Data Insight: Productivity differences in Northern Ireland

This Data Insight examines the differences in productivity across the 11 local government districts (LGDs) in Northern Ireland, using data from the Northern Ireland Annual Business Inquiry. We focus on how labour, capital, and government subsidies are associated with the gross value added (the value generated by any unit engaged in the production of goods and services) at the enterprise level.

We find there are persistent differences in productivity across LGDs, with high productivity areas driven by the presence of ‘top performers’. Increasing labour inputs is found to have a positive effect on firms’ gross value added across all LGDs, but the effect of increasing capital investment or government subsidies varies by LGD.

These findings suggest future policy interventions must be place-based and tailored to reflect the spatial variations present in firm performance across Northern Ireland.

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Why it matters

Previous research has focused on Northern Ireland’s overall level of productivity, alongside the productivity of individual sectors. Our findings demonstrate the importance of considering the sub-regional variation in performance of firms, particularly when examining the relative performance of different LGDs within Northern Ireland.

Data from the Northern Ireland Annual Business Enquiry demonstrates there are persistent productivity differences between LGDs within Northern Ireland. The overall performance of each LGD is found to be related to the relative distribution between high and low performing firms: LGDs with low productivity have fewer high productivity firms, and/or relatively more low productivity firms. While Belfast is the best performing LGD within Northern Ireland, its performance is shown to be driven by these top performers.

These results are important for designing future policy interventions to improve and support firm performance across Northern Ireland. No consistent association is found between the receipt of subsidies and increased gross value added at the enterprise-level, with current subsidies having either positive or negative effects depending on location. The spatial differences in this relationship suggest that a ‘one size fits all’ policy approach is not appropriate when attempting to improve Northern Ireland’s economic performance, and that subsidies will need to be tailored to their local contexts. This is particularly relevant when considering place-based policy, and increasing calls for the NI Executive to target business support at areas outside Belfast.

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