Overview of North/South and Cross-Border Co-operation in ECONOMIC DEVELOPMENT

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INTRODUCTION

In October 2006 the two governments published their joint vision for economic collaboration on the island. This British-Irish Intergovernmental Conference (BIIGC) study, which was led by InterTradeIreland¹, outlines the challenges, rationale and benefits for joint government intervention and proposes co-ordinated policy intervention in R&D, skills enhancement, joint investment opportunities and support for trade development. In January 2007 the publication of the Irish National Development Plan 2007-2013 provided details of a range of planned North/South projects and set out, for the first time, proposals for Irish Government investment in new North/ South projects and initiatives for mutual benefits. In March 2007, as part of the drive to restore the Assembly in the North, the UK chancellor Gordon Brown promised a review of differentials in corporation tax rates between Northern Ireland and the Republic of Ireland.

This focus on economic development as a key area of North/South and cross-border co-operation builds on a succession of speeches from government ministers, business figures and researchers since the 1990s. Indeed almost one-fifth of the literature² (or 245 of 1300 publications) on cross-border co-operation on the island is dedicated to the question of economic co-operation.

In the past the Irish border has been portrayed as a barrier to trade and other forms of business collaboration or competition. There is now a consensus among economists and business figures that co-operation can improve the competitiveness of the two economies through reducing costs as well as providing the necessary scale for businesses to successfully export off the island.

In terms of cross-border trade there has been some debate over what levels can be expected with recent figures suggest that it may be worth around €2.5 billion to companies on both sides of the border. It is clear that while this trade has been a falling proportion of the Republic of Ireland’s overall trade since the 1990s, it remains of critical importance to smaller companies and those in the food and drink sector. In Northern Ireland the South is a key market and a steady rate of increase in North-to-South trade has been maintained since 1995.

In terms of business co-operation a survey published in 2005 found that less than 50% of companies had no business linkage, either formal or informal, with one on the other side of the border. The most common linkages were either import or export links involving up to 35% of all companies. Informal linkages, such as site visits or business meetings, were more common (involving 4-7% of companies) than formal ones, such as purchase of materials or joint marketing (2-3% of companies). The findings pointed to barriers including currency, legal regulations or cultural differences being important ones in stopping co-operation.

It is expected that the relevant departments and development agencies such as InterTradeIreland which have focused on addressing barriers to greater business co-operation will be the instigators of or partners in the co-operative activities which have been recommended in the BIIGC study. In addition to details of these organisations’ work, Border Ireland holds information on another important source of cross-border initiatives in economic co-operation. This is the programmes and projects which have been supported by funding from the EU and other sources. These contributions to cooperation are important in two ways. First, they cover most of the same areas of work including skills development, innovation and trade development. Second, because they might provide the source of successful cross-border approaches and pilot programmes that might be extended across the island.

ACTIVITIES

Border Ireland has details on nearly 500 cross-border economic development projects or programmes in its online guide to cross-border activities. These have been run by government bodies of all kinds or supported by EU and other funding since the 1980s.

The 497 activities are divided into eleven sub-sectors as shown in Chart 1 below. There is a fairly even spread of activities across the sub-sectors with all bar two ranging from 7 to 15%. The largest three sub-sectors (networking, innovation and marketing) account for 44% of all initiatives. Networking has involved companies (or representative organisations such as Chambers of Commerce) coming together on a cross-border basis to share information and find new ways of doing business.

Chart 1: Types of economic development cross-border activities, 1985-2005

Innovation activities have included product or process development activities, often pursued by higher education institutions in cross-border partnerships either with another institution or with a private business. Marketing has been a focus upon new market development for private companies either on the other side of the border or on a joint basis into worldwide export markets. Another sub-sector, joint ventures, fits well with marketing or innovation. There have been almost 40 of these cross-border activities where companies (largely funded by Peace I or II monies) have come together to either jointly market a product or process, or form a partnership to innovate.

The other 48% of activities fall into four main areas. First, the 20% of activities affecting the labour market through training to bring women or the unemployed back into work, cross-border mobility supports or initiatives to reskill or upskill those already in work. Second, the 9% involving Information and Communications Technology (ICT) which overlaps with some of the skills initiatives as well as infrastructural improvements in the border region (in broadband, for example). Also under infrastructure, the third of the sub-sector areas with 8% or 38 activities, has come investment in enterprise facilities and other innovation centres.

ORGANISATIONS

There are 223 organisations which fall into the economic development sector in Border Ireland and have been involved in cross-border co-operation since 1985. These can be divided into the following categories:

• The few organisations which have an all-island remit which include the statutory North/South implementation body, InterTradeIreland, voluntary representative organisations such as the IBEC-CBI Joint Business Council, the North-South Roundtable ‘think tank’ and private businesses with a reach that does not stop on the island of Ireland.
• The many national, regional or local enterprise agencies, few of which have a cross-border role per se but have developed this in partnerships with another counterpart agency or group of agencies. These range from the government training organisations (eg: FÁS and what was the Training and Employment Agency) to local enterprise bodies (eg: Leitrim County Enterprise Board and Lisburn Enterprise Organisation).
• Over 70 private sector firms which have access funding for joint ventures or cross-border marketing support, notably under the two Peace programmes.
• A smaller number of voluntary organisations representing business interest either local (such as Chambers of Commerce) or sectorally (e.g. Northern Ireland Food and Drink Associations). This category have run cross-border projects to bring local Chambers together, in the North-West or Eastern Border corridor, or have become involved in a variety of all-island networks.

Cross-border economic co-operation is not confined to organisations located along the frequently referenced Dublin-Belfast economic corridor. As the following map shows such co-operation has involved organisations from all over the island.

Figure 1: Location of organisations who have worked on economic co-operative activities³

CHANGES OVER TIME?

The level of funded economic development activity built slowly in the 1985-1995 decade, with less than 70 initiatives receiving the substantial amount of over €32m in funding. These were supported by the International Fund for Ireland (IFI) and then INTERREG I with the former notable for starting off the successful cross-border sales and marketing ACUMEN programme and supporting all-island trade missions to the USA, the Gulf States and Russia in the early 1990s. As is the case with other sectors the first two INTERREG programmes funded various back-to-back projects including large-scale funding for enterprise facilities and ICT infrastructure.

Chart 2: Numbers of economic development activities and funding allocated to the sector, 1985-2005

Between 1996 and 1999 there was a surge of economic development activity supported by the Peace I and INTERREG II programmes which showed a shift in the direction of genuine cross-border co-operation. Almost 230 projects received almost €60m in funding including 25 company joint ventures that Co-operation Ireland provided small grants for under Peace I. However, most of the cross-border co-operation arose from the local development agencies working with micro-enterprises or SMEs within the border region. In many cases one agency (say a County Enterprise Board) would support its local client companies to access markets on the other side of the border or perhaps joint training schemes. However, there were also some more integrated cross-border partnerships between development bodies delivering training programmes like Project LEO (Louth/Enniskillen Opportunities) or the online networking and marketing platform TradeNet Ireland (which was organised by a combination of the IBEC/CBI Joint Business Council and various local agencies and councils).

Since 2000, Peace II, INTERREG IIIA and other smaller sources of funding have supported almost 200 further cross-border economic cooperation initiatives. This funding support has been substantial with over €63m committed (to which can be added a budget of almost €40m for InterTradeIreland in the same period). Given the spatial requirements and other regulations surrounding the funding the emphasis has continued to be on supporting SMEs often through the vehicle of local agencies.

However, there have been changes in emphasis reflecting the stress laid on how best to improve competitiveness on a cross-border basis. In the first place more initiatives have been bringing companies together in networks or ‘clusters’ usually on a sectoral basis. Initiatives like ‘Border Vision’, ‘Threads’ or ‘Midas’ are all focused on this work, perhaps following the lead given by InterTradeIreland’s all-island networks programme. A second change has been the emphasis on targeted skills programmes which bring people together on a cross-border basis for training, often in ICT skills. How successful these initiatives have been in addressing the peripherality issues in the border region or finding better ways of co-operating in the business world can begin to be judged when the programmes come to an end.

RESEARCH AND STRATEGY

There has long been an emphasis on economic and business research as a key element of cross-border co-operation. In the fifty years after partition a number of studies, notably Garret Fitzgerald’s articles in the mid-1950s, tended to look at the advantages the North had over the South. However, this interest declined until the 1990s when two key projects, ‘Growth and development in the two economies of Ireland (1992-1994 with IFI support) and ‘Border Crossings’ (supported by EU Peace I in 1997-1999), placed the ‘island economy’ on the map. By the end of that decade the question being asked was how the North could catch up with the Southern ‘tiger economy’. The establishment of InterTradeIreland has provided economic and business research with a fresh impetus. Its agenda is focused on exploring the factors behind all-island competitiveness and providing the necessary information to help networks work better. A stimulating critique from one leading economist suggests that “praise for modest progress made tends to conceal the lack of any movements of a more strategic island importance”. However the hope is that research can move beyond North/South comparisons to all-island models for future economic development.

Together the two governments are, as noted earlier, exploring strategic ways in which economic co-operation can be given more impact. There is talk of more off-the-island joint trade missions, possible all-island promotion for inward investment and a deepening of some of the marketing and innovation work underway. This expansion of co-operation will certainly be more successful if there is an attempt to reach outside existing inter-governmental work to appropriate some of the best of the regional and local cross-border approaches which have taken shape in the past twenty years.

SUCCESSFUL CROSS-BORDER APPROACHES?

The case studies of successful business co-operation have filled the pages of newspapers over the past number of years. In some cases, like the Quinn Group, this is a story of expansion across the island and into different sectors like construction, insurance and leisure. In others it is a story of mergers and takeovers, particularly in the food and drink or media sectors (radio and newspaper). There are also increasingly stories of joint bids for construction work (e.g. Graham’s and Uniform on the M1 motorway) or collective marketing in the furniture and craft sectors.

There have also been successful approaches in the cross-border and North/South supports provided to businesses, notably through the work of InterTradeIreland. One of its less-well-known initiatives is ‘Go Tender’ where companies from across the island have been trained on how to get a foothold in the public procurement market in the other jurisdiction. Given that this market is worth £11 billion this programme has proved a popular one. In a very different field is the Peace II-supported Women into the Network programme which has been running since 2004. It has been providing a training and networking programme to raise levels of female entrepreneurship in the border region and is unique for bringing international models onto the island but also altering these to get the best from diversity.

Finally, in terms of new approaches, the issue of economic growth has always raised the thorny issue of uneven development. This is particularly important for the border region as a whole and the North West as a particular case within this. There has not been an ‘area-based strategy’ used (as with cross-border activity in the rural development sector) but, in recent years, the North West has attracted particular attention. The establishment of a ‘virtual’ cross-border enterprise park and initiatives to support greater levels of innovation and reskilling reflect the attention paid to the Derry/Donegal area.

A NEW ERA?

The Newry-Dundalk region is being developed as a ‘twin city urban-based cluster’ under a joint metropolitan plan. For the first time the two economies of Newry and Dundalk, sitting directly opposite each other on the border, are thriving at the same time. In the past one urban centre has typically prospered at the other’s expense. This signifies a new era of practical co-operation.

But has the real message on economic co-operation yet to be grasped? Most telling is that on 29 January 2007 the final debate of the Northern Ireland Assembly at Stormont focused on whether North-South co-operation should be based on practical economic considerations rather than on how Northern Ireland could best develop its economy in partnership with the South.

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1. InterTradeIreland is the all-island Trade and Business Development Body developed under the 1998 Belfast/ Good Friday Agreement2. Border Ireland (www.borderireland.info) provides a searchable database of activities and publications on cross-border co-operation on the island of Ireland since the early 1980’s3. The Centre is working with partners from the International Centre for Local And Regional Development (ICLRD) to develop a spatial mapping application which will allow Border Ireland users to query cross-border information in a visual manner

FURTHER READING:

• British-Irish Inter Governmental Conference (BIIGC), 2006, Comprehensive Study on the All-Island Economy
• Colin Buchanan and Partners, 2006, Newry Dundalk – A new perspective on the development of the region
• InterTradeIreland, Business networks on the island of Ireland, 2006
• InterTradeIreland, Survey of business links on the island of Ireland, 2005
• Ireland National Development Plan 2007-2013. 2007, Transforming Ireland. A better quality of life for all
• Bradley J. 2006, An island economy or island economies?: Ireland after the Belfast Agreement
• Bradley J. and Birnie E. 2001, Can the Celtic Tiger Cross the Border? Centre from Cross Border Studies