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REGIONAL ECONOMIC RESILIENCE IN IRELAND - THE ROLE OF INDUSTRIAL STRUCTURE AND INWARD INVESTMENT

REGIONAL ECONOMIC RESILIENCE IN IRELAND - THE ROLE OF INDUSTRIAL STRUCTURE AND INWARD INVESTMENT. Dr. Chris van Egeraat Maynooth University, Department of Geography and NIRSA Chairman Regional Studies Association – Irish Branch NIRSA/ESPON Conference: Creating the Regions of Tomorrow

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REGIONAL ECONOMIC RESILIENCE IN IRELAND - THE ROLE OF INDUSTRIAL STRUCTURE AND INWARD INVESTMENT

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  1. REGIONAL ECONOMIC RESILIENCE IN IRELAND - THE ROLE OF INDUSTRIAL STRUCTURE AND INWARD INVESTMENT Dr. Chris van Egeraat Maynooth University, Department of Geography and NIRSA Chairman Regional Studies Association – Irish Branch NIRSA/ESPON Conference: Creating the Regions of Tomorrow Maynooth, 26 September 2014

  2. REGIONAL ECONOMIC RESILIENCE IN IRELAND - THE ROLE OF INDUSTRIAL STRUCTURE AND INWARD INVESTMENT Proinnsias Breathnach*, Chris van Egeraat* Declan Curran** *Maynooth University, Department of Geography and NIRSA **Dublin City University Business School

  3. Resilience General definition resilience • The ability of a body or organism to recover from the application of a disruptive shock of some kind (=equilibrium concept of resilience) Additional Dimensions (Ron Martin) Hysteresis • The process whereby external shocks induce structural changes. • This means that the economy cannot resume its former configuration. Resistance • The ability of a body to resist deformation when an external force is applied.

  4. Impact of the Crisis in Ireland • Real GDP • Down 9.4% 2007-2010 • Slight recovery in ‘11 and ’12 but slight fall in ‘13 • Real GNP • Down 10.3% 2007-2010 • Continued to fall in 2011. Recovery in ‘12 and ‘13 • Employment down 14.5% 2008-2012 • Unemployment rate up threefold to 14.4% 2007-2012, falling since to 11.8% March 2014 • Construction employment down 64% 2007-2012 • Spinoff impacts on labour-intensive services • Exports fall slightly 2008, 2009 but strong recovery 2010-2012

  5. Data and Methodology • Analysis of employment in state-assisted firms • Mainly exporting or import-substituting • Data extracted from Forfás database for 2001, 2006, 2011 • Refers to where workers work rather than where they live • “The regions and localities we study are rarely functionally meaningful economic entities, but instead are often demarcated—for data collection, administrative or political reasons—along somewhat arbitrary lines.” (Martin, 2012, 13-14) • Analysis here based mainly on functional regions (Regional Fields) defined mainly from commuting data.

  6. Figure 1Regional Fields

  7. Methodology • Exercise 1: Descriptive statistics and indexes • Exercise 2: Ray-Srinath shift-share model

  8. Exercise 1 - Sectoral/Regional Categories Comparing employment change 2001-’06 and 2006-’11 Long-term decline • Lost employment in both 2001-2006 & 2006-2011 Long-term growth • Gained employment in both periods Recession-sensitive • Gained employment 2001-2006 • Lost employment 2006-2011

  9. Aggregate employment change - client firms • Strong fall in employment since 2006 • Foreign-owned segment faring better than indigenous segment

  10. Sectors in long-term decline (LTD)

  11. Sectors experiencing long-term growth (LTG)

  12. Employment in “recession-sensitive” sectors (RS) • Growth halted by the recession

  13. Growth Category and Employment Change 06-11 • Link between employment performance and 2006 sectoral mix • Regions with low rates of Long-term Decline (LTD) and high rates of Long term Growth (LTG) experience low rates of employment decline • Cork Anomaly related to Apple and EMC (no longer electronics manufacturing)

  14. Table 10 EMC Cork Functions

  15. The BVEC Index BVEC Resistance index. R = 0.64 with Cork and 0.79 without Cork BVEC Resilience index R = 0.69 with Cork and 0.85 without Cork

  16. Foreign firm share of employment in state-assisted firms 2006 • Some indication of a link between foreign presence and employment performance • Cork Dublin and Galway among four regions with highest proportion in foreign firms • At the same time, Limerick has the second worst performance (Dell effect) • Correlation coefficient excluding Limerick is 0.74

  17. Growth performance of sectors dominated by foreign/Irish firms (70%+) • Of the 5 foreign dominated sectors, 3 fall in the LTG category • Of the 9 Irish dominated sectors, 5 fall in the LTD category, with three in RS and one in LTG • Some evidence that foreign firms tend to be found in more robust sectors, but the relationship between the two is by no means clearcut.

  18. Shift-share 06-11 - All Firms

  19. Regional Fields 06-11 – By Ownership Irish firms Foreign firms

  20. Conclusions • Regional economic resilience in Ireland was the product of a complex set of interacting factors, including regional sectoral structure, regional competitiveness and nationality mix • Nationality mix has an important impact on regional performance, but this impact is no clearcut. • Foreign sector can have a positive as well as a negative effect on regional performance • RSA Irish Branch Conference on Regional Economic Resilience, 2013, Cork • Related Publications: • Van Egeraat, C. Breathnach, P. and Curran, D. (2013), Enterprise and labour: hubs, gateways and inter-regional specialisation. Administration, 60(3), 2013,p. 91-115 • NIRSA Working Paper • E-version on request

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