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A New Industrial Policy for Northern Ireland

A New Industrial Policy for Northern Ireland

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Author

Paul Mac Flynn

Summary

The term industrial policy is most often associated with economic history from the end of the Second World War until the late 1970’s. In reality this period only refers to a particular form of industrial policy usually associated with nationalisation and planned industrial development. In truth, industrial policy describes a wide range of activities concerning the state’s role in affecting change in the private sector. While the methods of state intervention may have changed, the motivation for intervention has not. Since the 1980’s policy has become more indirect and broadly focused. Enterprise policy as it is now known has come under much more scrutiny as many economies struggle to rebuild following years of recession.

A key policy focus for the Northern Ireland Executive over the last number of years has been to eliminate the gap in productivity with the rest of the United Kingdom. It is widely acknowledged that the private sector in Northern Ireland is underperforming and that higher value added activity is needed to boost overall output. A large portion of industrial policy has focused on providing financial incentives to companies to locate new investment or expand existing operations in Northern Ireland. These policies borrow heavily from the perceived success of the Republic of Ireland, but their appropriateness for Northern Ireland is open to question.

Changes to the status of Northern Ireland for State Aid purposes will severely limit the ability of the state to provide such financial assistance and this has opened a discussion on how to support industry in the future. This paper sets out a proposal whereby the state’s financial intervention would instead be committed to fund innovation in key sectors of the economy. As opposed to indirectly nudging investment, the state would actively enable the transformative advances that could shape Northern Ireland industry for decades to come.

Author

Paul Mac Flynn

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