ABSTRACT
Real GDP The GDP of a nation measures the total market value of goods and services produced in one year. In the measurement of GDP what matters is the geographical coverage of the national economy, regardless of whether the producers or owners of the resources are citizens of the nation or not. Since comparing Northern Ire-
land’s GDP with the UK’s GDP does not provide meaningful information, we explore real GDP growth rates. Table 3.1 portrays the growth rate of real GDP from the mid 1960s to the 1970s and the early years of the twenty-first century in Northern Ireland and the UK. Note that the growth rate between the early 1960s and early 1970s is an average measure and it may not be the case that Northern Ireland’s economy was growing at a higher rate during the entire interval. The data in Table 3.1 shows that the economy of NI experienced a higher growth rate than that of the UK. During the time period from 1963 to 1973, the growth rate of Northern Ireland’s economy was about 200 percent of that of the UK. Table 3.1 portrays the trend of the growth rate of real GDP in NI from 1973 to 2005. In the early years of the twenty-first century, the growth rate of real GDP in Northern Ireland slowed down significantly compared to that of the UK. Table 3.1 presents this convergence. Still, the overall average growth rate of Northern Ireland’s economy is slightly higher than that of the UK. Between 2003 and 2005, the average growth rates of real GDP for Northern Ireland and the UK are 2.83 and 2.7 percentage points respectively. Despite the fact that the overall Northern Ireland average is higher than that of the UK, the Northern Ireland average was below that of the UK in 2004. The above discussion illustrates that the growth rate of Northern Ireland’s economy was greater than that of the UK during the last four decades of the twentieth century. Figure 3.1 shows that Northern Ireland’s economy was growing at about double the UK rate during the 1960s and 1970s. This remarkable performance was not maintained and by the beginning of the twenty-first century the two growth rates had converged. Given the flow of the IFI and EU Peace and Reconciliation funds to the Northern Ireland economy since the 1980s and 1990s the trend of the growth rate of Northern Ireland’s real GDP is not in line with our expectation. It is expected, a priori, that the growth rate of the economy would improve after the 1998 GFA. The absence of a correlation between the GFA and the growth rate in Northern Ireland casts doubt on the notion that IFI and EU Peace II Fund assistance to
nurture peace and reconciliation efforts can significantly promote economic growth in Northern Ireland. One possible explanation for this disconnect is that EU Peace II and IFI economic assistance may be necessary, but not sufficient for economic development and the institution of peacebuilding and reconciliation in Northern Ireland. What can be surmised, with certainty, is that despite the contributions of the IFI and EU Peace and Reconciliation funds, the economy of Northern Ireland has been slowing down. In spite of the lower growth rates recorded in the twenty-first century, the Northern Ireland economy has been one of the fastest-growing regions in the EU (Portland Trust 2007). The growth rate of the Northern Ireland economy was five times that of the EU average growth rate in 2003. During 2004 and 2005 the EU economy converged with Northern Ireland’s, which may hint at some external factors that contributed to the slower growth. Figure 3.2 illustrates the growth rate of the Northern Ireland economy from 1964 to 2005 for selected years. The most obvious feature of the data is that the GDP has grown over time. The output of goods and services produced in Northern Ireland has grown on average, about 4 percent per year from 1964 to 2005. This continued growth in GDP enables a typical citizen to enjoy greater prosperity than his or her parents did. The second feature of the data is that the GDP growth rate has not been steady in Northern Ireland. Figure 3.2 shows that the growth rate has been far from uniform, demonstrating a cyclical behavior on a regular basis. The data presented is in nominal terms, and the economy could
have been in recession, suffering from economic distress, falling profits, falling employment rates, or economic slowdown. Moreover, GDP does not directly measure those factors that make life worthwhile, but it does measure our ability to obtain the inputs into a worthwhile life and it seems also to be correlated with most of the indicators of quality of life.
