Moving forward

In combination, recasting the education and training system, creating an all- Ireland IDA and adopting a ‘integration-by-doing’ approach to developing an all-island economy will represent a radical new departure to governing the Northern Ireland economy. But these measures are unlikely to be the only actions that will be needed to address fully the binding constraint that has been holding back regional economic performance for far too long. Other significant challenges to which there are no easy answers or which at least present difficult policy choices will need addressing sooner or later. For example, if the task of building closer ties between the two Irish economies progresses at pace then it will become increasingly anachronistic for wage setting in Northern Ireland, particularly in the public sector, to be tied to centralized, UK-wide collective bargaining arrangements. It would be preferable to conclude wage agreements that are more sensitive to prevailing economic conditions in the regional economy as well as the emerging all- Ireland economy. Understandably, some trade unions will be most reluctant to move away from established UK-wide collective bargaining arrangements and it will take a lot of persuading for them to agree to do so. It is not appropriate here to set out how this collective bargaining challenge could be optimally addressed. More important is the wider point that fragmenting the binding constraint to put the Northern Ireland economy on a stronger footing will involve difficult compromises, even sacrifices. Correcting the faultlines that are now baked into the structure of the Northern Ireland economy will require changing the established ways of doing things in many areas, and on occasions this will be hard to swallow.

Recognizing the imperative for institutional adaptation within Northern Ireland and also across the island is not the same as arguing that the Northern Ireland economy needs a strong dose of shock therapy. This point needs emphasizing. In most cases, shock therapy economics amounts to the implementation of a battery of radical policies to liberalize economies, to make them more market orientated. Examples of this type of neo-liberal economic programme include the Thatcher Government's monetarist experiment in the early 1980s that wreaked havoc with the UK's manufacturing base, and the economic transition programmes implemented in most of Eastern Europe to replace communism with capitalism. All these programmes assumed that slashing and burning established institutional and economic arrangements would somehow miraculously lead to market incentives flourishing. Needless to say, such an outcome never materialized. Instead, these programmes invariably created huge distortions that damaged the functioning of these economies, in some cases seriously so. Over the years, a form of neo-liberal shock therapy has been advocated for the Northern Ireland economy - in most cases to tackle the assumed negative impact the so-called dependency culture was having on entrepreneurship and business drive in the region. In a different way, the demand for creating a united Ireland as soon as possible would probably require the introduction of some type of shock therapy, given the amount of economic change that would have to take place in a relatively short period of period.

The argument developed throughout this book is antithetical to any type of shock therapy being introduced to reform the Northern Ireland economy. Instead, an all-Ireland economy is envisaged emerging through incremental adaptation that is continuous and meaningful, north and south of the border. Time is provided for well thought out and agreed solutions to be developed so as to mesh together the two economies. A problem-solving approach of this type is needed as it is foolish to think a strategic and comprehensive plan or blueprint that is easily implemented exists to integrate the two Irish economies. Bringing together economically the two parts of the island will be hugely complicated and will require active on-going efforts to address the involved complexities and to learn what is feasible. Mobilizing policy communities, business groups, trade unions, and civic associations around an evolutionary ‘integration-by-doing' process is the best way to realign the two economies in a manner that is not overly damaging. Building the new all-Ireland economy through discrete projects and situated problemsolving stands a greater chance of transformative coalitions being created in support of all-island economic integration, which are likely to get wider and deeper as the number of cross border economic programmes multiply. The result is that the emerging all-Ireland economy will have stronger social foundations.

The past five years has been a defining period of economic and political turbulence for Northern Ireland. Generating most of this turbulence has been Brexit. The Referendum vote in favour of the UK departure from the EU and the subsequent negotiations to effect withdrawal have stretched to breaking point the political accommodation that the Belfast Agreement had fostered between nationalism and unionism. Brexit also highlighted the depth of the inglorious indifference amongst Leave politicians in Britain to the economic well-being and political stability of Northern Ireland. Every assessment made has concluded that the UK's withdrawal from the EU will damage the Northern Ireland economy. While the power sharing institutions have been restored in the region, there is genuine concern that these function in a very fragile way, given the mistrust and suspicion that exists between the two political blocs. Thus, if nothing changes, the prospects for Northern Ireland for the next decade are bleak. On the economic front, Northern Ireland is likely to function as little more than a beleaguered outhouse of an underperforming UK economy. On the political front, relationships between the two communities are likely to be fraught with tensions, if not outright disagreements. The argument of this book is that it does have to be like this - the time has come for radical economic change. Northern Ireland is in desperate need of economic and social modernization. The only feasible way this modernization will come about is through the creation of an all-Ireland economy. There is no time to waste, decisive action should start immediately to that end.