Ireland and Northern Ireland - A Regional Economic Comparison 2023 - 2024

Gross Value Added (GVA) in the Irish regional accounts is calculated using the income method. The Office of National Statistics (ONS) calculates regional GVA for Northern Ireland by balancing the income-based GVA with the production-based GVA, more information can be found in the Background Notes. As seen with GDHI, GVA is also presented in Purchasing Power Standards (PPS), however, the PPP category used in this case is the Gross Domestic Product (GDP).

Figure 3.1 shows that GVA per capita increased in all regions between 2001 and 2023, however this increase was much higher for the Eastern & Midland and Southern regions. GVA per capita rose 36% in Northern Ireland between 2015 and 2023. By comparison, GVA per capita increased by 77% in the Eastern & Midland region and 48% in the Southern region during the same period. This reflects the presence of multinational corporations in these regions, who engage in higher profit-making activities. GVA per capita in Northern Ireland was also similar that of the Northern & Western region up to 2013, with GVA per capita diverging significantly between these two regions such that, in 2023, GVA per capita in the Northern & Western region was 38% higher than that of Northern Ireland.

Map 3.1 shows the GVA per capita by NUTS 3 regions for Ireland and LGD for Northern Ireland in 2022. As seen in Figure 3.1, regions in Ireland had a substantially higher GVA per capita than those in Northern Ireland. In 2022, the South-West has the highest GVA per capita in Ireland and Northern Ireland at 158,125 PPS, owing to the large presence of Manufacturing in the region. This was followed by Dublin at 130,153 PPS, here GVA per capita was bolstered by the contribution from the Information & Communication sector. The GVA per capita of Belfast was 46,277 PPS and was largely on par with levels seen in the Mid-West (49,459 PPS) or West (46,836 PPS) regions. Ards & North Down had the lowest GVA per capita overall at 14,475 PPS, followed by Causeway Coast & Glens (17,707 PPS) and Newry, Mourne & Down (19,505 PPS).

In 2023, high-wage, high-profit sectors made up a much higher component of GVA in Dublin and the South-West than most other regions. The GVA share of Information & Communication in Dublin was over ten times that of Northern Ireland, while Manufacturing accounted 74% of the entire GVA of the South-West region. The public sector accounted for a comparatively higher share of output in Northern Ireland. Public Administration, Education & Health accounted for 24.1% of GVA in Northern Ireland, highest after the Midland (26%) and Border (24%) regions. Overall, Manufacturing was the largest sector in Ireland, accounting for 31% of its total GVA, while in Northern Ireland it was 12%.

Northern Ireland had the lowest proportion of its GVA at factor cost composed of Gross Operating Surplus (GOS) (43.2%), followed by the Northern & Western region (55.8%), indicating a greater presence of more labour-intensive industries. The proportion of GOS in the Southern and Eastern & Midland regions was 76.2% and 70.6% respectively, reflecting the presence of more highly profitable industries.

Among the NUTS 2 regions, the Eastern & Midland region had the largest contribution of the Information & Communication and Professional, Administrative & Support Services sectors to its COE. The contribution of COE from the Information & Communication sector in the Eastern & Midland region was over three times that of Northern Ireland. The share of COE from the Financial & Insurance Activities sector in the Eastern & Midland region was also over double that of the same share in Northern Ireland. Northern Ireland had the second highest proportion of its COE dependent on the Distribution, Transport, Hotels & Restaurants sector among these regions. The Northern & Western and Northern Ireland regions had the highest and second highest COE shares devoted to Public Administration, Education & Health, 35.7% and 34.9% respectively.

Figure 3.8 shows the time-series of labour productivity for Ireland and Northern Ireland. Productivity in Ireland diverged from that of Northern Ireland after 2015. In 2015, labour productivity in Ireland was over twice that of Northern Ireland. Productivity grew by over 28 PPS per hour between 2014 and 2023 in Ireland, while Northern Ireland productivity in 2023 was similar to that of 2014. The increase in Irish labour productivity was profit-driven. Figure 3.2 shows that GDP per capita and GNI* per capita increased at a faster rate Ireland from 2015 onwards than in Northern Ireland. This increase in output per capita drove the observed increases in labour productivity. Productivity also increased in both economies in 2020, though this occurred because of a fall in hours worked during the pandemic. Ireland recorded a much stronger increase in productivity thereafter than Northern Ireland, and reached a peak in 2022 before returning to 2020 levels in 2023. As seen in Figure 3.4, the manufacture of basic pharmaceutical, computer and electronic products, represented an overwhelming proportion of Ireland's manufacturing and overall GVA, which in turn contributed significantly to Irish productivity.

The labour productivity log growth rate for Ireland and Northern Ireland is shown in Figure 3.9. Both Ireland and Northern Ireland observed a peak in their productivity growth in 2015. In Ireland, this was driven by large GVA growth (22%), however, in Northern Ireland it was due to a decrease in hours (2%) and increase in GVA (2.5%). In 2020, Ireland's productivity growth rate once again peaked at 18%, however, in this instance it was a result of a 10% decrease in hours and positive GVA growth of 8%. Both Ireland and Northern Ireland saw negative labour productivity growth in 2023 due to decreases in GVA of 8% and 2% respectively.