Northern and Western, Southern, and Eastern and Midland.  The Northern and Western region is very similar to the Western Region under the remit of the WDC[1].  While this is the first GDP data available for the three regions it is expected that the CSO will shortly publish regional GDP data in Ireland for the same years, at both NUTS2 and NUTS3 level, though there may be some issues relating to confidentiality at NUTS3 level which could delay the publication.

Regional GDP over the last decade.

Eurostat has published the data for 2006 to 2017 (although for Ireland the 2017 data is an estimate) allowing for a good examination of the changing output of the three regions, as measured by GDP.  Figure 1 below shows regional GDP (€million) in three NUTS2 regions for that period, highlighting the very different growth trends in the regions in the last decade.

 

Figure 1: Regional GDP (€m) for Ireland’s NUTS2 regions, 2006-2017

Source: Eurostat Table tgs000. 2017 data estimated. https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tgs00003

In 2006 the Northern and Western region accounted for 12% of the national economy, but by 2017 it was estimated to account for only 8%.  GDP in the region had grown by only 5% in that period.  In contrast the Eastern and Midland region economy grew by 47% between 2006 and 2017, while the Southern region’s economy had more than doubled in size (101% growth).  The Irish economy as a whole, as measured here, grew by 59% over that time. The Eastern and Midland has the largest regional economy, accounting for 56% of the national economy in 2006.  This fell to 51% in 2017.  The Southern region accounted for 32% of the economy in 2006 and 41% by 2017.

The level shift in the size of the economy Ireland in 2015 discussed in detail here, is shown clearly in the chart.  The relocation to Ireland by significant Multi National Enterprises (MNEs) of some or all of their business activities and assets (in particular valuable Intellectual Property) alongside increased contract manufacturing conducted abroad (which is included in Irish accounts), all contributed to this shift in GDP.  It is evident that the most significant shift was experienced in the Southern region, previously with the Southern and Eastern regional data combined this was less obvious.  Nonetheless growth in the Eastern and Midland region from 2013 onward was also very significant while the Northern and Western region GDP does not appear to have been affected by the factors which gave rise to the level shift, or to have achieved steady economic growth.

While Figure 1 shows the actual GDP, Figure 2 below shows GDP per person in each of the regions, a format which is more comparable across regions within Ireland and Europe and highlights the very significant widening of disparity among Ireland’s regions.

 

Figure 2: Regional GDP per inhabitant in PPS for Ireland’s NUTS2 regions, 2006-2017

Eurostat Table tgs0005 https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tgs00005

It should be noted that Figure 2 shows the data from 2006 to 2017 in terms of in terms of purchasing power standards (PPS)[2] rather than euro.  The disparity in GDP per person has grown significantly since 2006.  In 2006 GDP (PPS per inhabitant) in the Northern and Western region was 69% of the national average, by 2017 it was only 46%.  Meanwhile, in 2006 in the Eastern and Midland region GDP per person was 115% of the national average and 104% in 2017.  The most rapid change has been in the Southern region where GDP per person was 95% of the state average in 2006 and 122% in 2017.

Data for 2017 was also provided in euros.  The GDP per person in 2017 for the Northern and Western region was €28,400, for the Southern region it was €74,700 (163% higher), for the Eastern and Midland it was €64,000 per person, 125% higher than the Northern and Western region.  Nationally GDP was €61,200 per person.

 

Comparison with EU28 Regions

The GDP per person in the Southern region is 3rd highest (63,000 PPS) of the 323 regions for which there is NUTS2 regional GDP 2016 data, after Inner London West (185,100 PPS) and Luxembourg (76,200 PPS).  The Eastern and Midland region is 8th (54,000 PPS) while the Northern and Western Region lags considerably, in 181st place (23,900 PPS).

Given that the eligibility for the European Regional Development Fund (ERDF) and the European Social Fund (ESF) is calculated on the basis of regional GDP per inhabitant (in PPS and averaged over a three year period) this rank is important.  The NUTS 2 regions are split into three groups for the programming period 2021–27:

  • less developed regions (where GDP per inhabitant was less than 75% of the EU average);
  • transition regions (where GDP per inhabitant was between 75% and 100% of the EU average); and
  • more developed regions (where GDP per inhabitant was more than 100% of the EU average).

For the programming period 2021-2027, the Commission envisages the continued use of the NUTS classification for determining the regional eligibility  and co-financing rates for support from the ERDF and the ESF.

In the Southern region in 2017 GDP was 220% of the EU28 average (see Figure 3 below) and the Eastern and Midland region GDP was 189% of the EU average neither region would qualify as transition regions for the ERDF or the ESP, but would be classified as ‘more developed regions’.

 

Figure 3: NUTS2 Regional GDP per person as percentage of the EU average (EU=100)

Source: Eurostat Table tgs0005 Regional Gross Domestic Product (PPS per inhabitant in % of the EU28 average) by NUTS 2 regions. 2017 estimated. https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tgs00006

 

The Northern and Western Region, however, had a GDP of 82% of the EU average in 2016.  It was more than 90% of the EU average in only two of the last ten years (2011 and 2012), although in 2006 it was greater than the EU average at 102%.  It is estimated at 84% of the EU average in 2017 and so the Northern and Western Region would qualify as a ‘transition’ region in the programming period 2021-2027.

Edited to add: Despite publication of GDP data for the new NUTS2 regions it appears that for the next round of cohesion policy funding (2021-2027) the old NUTS 2 regions will be used (BMW and S&E) rather than the three new regions (including the NW).  This means the BMW will have Transition Region status and the Southern and Eastern Region will be classified as a ‘more developed region’.

Conclusion

There are of course difficulties with the use of GDP as a measure of regional disparities and regional well being (see here and here) but despite these concerns it remains the most important statistic for regional economic activity.  It is essential to our understanding of the changes taking place in Irish regions, although, in order to fully understand regional growth and change, it is important to use GDP in combination with other data such as that on employment, enterprise activity, income, wealth and consumption.

The rapid growth in GDP in the Southern Region and in the Eastern and Midland regions contrasts sharply with the very significantly slower growth in the Northern and Western Region.  The substantial differences in regional GDP per person in 2017 in the three regions, when compared to that in 2006, should be of great concern for Ireland as a whole and for the Northern and Western Region in particular.

 

 

Helen McHenry

[1] The WDC remit covers Donegal, Sligo, Leitrim, Roscommon, Mayo, Galway and Clare.  The Northern and Western region is similar, but includes Cavan and Monaghan and excludes Clare (which is part of the Southern Region).

[2] PPS is the technical term used by Eurostat for the common currency in which national accounts aggregates are expressed when adjusted for price level differences using PPPs.  Basic figures are expressed in PPS, i.e. a common currency that eliminates the differences in price levels between countries allowing meaningful volume comparisons of GDP between countries.

City Led Regional Development and Peripheral Regions- join the debate!

The theme of this year’s Regional Studies Association Irish Branch Annual Conference, to be held in the Institute of Technology Sligo on Friday 7th September, is “City Led Regional Development and Peripheral Regions”.

The conference will examine how urban areas interact with their rural regions and whether the development of the city or urban area leads to wider development.

Two international experts, Dr Andrew Copus from the James Hutton Institute in Aberdeen and Professor Mark Partridge, the C. William Swank Chair of Rural-Urban Policy at The Ohio State University, have been invited to present other countries’ experience on this theme and to stimulate debate about the reality of city led development.

Andrew’s paper  The Scottish City Region Deals – A rural development perspective. considers how urban-rural interaction is a long-established element of the “theory of change” associated with regional development policy. Optimistic assumptions about wider functional region benefits of city investments, are commonplace and generally unquestioned, despite meagre evidence of such impacts. A summary history of urban-rural concepts in the European policy discourse, will be followed by a brief account of rural/regional policy in Scotland. Against this background the origin and evolution of Scotland’s City Region Deals, and Regional Partnerships, will be described. The presentation will conclude with some reflections on the how these evolving arrangements fit into an already cluttered policy landscape, their compatibility with rural policy “mainstreaming”, and the likely benefits for rural Scotland.

Mark’s paper Is there a future for Rural in an Urbanizing World and Should We Care? examines how rural areas have received increased attention with the rise of right-wing populist parties in Western countries, in which a strong part of their support is rural based. While the underlying reasons are complex and unique to each country, one common feature is that rural areas have typically faced recent economic decline, creating anxiety, and in some cases, anger of rural residents directed at their urban counterparts. Thus, bridging this rural-urban economic divide takes on added importance in not only improving the individual livelihoods of rural residents but in increasing social cohesion. One way to bridge this economic gap is to improve rural-urban economic linkages through an urban-led economic strategy. For example, urban growth can create commuting and market opportunities for rural residents and firms if there is sufficient connectivity. While such a process has strong theoretical advantages it also requires rural areas to more carefully think about quality of life to attract and retain residents who would otherwise relocate to urban areas.

The issues in Ireland are examined in other presentations and it is to be hoped that the conference will provide useful input to the discussion about regional development in Ireland as the Regional Spatial and Economic Strategies of Project Ireland 2040 are drafted. The draft conference programme is below.

Detailed Conference Information can be accessed here (including speaker bios, directions, and accommodation). 

Register here for the conference (€70 including lunch) and come along and join in the debate.

 

Helen McHenry

WDC Insights Publications on County Incomes and Regional GDP

The Western Development Commission (WDC) has just published two WDC Insights: How are we doing? County Incomes in the Western Region and What’s happening in our regional economies?  Growth and Change in Regional GVA.

Both of these examine data from the most recent CSO County Incomes and Regional GDP publication for 2015 (with preliminary data for 2016) and they have a particular emphasis on the counties of the Western Region and on our regional economy.

These two page WDC Insights publications provide succinct analysis and commentary on recently published data and on policy issues for the Western Region.  Both of these WDC Insights are shorter versions of the series of blog posts on County Incomes and Regional GVA which you may have read previously.

How are we doing? County Incomes in the Western Region

In this WDC Insights data on County Incomes in 2015 are examined with a focus on the difference among Western Region counties and changes over time.

Five Western Region counties had Household Disposable Income per Person (Disposable Income) of less than 90% of the state average, while Galway and Sligo were both 93%.  They  had the highest Disposable Incomes in the Western Region in 2015 (Galway (€18,991) and Sligo (€19,001)).

Donegal continues to have a significantly lower Disposable Income than any other county in Ireland (€15,705 in 2015).  Disposable Income in Roscommon was also significantly lower than the state average at €16,582 in 2015. This was the second lowest of any county in Ireland, while Mayo had the fourth lowest.

Regional divergence was at its least in 2010 when all parts of the country were significantly affected by recession. Since then, incomes in some counties have begun to grow faster and divergence has again increased, particularly since 2012.

The WDC Insights How are we doing? County Incomes in the Western Region can be downloaded here  (PDF 260KB)

 

What’s happening in our regional economies?  Growth and Change in Regional GVA

The most recent regional GVA and GDP data (for 2015 and preliminary 2016) published by the CSO is discussed in this WDC Insights with a focus on the regions which include the seven Western Region counties.

Between 2014 and 2015 there was very significant growth in GVA and GDP nationally (a level shift which occurred for a variety of reasons). It is therefore valuable to examine how this rapid economic growth was spread among regions. While data for the largest regions of Dublin and the South West has been suppressed by the CSO, to preserve the confidentiality, variation in growth and disparity in the other regions continues to be of national and regional importance.

The data shows that disparities are widening and economic activity, as measured by GVA, is becoming more and more concentrated.  The smaller contribution to national GVA from other regions highlights their significant untapped potential.

The WDC Insights What’s happening in our regional economies?  Growth and Change in Regional GVA can be downloaded here  (PDF  350 KB)

 

If you find these WDC Insights on County Incomes and Regional GVA interesting and would like to read more detailed discussion of the data please visit these recent WDC Insights blog posts:

Leprechauns in Invisible Regions: Regional GVA (GDP) in 2015

What’s happening in our regional economies? Growth and change in Regional GVA.

How are we doing? County Incomes in the Western Region

I hope that you find these WDC Insights useful.  Let us know what you think.  We’d welcome your feedback.

 

Helen McHenry

What’s happening in our regional economies? Growth and change in Regional GVA.

In the last blog post on this subject, Leprechauns in Invisible Regions, the very significant changes in GVA and GDP[1] at a regional level between 2014 and 2015 were discussed.  These largely applied in manufacturing, with a national growth in GVA that sector of 134%.  As mentioned in that post, some regional data for the NUTS3 regions of Dublin and the South West was suppressed by the CSO to preserve confidentiality.  The focus of this post, therefore, is on changes in other NUTS 3 regions.  Of course Dublin and the South West are the largest economic regions but it is useful to consider the changing situation in regions less affected by the level shift in GVA in 2015 (and not affected by the confidentiality issue), and to examine in more detail the other GVA data published by the CSO in its annual County Incomes and Regional GDP publication.

The change in GVA per person between 2014 and 2015 is shown in Figure 1.  Growth in the State as a whole (which includes the South West and Dublin regions) was most significant (37%), but there was a 30% increase in GVA per person in the Mid West region and a 30% increase in the South East region.  Growth in GVA in those years was more modest in the Midland region (17%) and the West region (9%), while it was only 5% in the Border region.

Figure 1: Regional GVA per person at Basic Prices, 2014 and 2015 

a Data for 2015 for Dublin and South West regions suppressed for reasons of confidentiality

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 9c GVA per person at Basic Prices, 2007 to 2016

Looking at changes over a longer period Figure 2 shows GVA per person in the NUTS 3 regions since 2007[2].  GVA per person was significantly higher in the Dublin and South West regions between 2007 and 2014.  There has been some change in relativities among regions since 2007 with the Midland region, which had lowest GVA per person in 2007, higher than the Border region in 2015 (22,320 in the Midland region compared to 19,060 per person in the Border region in 2015).  GVA in the West grew more rapidly than elsewhere in 2011 and 2012 but since that period GVA in the West has again fallen behind that in the Mid East[3] and the South East and the gap between them has widened.

Figure 2: Regional GVA per person at Basic Prices, 2007 and 2016 

a Data for 2015 and 2016 for Dublin and South West regions suppressed for reasons of confidentiality

b Preliminary results for 2016

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 9c GVA per person at Basic Prices, 2007 to 2016

As has been discussed, some of the regions showed very significant growth between 2014 and 2015 but, as can be seen in Figure 2, there was no significant increase in GVA between 2015 and 2016 in any region for which data is available.

Disparities within the State

An index of how GVA in the regions compared to that in the State between 2007 and 2016 (Figure 3) gives a useful picture of widening regional disparity.  None of the regions for which data is available were above the State average during that period.  The Border region had an index of only 36.3 in 2015.  In that year the Midland region was only 42.5% of the State while the West was 56.0.  In contrast in 2007 the Border index was 68.1, the Midland index was 65.5, and the West was 71.3.  The Mid West, which had consistently highest index of GVA for regions where data was available, was 72.6% of the State average in 2016.

Figure 3: Index of GVA for NUTS 3 Regions, 2007-2016, State=100

a Data for 2015 and 2016 for Dublin and South West regions suppressed for reasons of confidentiality

b Preliminary results for 2016

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 10 Indices of GVA per person at Basic Prices, 2007 to 2016 (State = 100)

All of the regions for which data is available have lower indices of GVA relative to the State in 2016 compared to 2007.  For example, the West was 71.3 in 2007 and 56.0 in 2016, and the Border was 68.1 in 2007 and 37.1 in 2016.  This indicates the very significant widening of disparities in GVA between these regions and GVA in the State which is influenced by the more rapidly growing Dublin and South West regions.

 

EU comparison

It is also interesting to look at changes in GVA over time relative to an index of regional GVA in the EU.  This shows how Irish regions are faring compared to the rest of the EU.  It is also important as the relative size of regional GVA per person impacts on the level and type of EU structure funding available to a region.  Regions where GDP per capita is less than 75% of the EU average are designated ‘convergence regions’ (86 regions between 2014 and 2020) and those with GDP per capita above 75% of the EU average are seen as developed regions (186 NUTS 2 regions).

Looking at the NUTS 2 regions in Ireland the changes relative to the EU average are very stark, particularly since 2015 (Figure 4).  In 2007 the S&E region was 163.8% of the EU average and it declined to 144.2% in 2009, there followed by steady grown to 2014, when it reached 153.2%, still below that in 2007.  The level shift in GVA in 2015 meant the S&E region increased dramatically to 213% of the EU average in 2015.  In contrast in 2007 GVA in the BMW region was at the EU average (100.9) but it declined relative to the EU average until 2014 (77.1%) with only slow growth for 2015 and 2016 (it is estimated at 80.1% of the EU average in 2016), compared to 213% in the S&E region.

Figure 4: Index of GVA for BMW and S&E regions (NUTS 2), 2007-2016, EU28=100

b Preliminary results for 2016

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 11   Indices of GVA per person at Basic Prices, 2007 to 2016 (EU28 = 100)

There is more fluctuation in GVA relative to the EU28 when we look at NUTS 3 regions (Figure 5).  Even without data for the regions with the highest GVA (Dublin and the South West) the other regions in the S&E NUTS 2 region have all had higher GVA than the EU average since 2014.  The Mid West region consistently had GVA higher than the EU average since 2007, despite some decline, while the South East and the Mid East were below the EU average between 2009 and 2014).

Figure 5: Index of GVA for NUTS 3 regions, 2007-2016, EU28=100

b Preliminary results for 2016

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 11   Indices of GVA per person at Basic Prices, 2007 to 2016 (EU28 = 100)

 

In contrast, the three regions which make up the BMW were all at or below the EU average in 2015 and 2016, and the Border and Midland regions have never been above the EU 28 average.  The Border is currently only 65.7% of the EU average (2016) while the Midlands is 76.2%.  GVA in the West region has shown significant fluctuation, and was particularly strong in 2011 and 2012 (peaking at 108.8% of the EU average) but has since fallen back, though it is currently very close to the EU average (99.2%).

 

Productivity

It is also interesting to look at changes in productivity in recent years (Figure 6).  There was a dramatic increase of 42% in productivity (GVA per person at work) in the State between 2014 and 2016 (this includes the figures for the South West and Dublin regions), and there were also significant increases in the Mid East (38%), Mid West (34%) and South East (40%) regions.  While increases in productivity were much smaller in the Border (9%), Midland (20%) and West (15%) all regions did show productivity growth.

Figure 6: GVA per person at work 2014-2016 (NUTS 3)

Source: CSO, 2018, County Incomes and Regional GDP, 2015,Table 13  GVA at Basic Prices, population and persons at work for each region 2015

 

Regional Productivity is dependent on a number of factors, including the types of economic activities being undertaken in the regions so it is useful to look more closely at the data for this.

Economic Sectors

There is significant variation in the importance of different sectors in each region (Figure 7).  Looking at Industry, for example, the West region has the highest proportion of GVA from this sector (of the regions for which data is available) at 41.5% compared to 38.8% for the State as a whole.  There is substantial variation in the contribution of Professional, Scientific and Technical services to GVA (13.6% in the Mid East region and 13.4% in the South East compared to 5.3% in the Midland region and 6.2% in West region).  Public Administration and Defence makes a very significant contribution to GVA in the Border (27.9%) and Midland region (26.8%) but only accounts for 11.9% of GVA in the State as a whole.

Figure 7: Gross Value Added by Sector 2015

Source: Source: CSO, 2018, County Incomes and Regional GDP, 2015,Table 9d   Gross Value Added by Sector 2015

 

The relative importance of the three main branches of economic activity in the Border, Midland and West Regions is shown in Figure 8.  Manufacturing, Building and Construction accounts for almost half (46%) of GVA in the West region but only 24% in the Border and 32% in the Midland regions.  In contrast services account for 65% of the Midland GVA, and 73% of GVA in the Border region and 52% in the West region.  For the State as a whole Manufacturing, Building and Construction accounts for 41% of GVA and Services account for 58%.

Figure 8: GVA in Border Midland and West regions by branch, 2015

Source: Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 15   GVA at Basic Prices classified by region and branch, 2014 and 2015

 

Looking at changes in GVA between 2014 and 2015 for each branch of the economy and, as would have been expected, there were significant changes in GVA from Manufacturing, Building and Construction in most regions between 2014 and 2015, with a 105% increase in the State, a 76 % increase in the South East, and a 75 % increase in the Mid West.  In the West, however the increase in GVA in this branch was only 20% and again, very significantly (and giving rise to the low growth in GVA) in the Border it was only 3%.

Figure 9: Changes in regional GVA by branch between 2014 and 2015

 

Source: Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 15   GVA at Basic Prices classified by region and branch, 2014 and 2015

 

There were also changes of note in the Agriculture, Forestry and Fishing sector (which accounts for a relatively small amount of GVA).  There was a decrease in GVA from this sector of 7% in the State between 2014 and 2015 and a significant decrease of more than 20% in the South West and 14% in the Border region and the Mid West region.  GVA from services grew in all regions, but only by 1% in the West region (compared to 11% in the State).

 

Conclusion

While there are difficulties with using GVA and GDP as measures of regional development (see here and here) it is nonetheless a very important indicator of regional economic activity and essential to our understanding of the changes taking place in Irish regions.    However, in order to understand regional growth and change it is important to use GVA in combination with other data such as that on employment, enterprise activity, income, wealth and consumption.

 

 

Helen McHenry

 

[1] GDP is Gross Domestic Product, GDP and GVA are the same concept i.e. they measure the value of the goods and services (or part thereof) which are produced within a region or country. GDP is valued at market prices and hence includes taxes charged and excludes the value of subsidies provided. GVA at basic prices on the other hand excludes product taxes and includes product subsidies. See background notes .

[2] Data for the South West and Dublin Regions is not available for 2015 and 2016

[3] In previous posts on GVA the Mid East has been considered with Dublin (see this post for example) as much of the GVA in the Dublin region is produced by commuters from the Mid East (and other regions) and GVA per person for the Dublin region does not reflect this.  However, as data for the Dublin region is not available Mid East data is included here.

Leprechauns in Invisible Regions: Regional GVA (GDP) in 2015

Regional GVA (GDP)[1] figures for 2015, and preliminary figures for 2016, were published recently by the CSO.  The 2015 figures are of particular interest as that year (the year of leprechaun economics), there was a level shift in the size of the economy.  The relocation to Ireland by significant Multi National Enterprises (MNEs) of some or all of their business activities and assets (in particular valuable Intellectual Property) alongside increased contract manufacturing conducted abroad (which is included in Irish accounts), all contributed to the very significant growth in GDP.

There has been much discussion of the issue (see here, here and here) and a review of the statistics used to produce the data.  In addition the CSO recently held a seminar on the impact of globalisation on Ireland’s accounts, with papers available here).  The significant change in GDP in 2015 (a 26% rise on 2014) is, of course, played out at a regional levels and is evident in the regional GVA data.  However, because of the significant impact of a few businesses in some figures, for reason of confidentiality the CSO has not published GVA data at regional level for Dublin or for the South West (the ‘invisible’ regions of the title).

This is, of course, very problematic for those seeking to understand the economies of these regions and for those of us interested in comparing regional economic activity.  For regions, measures of progress and disparity and measures of how well they are doing, whether they are catching up or falling behind are all key issues considered using GVA data.  Nationally, other indicators (including GNI*, Modified Domestic Demand and a Modified Current account (CA*)) have been developed to help improve our understanding of growth and change in the domestic economy.  It is to be hoped that consideration will be given to producing other regional economic indicators (such as a regional GNI*) which could add to our understanding of changing regional economies.

This post focuses on the level shift in GVA which occurred in 2015 and its impact in regional statistics, while my next post will examine other (more traditional) aspects of regional GVA in more detail.  In this post Dublin, and the South West are considered together.

The size of the Regional Economies

Much of the dramatic increase in GVA was concentrated in Dublin and the South West (although, as discussed below, it was not confined to these regions), so it is useful to look at how much these regions contributed to Irish GVA in 2015 (See Figure 1).  The two regions of Dublin and the South West together accounted for more than two thirds (67%) of Irish GVA, although, interestingly this was not a dramatic increase on 2014 when the two regions contributed 63% of GVA.  This is partly because most regions experienced level shifts in their GVA between the two years.

Figure 1:  Regional contribution to Ireland’s GVA in 2015

*Dublin and South West are not a ‘region’ but are shown together as data not available for these two regions (own calculation from data).

Source: CSO, 2018, County Incomes and Regional Accounts Table 9   GVA per Region at Current Market Prices (GDP), 2007 to 2016 

Output from these regions over time

It is also useful to look at the changing contribution of the two regions with the largest economies over a longer time period (Figure 2).  In 2000, Dublin and the South West contributed 57% of national GVA.  This has been rising, particularly since 2010, and it reached 67% in 2015 (and remains 67% in the 2016 estimate).  This indicates the very significant concentration of high value added activity in these two regions, a concentration which has been increasing over time.

Figure 2: Percentage of National GVA from Regions 2000-2015

Source: CSO, 2018, County Incomes and Regional Accounts table RAA01

Of course, before 2015, these two regions could be considered separately, and in 2014 Dublin contributed 45% of national GVA while the South West contributed 18%.  In 2002 the South West accounted for 20% of GVA and Dublin 37% (figures for the South West generally varied between 18 and 20% of national GVA over this period).

GVA per person in Regions

While the above discussion has focused on the amount of GVA contributed by the regions it is, in general, more useful to consider GVA per person as a means of comparing regions (because of different regional sizes).  Given the lack of data for two of the NUTS 3 regions, it is easiest to look at (Figure 3) NUTS 2 level regions i.e. the Border, Midland and West (BMW) region and the Southern and Eastern (S&E) region (which includes both Dublin and the South West).  GVA per person has always been significantly higher in the S&E region than in the BMW.  In 2000 it was €28,490 in the S&E and €19,148 in the BMW, a difference of €9,342 per person.  The figures followed a similar pattern (with some minor variation in the disparity) over the year to 2012 when the trends began to diverge, most dramatically in 2015.  In that year GVA per person in the S&E was €63,179 (up from €44,464 per person in 2014), and was only €23,606 in the BMW.  This is a very significant difference of €39,573 in GVA per person.

Figure 3: Gross Value Added (GVA) per person at Basic Prices (Euro) by NUTS2 Region and Year (2000 to 2015)

Source: CSO, 2018, County Incomes and Regional Accounts table RAA01

 

While the difference in GVA is dramatic, it should be remembered that, in relation to household income, which is what is relevant to most people, differences in income from economic activities are, to some extent, smoothed out by taxation and social transfers (see here for discussion of 2015 Household incomes at regional level).  However, the very different output levels among regions are significant and deserve attention.  If high value added activity remains concentrated in a few regions, disparities will continue to widen and there will be an ongoing perception that some regions are ‘dependent’ on others for transfers.  Indeed, without growth in higher value added activity and better quality employment this would become inevitable.  A focus on growing weaker regional economies and increasing higher value added activities (and not just from MNEs) is essential to growing our national economy.

Which regions are most affected by the 2015 level shift?

Although the data for Dublin and the South West has been supressed for reasons of confidentiality, it is clear that these regions experienced a level shift in their GVA between 2014 and 2015 (see Figure 4 below).  But most other regions also experienced a significant increase, or level shift.

It should be noted that, in this post, we are looking at GVA rather than GDP (see footnote 1)[2].  While there was a startling 26% increase in GDP in Ireland in 2015 (published in July 2016), the increase GVA for the State was even bigger in 2015 (37%).  See here for more information on this and on the MNE components of GVA.

As expected, the largest increase (46%) in GVA was in Dublin and the South West (again, these are combined as data for these regions was not published[3]).  But the other regions in the S&E also experienced a significant increase, with the Mid East, Mid West and South East all showing increases in GVA of more than 30%.

Figure 4: Increase in GVA in NUTS 3 regions between 2014 and 2015

Source: CSO, 2018, County Incomes and Regional Accounts Table 9b   GVA per Region at Basic Prices

 

In contrast, the three regions which together make up the NUTS2 BMW region had much smaller increases in GVA.  Between 2014 and 2015 GVA in the Midland region increased by 17%, in the West by 10% and in the Border region by only 6%.  The impacts of globalisation on GVA statistics are significantly less in the BMW region, which is much less dependent on the globalised sectors (though consequently they also have much lower economic output).

Preliminary data for 2016 shows a return to more normal GVA growth rates between 4% (Mid East and West) and 7% in the Border region.  The ‘Dublin and South West group’ shows a modest 5% increase in GVA.

Manufacturing and other sectors affected

Manufacturing is key sector experiencing the level shift in GVA between 2014 and 2015.   Looking at the manufacturing sector in the NUTS 3 regions (Figure 5 below), it is clear that most regions experienced a level shift in GVA from Manufacturing.  Only the Border region showed no discernible change, with a growth of only 5% in Manufacturing GVA.  The West also had a more modest (though still significant) growth in GVA of 25% from Manufacturing in 2014-2015.  With two NUTS regions (Mid West and South East) showing growth in GVA from manufacturing of more than 100% and Dublin and the South West combined showing a 172% increase in GVA from Manufacturing, this is clearly the sector where most of the significant changes between 2014 and 2015 took place.

Figure 5: Increase in GVA in the Manufacturing Sector in NUTS 3 regions between 2014 and 2015

Source: CSO, 2018, County Incomes and Regional Accounts Table 9d and e GVA by sector

 

However, in a number of other sectors different regions showed quite significant changes.  As would be expected these are in the high value sectors with global value chains.  There were significant increases in ‘Professional, Scientific and Technical Activities etc.’ in the Border (43%), the Mid East (50%) and South East (48%), while the Border also showed a 31% increase in GVA from Financial and Insurance Activities in 2014-2015.  Finally, the South East experienced a 39% increase in GVA from Information and Communication.  Not all of these increases are necessarily related to the relocation of IP assets, or to the other factors which underlie the level shift in GVA between 2014 and 2015 but these are all very significant growth figures (the detail of other sector changes in GVA will be discussed in a forthcoming post.)

Manufacturing is the sector where data is suppressed for reason of confidentiality in Dublin and the South West.   It is a key sector in these regions.  In 2014 (the first year for which such regional data was available) the South West accounted for 34% of Ireland’s Manufacturing GVA and Dublin accounted for 29% (63% in total). In 2015, as shown in Fig. 6, the two combined accounted for 73% of Ireland’s GVA from Manufacturing.

Figure 6: Regional contribution to Manufacturing GVA in 2015

Source: CSO, 2018, County Incomes and Regional Accounts Table 9d GVA by sector

 

The dominance of these two regions in the high value manufacturing sector is evident when the contribution of different sectors to regional GVA is considered at NUTS 2 level (Figures 7 and 8 below).  In the Southern and Eastern region manufacturing accounted for 38% of the Region’s GVA, and other high value areas (‘Information and Communications’ (10%), ‘Financial and Insurance Activities’ (7%) and ‘Professional, Scientific and Technical Activities’ (11%) also relatively important (28% of GVA in the S&E came from these three sectors combined).

Figure 7: Gross Value Added by Sector in the Southern and Eastern Region

Source: CSO, 2018, County Incomes and Regional Accounts Table 9d GVA by sector

 

In the Border, Midland and Western region the Manufacturing sector contributed 28% of GVA and the other high value sectors were much less significant in GVA terms.  ‘Information and Communications’ (2%), ‘Financial and Insurance Activities’ (5%) and ‘Professional, Scientific and Technical Activities’ (6%) combined only accounted for 13% of GVA in the BMW region.  In contrast ‘Public Administration and Defence’ accounted for 24% of GVA in the BMW region and only 10% in the Southern and Eastern region.

Figure 8: Gross Value Added by Sector in the Border, Midland and Western Region

Source: CSO, 2018, County Incomes and Regional Accounts Table 9d GVA by sector

 

Conclusions

GVA is essential regional data, despite its limitations.  It is one of the key variables for national and international regional comparisons and, given the paucity of other regional economic data, it is particularly important.  While understanding the necessity of ensuring data confidentiality, the lack of GVA data for two regions limits discussion of regional development significantly.

Given the focus on regional development in government policy (Project Ireland 2040) we need to be able to measure how regions are doing.  Income, Wealth and Consumption data would give a good picture of how households in regional economies are doing, but while we have regional income data, there is no longitudinal data on wealth and consumption for regions.  Similarly we have Survey on Income and Living Conditions (SILC) data at regional level giving a broader picture of income and poverty, and Labour Force Survey data on employment and unemployment.  However, although these are important, each region also needs to have an indicator of economic activity and growth.

Potentially the issue of confidentiality will not affect data for every year, and 2015 (and 2016 preliminary data) might prove to be exceptions, with full regional GVA data available again in the future.  Nonetheless, the difficulties with regional GDP need to be addressed.  Should new NUTS2 regions be agreed with Eurostat (to align with the regional assemblies) GVA data will published for these.  Currently as both Dublin and the South West are in the NUTS2 Southern and Eastern Region, it is only necessary to withhold data for both of these NUTS3 regions and the NUTS 2 data can be published in full.  In future,  if Dublin and the South West will be in different NUTS 2 regions (Dublin in the Eastern and Midland Region, and the South West in the Southern Region, to ensure confidentiality in relation to these regions, it might become necessary to supress detailed NUTS 3 data for some of the other regions.

It is not clear what solutions might be possible in relation to regional GVA data, but good quality regional data is essential both to understand regional economies and to monito the impact of regional and national policy.  Development of the GNI* indicator at regional level could help to understand activities in domestic regional economies.

Improving our understanding of regional economic growth and change is essential if we are to develop policies and actions to ensure that all regions can grow their economies, employment and value add at more comparable rates into the future.

 

 

Helen McHenry

 

[1] GDP is Gross Domestic Product, GDP and GVA are the same concept i.e. they measure the value of the goods and services (or part thereof) which are produced within a region or country. GDP is valued at market prices and hence includes taxes charged and excludes the value of subsidies provided. GVA at basic prices on the other hand excludes product taxes and includes product subsidies. See background notes .

[2] For the purposes of regional accounts GVA is the most common measure of regional growth and regional economic activity. However data in Figure 1 (from Table 9) is GVA at market prices (GDP).

[3] The amount for this ‘combined region’ was calculated by subtracting the other regional data from the total.

RSA European Conference: Session on ‘Ensuring Rigorous and Effective Regional Spatial and Economic Strategies’

Last week the Annual European Conference of the Regional Studies Association took place in Dublin.  Hosted jointly by TCD and UCD, the theme was ‘The Great Regional Awakening: New Directions’ or GRAND if you prefer!  From Sunday evening until Wednesday lunchtime, there were a huge number of plenary, parallel, and discuss and debate sessions exploring all aspects of regional studies research – economic, demographic, geographical, sociological, financial – from across Europe and further afield.  The conference was a great opportunity to catch up with current research on regional development. There’ll be a quite a few more blog posts from it all!

‘Ensuring Rigorous and Effective Regional Spatial and Economic Strategies’

This post will focus on one of the ‘Discuss and Debate Sessions’ held on Tuesday 6 June.  Organised by the Eastern & Midland Regional Assembly (EMRA) together with the Northern & Western Regional Assembly (NWRA) and the Southern Regional Assembly (SRA) the session topic was ‘Ensuring Rigorous and Effective Regional Spatial and Economic Strategies’.

The three Regional Assemblies in Ireland have the responsibility to develop new Regional Spatial and Economic Strategies (RSESs) to replace the current Regional Planning Guidelines. The RSESs are intended to translate the National Planning Framework (NPF) to a regional level and provide a ‘… long-term strategic planning and economic framework for the development of the region …’. While background and research work is underway by the three RAs, the delays in the development of the new NPF have held up the process of developing the RSESs.

Following the public consultation on the NPF, a draft NPF document is expected to be issued for public consultation before the Oireachtas summer recess.  A conference taking place today (14 June) titled ‘National Planning Framework, The Future of Urban Planning, Activating Spaces & Developing places’ may provide some additional insight on NPF timelines. Policy Analyst with the WDC, Deirdre Frost will be speaking later today on ‘The National Planning Framework and Regional Inequalities – Can these be addressed?’

As the WDC pointed out in our submission to the NPF consultation, the NPF Issues & Choices consultation paper did not set out very clearly the relationship and respective areas of responsibility of the NPF and RSESs. So this session during the RSA conference was a timely opportunity to discuss the issues.

Presentation from EMRA

The session began with a presentation by Clare Bannon, Senior Executive Planner with the EMRA. In it, she outlined a background paper prepared by them. Some of the key points were:

  • A lot can be learned from the experience of the NSS/RPGs (lack of legislative basis, lack of ‘rural’ element, no mechanism to amend as circumstances changed, economics missing)
  • Land use planning has increasingly evolved into ‘spatial planning’ as it is not seen as sufficient to consider land use alone.
  • Implementation will be the key challenge for RSESs. Capital Plan needs to be aligned with the RSESs.
  • An evidence base is critical. Data gathering is underway, need more analysis (qualitative, environmental), consultation will be part of gathering data. Under NPF process Demographic and Econometric Modelling is underway for the three regions.
  • Economic dimension is a new departure from RPGs. RSESs expected to encourage regional progress, not just in GDP/GVA but also across range of quality of life indicators.
  • The efficiency / equity debate will come into play in term of the location of public resources.
  • Other policy areas (e.g. transport, health) can have a far greater impact on regional performance than planning.

Every two years each Local Authority will be required to submit a report to their Reginal Assembly on progress made in implementing the RSES. Can the RSES be an operational strategy for delivery of regional progress? Do the RSESs need to include an ‘Action Statement’?

Discussion

Following the presentation, a panel gave their initial views: David Meredith, Senior Research Officer, Teagasc; Brendan Williams, Assistant Professor in Planning and Environmental Policy, UCD; Alma Walsh, Planning Advisor, DoHPCLG and Caroline Creamer, Acting Director, International Centre for Local and Regional Development (ICLRD), and then the discussion was opened to the floor.

There was a lot of debate on the issues and challenges surrounding the development of both the RSESs and the NPF, with contributions from a number of people with huge experience of the previous NSS and RPGs process.  The key themes which emerged from the discussions were:

Different places have very differing needs

  • Concept of scale is very important at regional level. There are three very different regions. A town of 10,000 population in the NWRA region means something very different to its hinterland than a town of 10,000 located in the Greater Dublin Area. A town of 10,000 in a rural county can play a similar employment and service provision role for its hinterland, as a city in another area.
  • The three RA areas are very large with many internal differences e.g. the EMRA includes Dublin city centre and Co Longford. RSESs should be developed at sub-region level, as there are very different priorities and issues within each of the three regions.
  • Place-making and place-shaping are critical to achieving regional growth. Identifying the assets of a specific place and developing those.
  • Quality of life is a key factor for the RSESs, including in how they envision the potential of rural areas to contribute to regional growth.
  • Some concern if the role of rural in the RSESs is seen as a ‘solution’ to an urban problem. Rural areas as a housing location for commuting to cities. Rural should not be seen as a ‘spillover’ from the urban, with quality of life the only factor considered for rural areas, rather than seen as sites of employment and production.
  • A town or area does not need to be listed in a Plan in order to grow, a lot of other public, private and community factors come into play.

Regional v Local

  • Policy is deeply rooted in local issues, but planning has now moved to a regional level. Balancing the conflict between local and regional will be a major challenge for RSESs.
  • It is important, especially for NWRA, to take an island of Ireland approach. With Brexit, a lot of spatial issues will have a more complicated cross-border context in future.
  • Needs to be a clear separation of ‘regional issues’ and ‘local issues’. Have to identify from the start what are the regional issues that are best dealt with at a regional level through RSESs.
  • Level of time and resources put into planning at different levels – as much time could be spent on a local area plan as the NPF – what is expected of planning at different levels?

Spatial and Economic

  • Linking economic and spatial is a significant change in the RSESs compared with RPGs.
  • There is a danger of setting up a false dichotomy between ‘spatial’ and ‘economic’. All spatial planning is economic as it is concerned with the location of activity.
  • While it is important to understand the economics of production (where products and services are produced), NPF/RSESs also need to consider the economics of provision (where products and services are provided). The spatial pattern of service provision (and associated employment) is far broader and more spatially spread, than production.

Measurement

  • GDP/GVA is a problematic indicator especially at regional level. Disposable income is a better indicator and there is a narrower regional gap.  Measuring income rather than GDP/GVA shifts the debate to regional potential.
  • How do you measure regional progress? What does society consider to be ‘progress’?  What you measure is what you will get. GDP is not a perfect measure, but needs to be included as it is what the EU uses for regional funds.  But to measure success of RSESs we need to use a set of indicators including quality of life indicators.  RAs intend to use adjusted national income plus a broad set of indicators. Selecting what indicators to use to measure regional progress is the technical side of the equity/efficiency debate.
  • Demographic and Econometric Modelling work being undertaken for NPF will be at national, regional and county level. Will be fundamental to drafting NPF and RSESs.
  • How well is the current evidence base collection resourced? A lot of issues/background papers prepared for NSS.

Implementation

  • Often argued that plans are left on a shelf but need to ask the question, why would anyone (a policymaker) take a plan off the shelf? 1) if they are legally required to; 2) if it is useful to them.  Effectiveness of any spatial plan is down to decisions taken by other policymakers.  This will only happen if the plan is useful to them.  RSESs should provide a strategy to make the case for investment to policymakers.
  • What type of strategic plan do we want? In some countries there is very active/proactive management of the implementation of the plan. Or do we want one that is more aspirational and guidance for policymakers?  NPF/RSESs may need to include a ‘carrot’ to encourage public agencies to take the lead in implementing them.  What should role of Regional Assemblies be in the RSESs implementation?
  • Effective governance is critical to place-based development. What capacity is there at regional level? What is the relationship between local and regional? There is not much appetite to change power structures in Ireland, but the capacity of the structures at regional and local level can be strengthened.
  • The relationships across a lot of policies/plans is not clear, there are a lot of plans at present e.g. Regional Action Plan for Jobs, Action Plan for Rural Development etc, and it needs to be clearer how they relate to each other and to the RSESs.
  • Need to challenge the political acceptance of what is development and how to measure it. In some places e.g. Melbourne, it became the ‘most liveable city’ with no change to its institutions.

Public and community involvement

  • It is important for NPF and RSESs to be clearly understood by public. A lot of communities feel disconnected from planning but face the consequences (negative and positive) of planning decisions every day of their lives. It impacts on quality of life, health and wellbeing, employment, delivery of services etc.
  • More likely to gain public support for NPF/RSESs if they are less ambitious but more achievable. Public will not have buy-in for a plan that is unrealistic and unachievable.  Choosing fewer actions, but ones that can be achieved, will help create public support.
  • What is the capacity in local communities to engage with the NPF and RSESs? The changes in local development structures in Ireland over the past few years, with an increasing role and funding to Local Authorities for rural development, has weakened some traditional local development structures. It cannot be expected that these structures and individuals will have the capacity, or willingness, to now take a lead role in framing or delivering the RSESs. Community organisations may already be struggling to engage with Local Authorities, let alone with regional level also.

Funding

  • NSS had the benefit of being set in the framework of the National Development Plan (NDP), now there are a lot of documents for different sectors but no comprehensive economic plan. Where will the NPF sit?
  • There needs to be alignment between policy (NPF/RSESs) and investment. Where public investment takes place should be aligned with RSESs.
  • Needs to be a focus on what can realistically be delivered by public investment over the period of the RSESs. Public investments tends to be very cyclical, there needs to be long-term assurance that investments will be made to deliver on the NPF/RSESs.  If RSESs too broad and ambitious they will not be able to prioritise and will be less achievable.  RSESs need to include prioritisation.
  • Debate in UK at present on having a much wider qualitative and quantitative Cost-Benefit Analysis (CBA) methodology for investments.
  • There is a wide mix of funding models for investments. Good to have a mix of funding sources for any project, not just public sources.  Cannot have good infrastructure policy in absence of other good policies.

Clearly this ‘Debate and Discuss Session’ could have gone on all day given the scope and importance of developing new strategies for the spatial and economic development of Ireland’s regions out to 2040.  There will be a lot more discussion, debate and consultation on the development of the three RSESs during the rest of 2017, and well into 2018.

Pauline White

How are we doing?  GDP of Irish Regions in 2014

The CSO has recently published Gross Domestic Product (GDP) figures for Irish regions (NUTS3) for 2014.  This publication updates the preliminary figures for 2014 which were published last year (and also makes some changes to the 2013 figures) but it does not, unfortunately, provide any 2015 estimates.

While a regional GDP[1] figure is provided (Table 9a) most of the information for regional accounts is for GVA at basic prices (Table 9c).  These are considered in this post which examines differences among regions and changes over time.

Discussions of GDP inevitably must also consider on the limitations of the statistic as a measure of economic development (see here ) but it is the key statistic used, despite shortcomings.  As Eurostat notes here GDP per capita does not provide an indication as to the distribution of wealth between different population groups in the same region, nor does it measure the income ultimately available to private households in a region, as commuter flows may result in employees contributing to the GDP of one region (where they work), and to household income in another region (where they live).

This drawback is particularly relevant when there are significant net commuter flows into or out of a region. Areas that are characterised by a considerable number of inflowing commuters often display regional GDP per capita that is extremely high (when compared with surrounding regions). This pattern is seen in many metropolitan regions of the EU, but principally in capital cities and is very clearly displayed in Ireland in particular between Dublin and the Mid East.

Indeed, the Solas Regional Labour Market Bulletin for 2016 has noted that the prevalence of inter-regional commuting was the highest in the Mid -East region, where 40% of workers who resided in the region were employed in other regions, the majority of whom were employed in Dublin. For this reason in most of the rest of the post Dublin and the Mid East regions are considered together.  It highlights that commuting to work was also sizeable in the Midland region, where a quarter of those in employment were commuting to other regions , while in the Border, South-East and West regions the corresponding figure was about one-in-ten.

Given these difficulties with the data, a  better picture of regional growth and development would be gained from a broader focus considering Income, Wealth and Consumption data but while Income figures are available at NUTS 3 level (see here) there is little regional data on Wealth and Consumption.

Despite issues with GDP and GVA they are important regional statistics and considering relative levels and changes over time can help us better understand economic development and growth in our regions.

 

How much of our GDP is produced in each Region?

The Dublin region contributed 45% of Ireland’s GDP and the South West contributed 17%.  In contrast the Midland region produced 3% (see Figure 1 below) and the rest of the regions were responsible for between 5 and 8% of national GDP in 2014.

The high level of commuting into the Dublin Region means much of that region’s GDP, more than any other, is produced by workers residing in other regions (mainly the Mid East but also Midland and Border regions).

 

Figure 1   GVA per Region at Current Market Prices  (GDP), 2014 

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 9

It should also be remembered that the regions also vary considerably in size.  While Figure 1 shows the GDP produced in each region in 2014, Figure 2 shows the proportion of the population (as estimated by the CSO for 2014) in each region.  Some of the reasons for the  different distribution of population and economic activity are discussed later in this post.

 

Figure 2 Population Distribution by Region 2014

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 13

It is interesting to see how the proportion of GDP produced in each region in 2014 compares with that in 2004 (Figure 3).  In that year Dublin produced 39% of GDP (compared to 45% in 2014) and the Border produced 8% compared to 5%.  This, as will be seen again later in this post, shows the dominance of Dublin, in particular, but the South West is also increasing its relative contribution while the relative importance of GDP from other regions has reduced over time.

 

Figure 3   GVA per Region at Current Market Prices  (GDP), 2004 

Source: CSO, 2015, County Incomes and Regional GDP 2012, Table 9b

 

Regional GVA per person

Clearly Dublin produces much of Ireland’s economic output, but it is important to look at how much is produced per person in each region.  As noted by Eurostat here, in a majority of the multi-regional EU Member States, capital city regions were generally those with the highest average GDP per capita; the only exceptions to this rule were Germany, Italy and the Netherlands.

Figure 4 shows the amount of GVA produced per person resident in each of the NUTS3 regions.  Dublin and the Mid East had the highest GVA per person in 2014 (€51,799), while the South West also had high output (€45,956).  In contrast the Border (€18,371) and Midland (€19,778) were much lower, the Border region only 35% of that in Dublin and the Mid East and the Midlands 38%.

 

Figure 4: GVA per person at basic prices 2014

Source:  CSO, 2017, County Incomes and Regional GDP 2014, Table 9c

 

Regional recovery in GVA- or not…?

The different trends in GDP overtime can be seen in Figure 5 below which shows GDP per capita for 2006, 2010 and 2014.

The Border is the only region to still have a lower GVA per person in 2014 than it did in 2010.  All other regions are now above the 2010 level, (though only by small amounts in the Midland and West).  However, only Dublin plus Mid East and the South West had higher GVA per person in 2014 than in 2006.

 

Figure 5: GVA per person (basic Prices) NUTS3 Regions (2006,2010,2014)

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 9c

Looking at the variation since 2006 (Figure 6 below) the strong recovery in Dublin and the Mid East since 2011 is evident.  The recovery in the South West was less consistent with a decline in 2013 but these two regions are significantly ahead of the other regions both in terms of the level of GVA per capita and the scale of recovery.  The West region which had begun to recover well had GVA growth between 2009 and 2012, it fell in 2013 but 2014 shows some recovery while recovery in the Midland and Border regions has been sluggish.

 

Figure 6: GVA per person 2006-2014 (Basic Prices) NUTS3 Regions.

Source:  CSO, 2017, County Incomes and Regional GDP 2014, Table 9c

These differing patterns of change can also be seen clearly when GVA per person is shown as an Index where the State =100 (Figure 7).  This allows us to consider the GVA per person in each region compares with that in the state over time (2006 to 2014).

The relative decline (compared to the State) in 2014 for all regions except the South West and Dublin plus the Mid East is worrying and the widening of disparities among the regions since 2006 is very clear.  In 2006 the gap between the lowest GVA per person (Midland 70.0 points) and the highest (Dublin plus Mid East 124.7 points) was 54.7 index points, but by 2014 the gap had increased very significantly to 87.8 index points (Border 48.2, Dublin plus Mid East 136.0).  In 2014 the Border (48.2) and Midland (51.9) were very low compared to the state, but even the South East (67.0), West (71.3) and the Mid West (75.9) have low GVA per person compared to the state average.

 

Figure 7: Indices of GVA per person 2006-2014 (Basic Prices) NUTS3 Regions (State=100)

Source: CSO, 2017, County Incomes and regional GDP 2014, Table 10

 

How do Irish Regions compare to the EU average?

It is useful to look at how Irish regions (at NUTS 3 level) compare to the EU average.  This is shown in Figure 8 with Indices of Irish regions between 2006 and 2014 with the EU average equalling 100 in each of those years.  The disparities discussed above are also clear relative to the EU average GVA per person.

In 2014 two of the regions (Dublin plus Mid East (179.5) and South West(159.2)) were significantly above the EU average while the Mid West, which was consistently above the EU average from 2006 to 2013 was just barely above for 2014 (100.1).  The State itself was also above the EU average (132.0).

In contrast, the West, which was briefly above EU average in 2012 and 2013 has again fallen below the EU average (94.1), while the South East was 88.5 in 2014.  The other NUTS 3 regions (Midland (68.5) and Border (63.6)) were both considerably below the EU average and both less than 75% of the EU 28 average.

 

Figure 8: Indices of GVA per person 2006-2014 (Basic Prices) NUTS3 Regions (EU28=100)

Source: CSO, 2017, County Incomes and regional GDP 2014, Table 11

Most EU structural funds  are directed to NUTS 2 level regions where GDP per capita is less than 75% of the EU28 average.  While both the Midlands and Border regions are well below this, when combined with the West the NUTS2 Border, Midland and West (BMW) region was just above the cut off for structural funds at 75.7% of the EU average in 2014[2].  By comparison, in 2006 the BMW region was 106.1% of the EU28 average.

 

Labour Productivity at Regional Level

Within regional accounts, labour productivity is defined as GVA at basic prices per person employed.  It should be remembered that in the regional GVA data for Ireland the ‘person at work’ statistic is related to the region of residence rather than of employment and so the gaps in GVA among regions can appear even wider.  This is shown in Figure 9.

GVA per person at work is, as expected, highest in Dublin at €116,112 per person at work while in the Midland region it is €49,863.  High levels of labour productivity are linked to the efficient use of labour (without using more inputs) and to the mix of activities in the regional  economy (some activities, such as financial services, have higher levels of labour productivity than others).  The South West also shows a very high level of labour productivity. At €111,600 per person at work the South West is only slightly below that of Dublin and the Mid East.  This is also likely to be due to the sectors in the region, especially pharmaceutical and other multinational manufacturers.

 

Figure 9: GVA per person and GVA per person at work (labour productivity) in 2014

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 13

Where a region has a higher proportion of older people, children, or people not in work for other reasons, the GVA  produced is being divided among relatively fewer people at work and so the figures for GVA per person at work appear better.  This is the case in the Border region most significantly, where only 36% of the population is classified as being at work, but also applies to those for the Midland region (39.7%) and the Mid West (39.4%) all of which have a lower proportion of people at work than the state average (41.7%).  In contrast Dublin (45.2%) and the Mid East (43.2%) have much higher proportions of people at work in their populations.

Figure 10 below shows the proportion of the population at work in each of the regions in 2014 as estimated by the CSO.

 

Figure 10: Proportion of the population in each region classified as persons at work, 2014

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 13

 

Conclusion

Dublin and the Mid East had the highest GVA per person in 2014 (€51,799), while the South West also had high output (€45,956).  In contrast the Border (€18,371) and Midland (€19,778) were much lower, the Border region only 35% of that in Dublin and the Mid East and the Midlands 38%.

The Border is the only region to still have a lower GVA per person in 2014 than it did in 2010.  All other regions are now above the 2010 level, (though only by small amounts in the Midland and West).  However, only Dublin plus Mid East and the South West had higher GVA per person in 2014 than in 2006 and other regions have not yet returned to the 2006 level.

The differences in GVA growth among regions are partially the result of increased productivity and concentration in high value sectors in the wealthier regions, and partly relate to different commuting patterns and the worker to population ratios.

The variations underline the importance of ensuring that there is a focus on regional development needs and a policy of investment and promotion of higher value sectors in all regions, so that the benefits of the recovery are felt more widely.

 

Helen McHenry

 

[1] GDP is Gross Domestic Product, GDP and GVA are the same concept i.e. they measure the value of the goods and services (or part thereof) which are produced within a region or country. GDP is valued at market prices and hence includes taxes charged and excludes the value of subsidies provided. GVA at basic prices on the other hand excludes product taxes and includes product subsidies. See background notes 

[2] The allocation of cohesion funds is currently based on a decision referring to average GDP per capita during the three-year period from 2007 to 2009; a mid-term review of cohesion policy allocations is taking place during the course of 2016 and will likely result in some changes to the system — more information is provided in an article on regional policies and Europe 2020.  See here also .

How is the Western Region doing?

On 31 January, the WDC was invited to give a presentation to officials of the Department of Social Protection working across the Western Region. The objective was to give an overview of the WDC’s analysis of data across a range of socio-economic issues.

Analysing regional data provides information on the areas for which we are responsible and highlights the multi-dimensional nature of the concept of regional development.  A regional perspective is necessary since changes and inequalities not only occur among individuals but also the places where they live

This (very) comprehensive presentation analyses the following indicators:

  1. Population: Preliminary Census 2016 Results
  2. Labour Market: QNHS Q1 2016, special run
  3. Income: County Incomes & Regional GDP, 2013-2014
  4. Enterprise: Business Demography, 2014

These are some of the key points emerging from the analysis.

Population

  • Population of Western Region grew +0.9% 2011-2016 compared with +3.7% growth nationally.
  • Three counties in the Western Region showed population decline 2011-2016 –(Donegal -1.5%, Mayo -0.2% and Sligo -0.1%) – only counties in Ireland to do so. In addition Leitrim and Roscommon had the lowest growth.  Galway city had 5th highest population growth in Ireland.
  • Every county in Ireland had a positive natural increase (more births than deaths) during 2011-2016. Donegal, Sligo and Mayo however had enough negative net migration to lead to population decline.
  • All western counties, and all but six areas nationally, had negative net migration between 2011 and 2016. Donegal and Sligo had the two highest rates of negative net migration.
  • Male out-migration considerably higher than female leading to a +1.5% increase in the female population of the Western Region and only +2% growth in the male population.
Figure 1: Percentage change in population by administrative area, 2011-2016. CSO (2016), Preliminary Results Census 2016

Figure 1: Percentage change in population by administrative area, 2011-2016. CSO (2016), Preliminary Results Census 2016

Labour Market

  • The Western Region’s labour force declined marginally (-1.2%) between 2007 and 2016. Within this the male labour force fell by -6.1% while the female rose by +5.7%.
  • The Western Region has a lower share of its labour force aged under 35 years and a higher share aged over 44 Its labour force participation rate is lower for both men and women, and across all age groups (except 65+).
  • Total employment in the region fell by -5.8% 2007-2016 compared with a -6.5% decline in the rest of the state (all counties outside Western Region)
  • There has been exceptionally strong growth in self-employment in the Western Region since 2012, increasing by +31.1% in the region compared with +7.2% in the rest of the state.
  • Growth of self-employment tied to sectoral pattern of growth with strongest jobs growth since 2012 in Agriculture, Construction, Accommodation & Food Service and Wholesale & Retail, all with high self-emp
  • Since 2012 the Western Region has had jobs decline in 7 out of 14 sectors, in the rest of the state there was only decline in 1 out of 14. Jobs recovery in the Western Region is not as diversified across the economy as elsewhere and more concentrated in domestic sectors
  • Unemployment numbers declining steadily in region, but share of long-term unemployment growing. Western Region has higher unemployment rate in all age groups (except 65+ & 25-34) and particularly among youth.
Figure 2: % change in employment by sector in Western Region and Rest of State, 2012-2016. CSO, Quarterly National Household Survey, Q1 2012-2016, special run

Figure 2: % change in employment by sector in Western Region and Rest of State, 2012-2016. CSO, Quarterly National Household Survey, Q1 2012-2016, special run

Income

  • Disposable income per person in the Western Region was €17,260 in 2013 (92.3% of State). Provisional 2014 figures show some growth (€17,768) but still well below the 2008 peak (€21,167).
  • Longer term, the gap is narrowing, the Western Region had disposable income of 84.3% of State in 1995, 92.3% of State in 2013.
  • Within the Western Region, Roscommon had a significantly lower income relative to the State in 2014 (87.2%) compared with 2005 (95.8%). Clare has also fallen relative to the State starting at 95.5% in 2005 and dropping to 93.3% in 2014. Sligo, Galway, Mayo and Donegal have all improved their position relative to the State since 2005, albeit with some variation. Galway and Sligo had greatest improvements.
Figure 3: Index of disposable income per person in western counties, 2005-2014 (Index State=100). CSO, County Incomes and Regional GDP 2013, provisional 2014

Figure 3: Index of disposable income per person in western counties, 2005-2014 (Index State=100). CSO, County Incomes and Regional GDP 2013, provisional 2014

Gross Value Added

  • Dublin region is the only region where the preliminary 2014 GVA per person figure is higher than the peak GVA per person in 2007. None of the other regions have recovered to the 2007 level, though the difference in the West region is slight.
  • Dublin and Mid-East and South West, only regions with a greater share of national GVA than share of persons at work.
  • In 2005 there were 60.6 index points between the lowest GVA per person in a region (Midland, 65.4) and the highest (Dublin and the Mid-East, 126.0).  In 2014 the difference between Midland (59.2) and Dublin and the Mid-East, (130.6) was 71.4 index points (71.3 in 2013).
Figure 4: Index of GVA per person by region, 2005-2014 (Index State=100). CSO, County Incomes and Regional GDP 2013, provisional 2014

Figure 4: Index of GVA per person by region, 2005-2014 (Index State=100). CSO, County Incomes and Regional GDP 2013, provisional 2014

Enterprise

  • The share of enterprises nationally that are based in the Western Region is declining and was 17.1% of the total in 2014.
  • Construction, Wholesale & Retail, Professional activities and Accommodation & Food Service are the largest enterprise sectors in the region. Less than 5% of the region’s enterprises are in Financial & Insurance and Information & Communications combined.
  • There has been a far greater decline in enterprise numbers in the Western Region than the rest of the state since 2008 and the region had a weaker performance – greater decline or lower growth – in every sector (ex. real estate).
  • The enterprise base differs across more urban and rural counties. Highly rural counties of Roscommon, Mayo and Donegal have 34-36% of enterprises in Industry and Construction but in more urban counties of Clare and Sligo it is around 30%.  A higher share of enterprises in Galway and Sligo are active in knowledge services sectors, though even Galway is below national average. Local services play a larger role in more rural counties.
  • Western counties had among the greatest losses of enterprises since 2008. Donegal lost more than 1 in 3 of its Construction firms; Wholesale & Retail declined most strongly in Donegal and Clare; Accommodation & Food Service declined across most counties.
  • Knowledge services performed best, though from a low base.
Figure 5: % change in number of active enterprises by sector in Western Region & Rest of State, 2008-2014. CSO, Business Demography, 2014

Figure 5: % change in number of active enterprises by sector in Western Region & Rest of State, 2008-2014. CSO, Business Demography, 2014

The full presentation can be downloaded here  (PDF, 2MB)

 

Pauline White & Helen McHenry

County Incomes and Regional GDP

The WDC recently published its analysis of the latest County Incomes and Regional GDP data for 2011 produced by the CSO.

Our analysis shows that regional income disparities began to widen again in 2011 and that the West, Mid-West and Border regions had the largest declines in disposable income per person between 2010 and 2011.

At the same time national output is becoming more regionally concentrated in the stronger regions and the share coming from Dublin and the South West combined rose from 57.2% in 2002 to 59.9% in 2011.

The West has performed relatively well and its national position has strengthened to become the third largest contributor to national output. The Border region however has seen its national role decline, to the second smallest region in output terms.

Download  a two page WDC Insights summary here

A more detailed WDC Report, including analysis of county level income figures, is also available here

Pauline White