Summary

Productivity is one of the key economic policy priorities, featuring in the Programme for Government, Economic Strategies and Departmental plans. Within the research community, considerable effort is being devoted to try to understand the apparent slowdown in productivity growth at the national level and in Northern Ireland (NI).

Whilst productivity features in many Economic Strategies and plans, with considerable weight being placed on improvement, it remains poorly understood by many and is often confused with the wider measure of standards of living (GDP per capita or GVA per capita).

GVA is made up, in the main, by wages and profits with wages accruing to employees and profits accruing to enterprises. Furthermore, at a regional level there are considerable concerns over the veracity of the published data which means that it is difficult to measure the impact of productivity boosting policies.

This paper examines current published data in order to better understand the factors that are responsible for relatively lower productivity in NI than the UK average and the widening of the gap in recent years. It breaks down the components that underpin NI’s income disparity (as measured by GVA per capita) with the UK and explores the impact of NI’s sectoral composition in determining the size of the productivity gap between NI and the UK average.

Further research in relation to some elements of the data might provide policy makers in NI with a more detailed understanding of why NI’s standards of living and productivity apparently lag so far behind the UK average.

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