Wednesday, October 27, 2010

GDP Indicates a United Ireland is Economically Unwise

In some parts of the Republic of Ireland and the Irish Diaspora, there is still the strong dream of a United Ireland.  The island's, currently split between the Republic of Ireland and Northern Ireland (part of the United Kingdom), problems have long been thought of in terms of religion and politics.  Economic analysis can add a new dimension to the debate on whether the island should be united or if the border should be kept.

For example, consider the role of economics in the case of Germany's reunification.  Despite initial popular approval based on politics, the reunification of East and West Germany has been proven to have been rushed without economic considerations.  The gap between East and West's economies forced the West to spend much of its resources on getting the East somewhat to par.  Even after twenty years parody has not been achieved.

The difference between the two Germany's right before reunification was stark.  The East German GDP was only 10% of Germany's total in 1989 despite having 20% of the total population.  Per Capita wise, East German GDP was 42% compared to West Germany's.

Now examine Northern Ireland's economy in relation to that of the Republic of Ireland and the United Kingdom's.
  • Northern Ireland's GDP is 30% of all of Ireland though it has 39% of all the island's population.  Per Capita wise Northern Ireland's GDP is 60% compared to the Republic of Ireland's.
  • In comparison to the United Kingdom: Northern Ireland's GDP is 1.5% of all the UK's GDP while being 2.9% of the total population.  Per Capita wise Northern Ireland's GDP is 79% compared to the UK's.
Northern Ireland's economy is underdeveloped compared to both the Republic of Ireland and the United Kingdom.  However, it would be economically wiser for Northern Ireland to stay in the United Kingdom for two reasons.
  1. GDP per capita is closer to the United Kingdom's rather than Ireland's.  Cost of living fluctuations would cause more harm than good for the Northern Irish citizenry.
  2. The sheer size of the United Kingdom's economy allows it to better support (i.e. prop up) Northern Ireland.  Ireland would be forced to spend a much larger share of its resources on Northern Ireland much like West Germany had to do for East Germany.  This is unreasonable with the republic currently suffering a massive downturn.

5 comments:

Yofie said...

Interesting that Northern Ireland is nowadays less economically developed than the Republic. Up until 20 or so years ago with the rapid growth in the Republic, it was the other way around. (Of course, at least right before the present recession, the Republic's per capita GDP was higher than even the UK's.)

Caitlin said...

Northern Ireland has a great potential to be reunited with the rest of Ireland. Keep in mind that the UK hasn't had the best track record in nurturing Northern Ireland (particularly in the treatment of its Catholic population) so, in reality, it's hard to tell how that section of the island would thrive as part of the Republic of Ireland.

Catholicgauze said...

Yofie,
I assume that the troubles in Northern Ireland combined with the Celtic Tiger caused Northern Ireland's fall behind.

Catholicgauze said...

Catlin,
True, but I wonder how a United Ireland would be contaminated by Norther Ireland's politics. In the republic there are two reasonable parties (the republican Finna Fail and Christian Democrat Fine Gael) and a smaller, old-school non-communist left Labour Party.

Northern Ireland's two biggest parties are the (somewhat moderated) right-wing extremist Democratic Unionist Party and the (only somewhat moderated) Marxist Sinn Fein. The reasonable Ulter Unionist, Soical Democratic and Labour, and Alliance parties meanwhile have lost ground to these extremes.

Introduction of Northern Ireland's political and cultural landscape could greatly upset stable Ireland and make it worse for everyone (including the cultural Catholics of Northern Ireland).

Disclaimer Note: Being of part Irish descent I greatly value Irish republicanism and share the belief that there should be one united Ireland. However, I believe now is not the right time and a majority of all Irish should demand a united country before one is unjustly imposed on them.

alfanje said...

I suppose much of this analysis depends on the fluctuation of the euro/pound ratio. If both entities shared a single currency the picture would be clearer. Living in the Republic and travelling often to Northern Ireland I have never had the feeling that the North was less developed. All the opposite.