NDP bolsters an all-island economy

Comment:The Government's new National Development Plan (NDP) commits additional taxpayers' money to enhancing economic co-operation with Northern Ireland and the development of the north-west and the Border counties.

The measures it contains are therefore an important step towards realising the full economic potential of a prosperous island underpinned by a sustainable peace.

Last year, North-South economic co-operation moved significantly up the political agenda. Minister for Finance Brian Cowen called for "wider dialogue and engagement of the possibilities and benefits of an island economy", while Taoiseach Bertie Ahern suggested "joining up that which needs to be joined up".

The Comprehensive Study on the All-Island Economy, published in October, confirmed the British and Irish governments' commitment to the concept of an all-island economy. It provided an economic rationale for continued co-operation grounded in the vision of a "competitive and socially inclusive island economy with strong island-wide clusters whose development is not impaired by the existence of a political border".

Though not uncontroversial, the study clearly indicated that the vision of an island economy was firmly embedded in the minds of the political establishment. Now, with the NDP, the Government is supporting that vision with a commitment of significant funding to develop the economic and physical infrastructure across the entire island.

The concept of and practice of North/South co-operation has come a long way in recent years. Former Ulster Bank governor Sir George Quigley first pioneered the idea of an island economy in the early 1990s. He envisaged the island as a natural economic zone where co-operation could bring mutual benefit.

His conception was given an institutional underpinning by the Good Friday agreement in 1998. Both governments committed to greater bureaucratic co-operation and put unique and innovative cross-Border institutional arrangements in place to deliver on their commitments.

As the agreement was negotiated, the Celtic Tiger took off, accelerating the divergence in the experiences of the two parts of the island and creating a very different economic landscape.

The South experienced unprecedented growth, a resurgent private sector and a deep integration into the global economy.

Despite a notable peace dividend, the North's core structural weaknesses of dependency on the public sector and on Britain remain.

Some economists have seen this divergence as spelling the end for the prospect of an island economy.

This is premature. Rather, the concept has entered a new phase, with a new purpose: the South's success can assist the development of a much bigger and more dynamic private sector in the North.

Unlocking the potential of the private sector is critical to reviving the Northern Irish economy. The high dependence on the public sector is both distorting and, in the long run, unsustainable. With a British electorate ambivalent to the problems in the North, a potentially sceptical prime minister in Gordon Brown, and many other disadvantaged regions across the UK clambering for funds, high levels of subsidisation of the North will not continue indefinitely.

Unless the private sector picks up the slack, the economy will falter. The resulting economic hardship could provide conditions conducive to a relapse into violence.

Ensuring that this does not happen is undoubtedly in the South's strategic interest. A peaceful island, North and South, is an essential prerequisite for a prosperous island, just as the peace process was an essential precondition for the Celtic Tiger.

The benefits of co-operation are most obvious in relation to the poorer parts of both this State and Northern Ireland: the northwest and the Border regions. Local development from Sligo to Coleraine will benefit from the investments in cross-Border roads and Derry airport. The Dundalk/Newry "metropolis" is the natural "belt buckle" of the economic corridor running from the Lagan to the Liffey and beyond.

And there are a host of other practical examples in business development, skills training, research and development, health, education, agriculture, food and the environment.

In all of these areas there are as yet unrealised opportunities for collaboration to enhance efficiency and performance.

But economic co-operation also benefits the island as a whole. As Minister for Enterprise, Trade and Employment Micheál Martin has said, our two small economies can best respond to the competitiveness challenge posed by globalisation through co-operation.

Collaboration can offset some of the limitations in scale, augment the labour supply available to both and offer foreign investors greater possibility.

Indeed, many US companies, following the lead of their government, now consider the island as a whole when investing and not as two separate parts.

Many start-up enterprises in areas such as software and bio-medicine are aware of this fact and are joining up to share revenue, attract investment and tackle international markets.

When northern business people join their southern counterparts on trade missions, such as that led by the Taoiseach to the Middle East last week, this process is greatly facilitated. What is true in enterprise could be true in many other areas.

The new NDP is a clear marker of the Government's commitment to the concept of an island economy.

The challenge now will be, in the North, to decouple economic co-operation from constitutional issues.

The island economy should not be seen as a Trojan horse towards a united Ireland but rather an opportunity for mutual gain.

The NDP is a significant and ground-breaking investment in the delivery of that long- desired goal.

Michael D'Arcy provides independent strategic analysis, advice and facilitation on cross-Border economic and business co-operation and is the joint editor, with Tim Dickson, of Border Crossings: Developing Ireland's Island Economy (Gill & Macmillan, 1995)