Has There Been A Peace Dividend In Northern Ireland Since The Good Friday Agreement Was Signed?
Economics researchers Professor John Turner, Dr David Jordan, and Dr Graham Brownlow explore if the cessation of major violent conflict in Northern Ireland has positively affected the economy over the last 25 years.
The Good Friday Agreement was the deal signed on 10 April 1998 that brought a cessation to ‘the Troubles’, a three decades-long conflict in Northern Ireland. 2023 marks the 25th anniversary of the Good Friday Agreement, offering a chance to reflect on the effects of the deal.
Between 1969 and 1998, 3,720 people were killed, 47,541 were injured, 16,209 bombings took place and there were 36,923 shootings in Northern Ireland. Public spending was focused on security and stabilising the economy. Since the Good Friday Agreement, the number of deaths due to the security situation has remained low.
A peace dividend is defined as the economic boost that a nation or region receives from the cessation of conflict. This boost comes about because governments can reduce security spending and reallocate the money saved to more productive economic activities. The economy can also benefit from a decrease in uncertainty and a more stable political environment, which encourages investment.
Key questions and findings:
Has Northern Ireland’s economy grown since 1998?
- The Troubles are estimated to have reduced Northern Ireland’s GDP by up to 10%.
- By 2019, prior to the Covid-19 pandemic, Northern Irish GDP per capita had grown 27% in real terms, but the gap with the UK level remained relatively unchanged, at around 21%.
- Northern Ireland has the poorest productivity of any UK region, with a 17% gap to the UK level, when measured per hour worked.
Are individuals better off since 1998?
- Since 1998, NI has experienced the strongest employment growth of any region in the UK outside London.
- Unemployment has also fallen over this period.
- But, NI has the highest rate of economic inactivity – those not in employment but not seeking work within the last month – of any UK region.
- NI also has the lowest rate of employment for individuals with disabilities of any UK region.
Is Northern Ireland still overly reliant on the public sector?
Public sector employment as a percentage of overall total employment:
- 1960: 22%
- 1970: 25%
- 1987: 42%
- 1998: 29%
- 2022: 27%
Nevertheless, it has remained significantly higher than the UK share of 18%.
Has Northern Ireland attracted higher levels of investment?
- NI experienced a decline in foreign direct investment during the Troubles.
- Today, NI is placed ninth among the UK’s 12 regions for the level of foreign direct investment in the local economy – performing no better than the UK average.
- However, NI has seen the growth of new industries in the private sector:
- Employment in financial and insurance activities grew 36% between 1998-2022, higher than in any other UK region.
- Jobs in information and communications grew by 99%, the second highest of any UK region.
- TV and film production contributed approximately £300 million to the local economy between 2018-2022.
Why has the peace dividend been relatively small?
- The overall evidence suggests a mixed picture for the extent to which Northern Ireland has benefited from a peace dividend.
- It is clear that economic scars caused by political violence have not fully healed since the signing of the Good Friday Agreement.
- Unemployment is lower, wages have improved for the lowest paid and new industries are growing.
- But there has been relatively little progress relative to the UK’s other nations and regions, particularly in productivity, the key driver of better living standards over time.
- In reality, distortions that emerge in response to a crisis such as the Troubles are not fully reversible, even once the crisis ends.
What needs to change?
- There needs to be a functioning executive, delivering good governance for the people of NI.
- Invest NI, the region’s inward investment agency, should focus on increasing productivity levels.
Find out more:
The full-length version of this article can be found on the Economics Observatory, where all references and further reading can also be located.