In this blog, NERI Co-director Dr. Tom McDonnell discusses his joint NERI Working Paper on 'Resilient Economy - A policy framework for the Republic of Ireland and Northern Ireland'.
How do we create a model of economic development that is more resilient to the vagaries of a globalised world and fit for the challenges of climate change and the other macro transitions and change of the next few decades?
Ageing demographics and the ongoing shift towards services imply that annual average growth in advanced economies will slow somewhat relative to previous decades. At the same time, future models of economic development will need to be consistent with net zero emissions and protective of biodiversity.
In the latest NERI Working Paper (no 74) we propose a set of high-level principles and policy reforms which we argue will facilitate the development of twin economies on the island of Ireland that are resilient over the longer-term.
We argue that for growth to be resilient, it must be built on foundations of sufficient and intelligent investment in human and physical capital embedded within a supportive innovation system. From early year education to managing skills coordination, reaping the full potential of human capital requires not only funding, but also agility and persistence within our education sector. At the same time, infrastructure and innovation are crucial to sustainable growth. This mean public capital investment and public R&D levels need to be prioritised within public spending. Supports for enterprise should be strategic with a shift towards the long term goals of high-value innovation and tackling the climate emergency.
It’s also crucial that growth is inclusive and that it is sustainable across all dimensions (fiscal, climate etc). Inclusive growth hinges on agency and adequacy for all participants. We can broaden labour market opportunities by removing barriers to employment, while agency and voice can be enhanced through collective bargaining. Adequacy is underpinned by decent wages, income floors and universal basic services.
These policies, while inevitably incomplete, are intended to provide a framework for ongoing sustainable improvements in living standards for all groups within society.