| Northern Ireland could become ‘back office’ centre |
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| Northern Ireland is now home to 'positive attitudes and a supportive approach' when it comes to investment, according to Sean Farren |
F arren was speaking as a participant in the IAPF's annual conference in Dublin Castle where the association attempted to answer what is fast becoming the ultimate question: How long will the party last? As SDLP spokesperson on the economy, he added a Northern dimension to an eclectic line up of speakers which included Albert Reynolds TD, Paul O'Flaherty, chairman of the IAPF and Jimmy Joyce, chairman of the Telecom Eireann Superannuation Fund.
Farren introduced his paper to an attendance of approximately 150 delegates and was balanced in his consideration of the 'key features of the Northern economy, positive and negative [and the] challenges of peace and stability'. The thrust of the presentation was challenging, in that those listening were almost dared to play a part in the redevelopment of an economy in poor repair.
Positives and Negatives
Farren summed up the most noteworthy aspects of the Northern economy in a few points. Firstly, he aid, the North has high standards of education and training. Secondly, the region is experiencing continuing growth in certain sectors like transport, electrical and optical equipment, health and pharmaceutical products, software development and food processing. However, according to Farren, these two positives must be appreciated in light of the negative. Northern Ireland is subject to difficulties in agriculture and volume textiles and a weak equity market and under-exploitation of venture capital. The challenge, said Farren is to build on an annual IDB industrial investment of STG?700 million while ensuring that ‘the adjustments which must be made, e.g. reducing dependence on the public sector, will be made without negative impacts.
At the forefront of new opportunities within the Northern economy, said Farren, are those provided within the context of ‘more dynamic North-South relationships'. He said that, to date, mush North-South co-operation has been ‘essentially ad hoc’ and claimed that ‘hardly any sector of the economy’ exists where greater co-operation would not be beneficial.
Liquidity
He said that similarities exist between both parts of Ireland with respect to the equity market, pointing out that, in the North, liquidity is very concentrated, with ‘only about a dozen plcs’. While most of these plcs have performed well, political upheaval has led to a degree of discounting in their trading. Farren said that the problem of a small equity market and a general culture of ‘shyness’ as far as capital markets are concerned could be attributed to an over-dependence on grant-aided development, as well as a reluctance to dilute control. He said that fund managers willing to consider investment in the North might be interested in contributing to changing attitudes and practices in order to encourage greater resort to the capital support they could make available.
Currently, the level of subvention in the Northern economy from the British Exchequer run at 25 per cent of GDP, with the result that the standard of living and level of public service is highly reliant on London. Another key negative feature of the economy is an over-reliance on the public sector. Farren said that when this is translated into the job market, it shows that over 30 per cent of a 93 per cent employment is concentrated in this sector. This compares with 13 per cent in the UK and 18 per cent in the South. Farren expects some pressure to reduce this dependence over time, but says that any reduction will take time, and will only be successful if the slack created by a reduced public sector is made up by additional private sector employment and the emergence of new business opportunities catering for a growing workforce.
Value-added business
A key element in this will be, according to Farren, the fostering of more value-added businesses than at present. He said that the industries to receive most attention in this regard would be advanced technology based enterprises, transport equipment, chemical and pharmaceuticals, electrical goods, food processing, quality clothing and tourism. Other sectors, according to Farren, are less likely to experience growth, at least in the short term. These include the ailing agriculture and textile industries.
Pointing to post war economic and social reconstruction as a model for the Northern economy, Farren said that ‘imaginative, innovative and practical policies’ were needed to maximise the flexibility and opportunities provided by the ‘new political era’. He said that the North's infrastructural network was in need of a major upgrade and identified the telecommunications ‘back office’ sector as a possible area of future growth. |
Sean Farren is NI Assembly member for North Antrim.
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| Article appeared in the April 1999 issue.
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