Centre for Policy Studies Conference 2014

Coping with Recession – A Regional Perspective

After the Gold Rush

Changes to the National & Regional Economies

of Ireland since the Downturn

Steve MacFeely

Centre for Policy Studies, UCC

NUTS Regions in Ireland

NUTS Regions in Ireland

NUTS 2

NUTS Regions in Ireland

NUTS Regions in Ireland

Before

Trade

0

20

40

60

80

100

120

140

SE -Exports

SE -Imports

BMW -Exports

BMW -Imports

Domestic

International

€ Billion

Total Imports and Exports, S&E and BMW Regions, 2005

Trade Balance

SE BMW State

€ Million € Million € Million

Agriculture, Forestry & Fishing -618 234 -383

Manufacturing 34,220 1,199 35,419

Construction 472 -481 -9

Distributive Trades & Communications -685 -1,949 -2,634

Business Services -9,424 -3,529 -12,952

Other Services 391 -284 107

Goods 33,603 1,433 35,036

Services -9,245 -6,243 -15,488

Total 24,358 -4,809 19,549

Regional Net Trade Balances, 2005

Final Demand

Percentage Distribution of Regional Final Demand, 2005

22

1

8

14

49

6

32

1

1116

25

14

0

20

40

60

Household Consumption

NPISH Government Consumption

Capital Formation

International Exports

Domestic Exports

SE

BMW

%

Total GVA

Regional Contribution to GVA at Basic Prices by Broad Industry Sector, €Billions, 2005

0 5 10 15 20 25 30 35

Agriculture

Mining & Quarrying

Manufacturing

Electricity, Gas & Water

Construction

Distribution

Transport & Communications

Financial Intermediation

Public Administration

Health & Education

Business Services

SE

BMW

€ Billion

Total GVA

% Regional Contribution to GVA by Broad Industry Sector, 2005

0% 25% 50% 75% 100%

Agriculture

Mining & Quarrying

Manufacturing

Electricity, Gas & Water

Construction

Distribution

Transport & Communications

Financial Intermediation

Public Administration

Health & Education

Business Services

SE

BMW

Total GVA

% Sector Contribution to GVA by Region, 2005

2

25

9

18

29

16

4

21

14

18

21

22

0

5

10

15

20

25

30

Agriculture, Forestry & Fishing

Manufacturing Construction Distributive Trades & Communications

Business Services Other Services

SE

BMW

Composition of GVA

Composition of Regional GVA, 2005

€ Million % € Million % € Million %

Compensation of Employees 65,963 46 52,045 45 13,918 52

Net Operating Surplus 60,155 42 49,846 43 10,309 38

Consumption of Fixed Capital 16,965 12 13,848 12 3,117 12

Taxes 1,550 1 1,272 1 277 1

Subsidies -1,442 -1 -801 -1 -640 -2

Gross Value Added 143,191 100 116,210 100 26,981 100

State SE BMWComponents

Composition of GVA

International

Imports

Domestic

Imports

Total

Imports

International

Imports

Domestic

Imports

Total

Imports

Agriculture, Forestry & Fishing 0.311 0.071 0.382 0.288 0.163 0.451

Manufacturing 0.591 0.016 0.607 0.388 0.145 0.533

Construction 0.313 0.027 0.341 0.180 0.115 0.295Distributive Trades &

Communications 0.238 0.017 0.256 0.089 0.085 0.174

Business Services 0.343 0.011 0.354 0.085 0.104 0.189

Other Services 0.144 0.010 0.154 0.109 0.084 0.193

SE BMW

Regional Import Multipliers, 2005

Before & After

Sector Composition of GDP

2007 2011

Index of Per Capita GVA (Basic Prices)

State = 100

NUTS 2 & GDA

60

70

80

90

100

110

120

130

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

State

BMW

S & E

GDA

Index of Per Capita GVA (Basic Prices)

State = 100

NUTS 3 & GDA

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

State

GDA

Border

Midland

West

Dublin

Mid-East

Mid-West

South-East

South-West

Index of Per Capita Disposable Income

State = 100

80

85

90

95

100

105

110

115

120

125

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

State

Border

Midland

West

Dublin

Mid-East

Mid-West

South-East

South-West

Regional Unemployment Rates

2000 - 2013

%

Quarter/Year

0

5

10

15

20

25

State

Border

Midland

West

Dublin

Mid-East

Mid-West

South-East

South-West

Regional Unemployment Rates

2000 - 2013

%

Quarter/Year

0

5

10

15

20

25

State

Border

Midland

West

Dublin

Mid-East

Mid-West

South-East

South-West

Unemployment Rates (%) by Region

2011

Quarter/Year

Regions most affected by employment loss

2007 - 2011

Quarter/Year

Population Growth

1996 - 2013

0 10 20 30 40 50 60

Mid-West

Dublin

South-West

West

Border

State

South-East

Midland

Mid-East

1996 - 2013 2001 - 2013 2006 - 2013

%

Gateways & Hubs

2002 - 2011

%

Population Growth

-5 5 15 25 35 45 55 65 75

State

GalwayWaterford

DublinLimerick

Cork

TullamoreMullingar

LetterkennyAthloneDundalk

Sligo

CavanTuam

MallowMonaghan

KilkennyState

WexfordEnnis

BallinaCastlebarKillarney

Tralee

Gateways & Hubs

2002 - 2011

%

Employment Growth

-15 -10 -5 0 5 10 15 20 25 30 35 40 45 50 55 60

State

GalwayWaterford

CorkDublin

Limerick

AthloneMullingar

LetterkennyDundalk

TullamoreSligo

CavanTuam

MonaghanMallow

KilkennyBallina

WexfordEnnis

KillarneyCastlebar

Tralee

Population Change 2006 - 2031

Various Models

0

500

1,000

1,500

2,000

2,500

2006

2011

2031 M2F2 Recent

2031 M2F2 Traditional

2031 M2F2 Modified

2031 M3F2 Recent

2031 M3F2 Traditional

2031 M3F2 Modified

000’s

Future Migration

2 Alternatives

-150 -100 -50 0 50

Border

GDA

Dublin

Mid-East

Midland

Mid-West

South-East

South-West

West

M3F2

M2F2

000’s

Projected Age Dependency Ratios (M2F2)

2011 – 2031

0%

10%

20%

30%

40%

50%

60%

70%

2011

2016

2021

2026

2031

Projected Age Dependency Ratios (M2F2)

2011 – 2031

40

45

50

55

60

65

2011 2016 2021 2026 2031

GDA

Dublin

Mid-East

Border

Midland

Mid-West

South-East

South-West

West

State

Age Dependency Ratios

A slightly more pessimistic view…

27

61

12 0-19

20-64

65+

Unemployed or not in LF

Traditional: 0.54

Modified: 0.64

Age Dependency Ratios

An alternate, more pessimistic view…

27

61

12 27

39

12

22

0-19

20-64

65+

Unemployed or not in LF

Traditional: 0.54

Modified: 0.64

Alternative: 1.6

Real Median Income

2004 - 2012

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

2004 2005 2006 2007 2008 2009 2010 2011 2012

State

Border

Midlands

West

Dublin

Mid-East

Mid-West

South-East

South-West

€

At Risk of Poverty

2004 - 2012

%

0

5

10

15

20

25

30

35

2004 2005 2006 2007 2008 2009 2010 2011 2012

State

Border

Midlands

West

Dublin

Mid-East

Mid-West

South-East

South-West

Material Deprivation

2004 - 2012

0

5

10

15

20

25

30

35

40

2004 2005 2006 2007 2008 2009 2010 2011 2012

State

Border

Midlands

West

Dublin

Mid-East

Mid-West

South-East

South-West

%

Consistent Poverty

2004 - 2012

0

2

4

6

8

10

12

14

2004 2005 2006 2007 2008 2009 2010 2011 2012

State

Border

Midlands

West

Dublin

Mid-East

Mid-West

South-East

South-West

%

Residential Property Prices Index: Jan 2005 = 100

40

50

60

70

80

90

100

110

120

130

140

National

National excluding Dublin

Dublin

Regional Distribution of Mortgages

& Negative Equity

0

5

10

15

20

25

30

Mortgages

Negative Equity

%

Source: Duffy & O’Hanlon – ESRI working paper No. 463

Regional Wellbeing

A crude estimate (Year: 2004 = 100)

0

20

40

60

80

100

120

2004

2008

2012

Conclusions

Regions matter – despite some being artificial

Distinct economic and social structures

MNEs have a significant impact (2 speed economy)

Recovery being be led by S&E - Dublin & GDA (2 speed economy)

Congestion in GDA likely to continue

Several regions will most likely require greater subsidy in future

The End

steve,.macfeely@cso.ie

www.cso.ie