Ireland’s economy appears to be in a relatively strong position for now, as is made clear in the Central Bank’s latest quarterly report. However, the east coast — and greater Dublin in particular — continue to outpace the rest of the country, while rural areas and small towns largely miss out on the recovery, writes Kyran Fitzgerald.
ESRI economist and associate professor, Edgar Morgenroth has produced a well-timed research paper dealing with the future prospects of the regions, reaching important conclusions.
He accepts that, as an economic entity, the capital has become a bit too big for its boots and there is a need to de-concentrate activity from Dublin: “Economic activity is excessively concentrated in one centre which reduces efficiency and has a negative impact on national economic performance.”
Successful city economies like Dublin’s tend to experience a surge in housing costs which in turn encourages sprawl. It reduces the density of activity on which agglomeration-based economic activities depend.
What Mr Morgenroth is seeking is a modest rebalancing rather than anything more overarching. The scattergun approach of encouraging a more even spread of investment in a large number of centres across the country should be avoided. Designating multi centre gateways as envisaged in the National Spatial Strategy “is likely to be ineffective as it would not result in centres with sufficient size and contiguous density”.
Instead, he suggests a relatively small number of cities — in particular, Cork, Limerick, Galway and Waterford — should be targeted with investment funding, the idea being that they could be developed as ‘counter poles’.
“Even the development of just one sizeable counter pole (such as Cork) would allow a large number of rural areas to benefit.” The author suggests, correctly, that advanced economies today — and Ireland now falls into this category — have developed on the basis of clusters, or ‘agglomerations’ of businesses attracting skilled people.
What we are witnessing is the rise of great city states, London being the great European example. In the broader European context, Dublin has emerged as a successful second-tier city state attracting many skilled immigrants from overseas. However, it is in danger of tripping up as housing costs surge and many of its work residents are forced into lengthy commutes.
Professor Morgenroth will cause a few eyebrows to rise with his view that investment should be concentrated within the second tier cities rather than being spent on connecting infrastructure such as roads and the rollout of broadband. Some may question his suggestion that remote working is no longer in fashion among many large corporations. He cites the decision of IBM to stop employee from working from home earlier this year.
In 2011, just over 16,000 people in financial services, real estate, computing and business services, worked from home — of whom less than six thousand were based in rural areas.
While availability of broadband is significant for startup enterprises, the benefits of broadband depend on the level of human capital available. What is critical is the share of people in the area with third-level qualifications.
The author also warns about pouring money into roads, as he concludes that such infrastructural development between cities encourages sprawl. The case for motorways is often overstated, but it would be hard to conclude the link between Cork and Limerick should be scrapped. The rollout of Irish motorways has had mixed effects, hitting some smaller towns hard while opening up previously remote areas to the benefits associated with long-haul commuting. In truth, concerns about the over-concentration of development in the Dublin areas have been with us since the 1960s when journalist John Healy wrote about the decline of his Mayo home town, Charlestown, in a ground-breaking book No One Shouted Stop.
Most European countries, along with the US, have struggled to reach the holy grail of regionally balanced development. Take London and Paris, two vast metropolises dominating their respective national economies. Perhaps at last, the moment of the so-called second tier city could be arriving. Montpelier in southern France, and Cambridge have forged ahead despite their modest size. They each have an internationally recognised university, together with spin off companies and a strong skills base. Cambridge also benefits from being in the broad London catchment area.
Cork, Limerick, and Galway each have strong third-level institutions and have attracted plenty of overseas investment. But their city authorities need to invest heavily in housing and allied amenities if they are to become even strong draws for investors, local and overseas. The potential, however, is there.
A final point is worth making. Mr Morgenroth laments the complete lack of an urban centre of any scale north of a line from Galway to Dundalk. He also points to the difficulties encountered in fostering economic activity between
towns and areas on either side of the Border, particularly against the background of Brexit.
However, Sligo and Westport are examples of successful towns well north of the line, and Mayo has had particular success in attracting high-end pharmaceutical investments.
Morgenroth’s ‘second tier’ strategy is a sensible one, but it is one that should not be adopted in too rigid a fashion, not that there is any likelihood of this being the case, given Irish political realities.