Two new reports from the Economic and Social Research Institute examine the flow of trade in services between Ireland and Northern Ireland and the factors influencing foreign direct investment in both jurisdictions.
These are the first two reports to be published by the ESRI as part of the Government’s Shared Island Initiative.
It is part of the Programme for Government and aims to “enhance cooperation, connection and mutual understanding on the island”.
The report on trade in services finds they make up a “considerably lower” percentage of cross-border trade compared to goods.
Services make up 26% of total exports from Northern Ireland to Ireland and they make up 16% of trade from south to north.
Goods also make up 82% of exports from Northern Ireland with services accounting for 18%. Ireland’s exports, by contrast, are comprised 48% goods and 52% services reflecting the dominant presence of multinationals in service exports. Their dominance also influences the fact that service exports to Northern Ireland account for slightly less than 1% of service exports from Ireland.
The biggest traded service from north to south is transportation and storage, accounting for 35.3% of service exports. From south to north, the biggest is business services at just over 41%.
The report notes that, over time “…cross-border trade in both goods and services shows a relatively flat profile with fairly modest growth rates”.
A second report highlights how both Northern Ireland and Ireland have seen a higher percentage of high value foreign direct investment (FDI) projects compared to other locations in the UK and the EU.
This report notes that from 2003-2020, 76% of the greenfield FDI projects locating in Ireland and 70% in Northern Ireland were considered “high value” compared to 67% in Great Britain and 51% in the EU26.
The jobs created by the projects, overwhelmingly in services, also provided a higher percentage of “high value” jobs compared to FDI projects in Great Britain and the EU26.
Using a measure called “FDI intensity” which takes the accumulated number of FDI projects in high-value sectors set against the population, the study finds that out of 98 locations across the EU and UK, Ireland ranks fourth while Northern Ireland ranks seventeenth.
The report also notes that based on 2020 data, Ireland ranks highest for “EU market potential”, labour skills and corporation tax while Northern Ireland fared comparatively better on labour costs and broadband access.
The report suggests that if the global 15% minimum corporation tax rate were introduced it could increase the number of FDI projects going to Northern Ireland by 7.5% per annum and reduce the number locating in Ireland by 4.4%.
In a statement welcoming the report, Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar TD said: “…The research shows that there is much more scope to ‘think all-island’ when it comes to the services economy and attracting foreign direct investment, accruing economic and societal benefits both North and South.”
Article Source – ESRI reports examine trade in services between Ireland, NI – RTE – Robert Shortt